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Highlights

  • Profit Surge: Net profit rose 23% year-on-year to RMB 1.46 billion, despite a 1.5% drop in revenue to RMB 23.13 billion.

  • Urea Sales Up: Sales volume increased 29% year-on-year, but selling prices fell 17%, impacting margins.

  • Operational Expansion: New projects in Xinjiang and Guangxi expanded production capacity, supporting future growth.

 China XLX Fertiliser Ltd. (HKSE: 01866.HK) reported a 23% year-on-year increase in net profit for 2024, reaching approximately RMB 1.46 billion, despite a 1.5% decline in total revenue to RMB 23.13 billion. The growth was primarily driven by cost optimizations, strategic disinvestment, and expansion into new production facilities.

 

Resilience Amid Market Challenges

China XLX navigated a challenging market environment in the coal chemicals sector, which faced declining coal prices, supply surpluses, and tighter export policies. While these factors put pressure on revenue, the company countered these effects through increased production efficiency and economies of scale.

One key contributor to profit growth was the divestment of Tianxin Coal Mine, which generated a substantial investment gain. Additionally, China XLX introduced an innovative marketing model to strengthen its brand awareness and market share, aligning with the evolving needs of China's agricultural sector.

Production and Sales Performance

China XLX’s fertiliser business remained the largest revenue driver, contributing 58% of total sales, followed by chemicals (37%), medical intermediates (2%), and other segments (4%).

  • Urea Sales:

    • Sales volume increased by 29% year-on-year.

    • Revenue rose 6.3% to RMB 7.31 billion, but a 17% decline in selling prices reduced profit margins.

    • Urea gross profit margin fell by 4 percentage points to 25%.

  • Compound Fertiliser:

    • Sales revenue declined slightly by 2% to RMB 5.99 billion due to delayed farming procurement and lower feedstock costs.

    • Despite a 2% drop in selling prices, cost reductions helped increase gross profit margins by 3 percentage points.

  • Methanol Sales:

    • Sales volume surged 16%, contributing to a 14.5% increase in revenue to RMB 2.68 billion.

    • Improved production technology and lower coal costs reduced methanol production costs by 10.6%, boosting gross profit margins by 9.2 percentage points to 8.6%.

Financial Strength and Expansion Plans

China XLX optimized its debt structure, leveraging interest rate cuts to reduce high-cost borrowings, resulting in a 15% decrease in finance costs and a 2.4 percentage point reduction in its gearing ratio.

The company also expanded operations with new projects, including:

  • A 60,000-ton polyformaldehyde project at its Xinjiang Base.

  • A 300,000-ton compound fertiliser project at its Guangxi Base.