Jinwu Financial News | According to China Securities International Development Research, China Heart Link Fertilizer (01866)'s performance growth in the first three quarters was in line with expectations. The company achieved operating income of 17.42 billion yuan during the period, a year-on-year decrease of 0.6%, and net profit to mother of 1.53 billion yuan, an increase of 80.7% over the previous year. Due to falling raw material prices and stable production, the company's gross profit increased by 5% year on year, and management expenses and financial expenses decreased by 2% and 13%, respectively. In addition, the company sold 100% of Tianxin Coal's shares, generating an investment income of RMB 0.79 billion. As of the third quarter, the company had received a sale of 0.8 billion yuan. On this basis, the company completed a capital increase in its subsidiary non-wholly-owned subsidiary, expanded its shareholding ratio to 80.18%, and net profit to mother increased markedly.
The bank pointed out that in terms of demand, demand for compound fertilizer will fluctuate seasonally in winter reserve fertilizer and fresh storage procurement. At the same time, demand for industrial urea will continue to grow steadily as the economy recovers and continues to increase in a positive trend. As a result, in anticipation of a release in demand and contraction in supply, fertilizer prices will gradually stabilize, and overall market performance will improve.
The bank said it is optimistic about the company's strong cost advantage and will maintain strong profitability during the urea price decline cycle. Maintain the target price of HK$6.5, corresponding to the projected price-earnings ratio of 4.3 times over 25 years. There is room for a 55% increase from the current price, and the purchase rating.
