Key Takeaways
China XLX Fertiliser Ltd. (01866.HK) reported a 51.7% surge in first-quarter net profit attributable to owners, fueled by higher sales volumes and prices for its core products amid a favorable operating environment.
"Underpinned by the peak planting season, domestic urea prices are expected to remain firm and stable in general," Mr. Liu Xingxu, Chairman of China XLX, said in a statement regarding the second-quarter outlook. "However, due to ample supply and other factors, there is limited room for further price increases."
For the quarter ended March 31, the fertiliser producer's net profit climbed to RMB 300 million, or RMB 24.1 cents per share. The company's press release did not include consensus estimates for comparison.
The strong performance was largely driven by the company's urea business, which saw revenue increase 27.6% year-over-year to approximately RMB 1.96 billion. This was the result of a 21.4% rise in sales volume and a 5.2% increase in the average selling price. The segment's gross profit margin expanded by 10 percentage points to 27%, benefiting from lower feedstock costs and economies of scale from its Jiujiang Phase II project.
Revenue from the compound fertiliser segment grew 8.7% to RMB 1.69 billion, supported by an 8.2% increase in sales volume as the company expanded its distribution network. However, the gross margin for this segment tightened by 1.9 percentage points to 12% due to higher feedstock costs.
The results signal that the company's strategy of optimizing its product mix and expanding marketing channels is delivering growth. Investors will be watching the scheduled second-quarter start of a new 700,000-tonne urea facility, which represents the next major catalyst for production growth.
This article is for informational purposes only and does not constitute investment advice.
