Key takeaway

In 1H26, the company maintained steady overall growth through sound production and operations and the full utilization of its circular economy industrial chain advantages. Meanwhile, the company steadily strengthened its technological capabilities during the reporting period, advanced several key projects in phases, and accelerated the upgrading of its industrial structure, with several products in the new energy materials and semiconductor materials segments delivering increases in both sales volume and prices. We are optimistic that the company will leverage its abundant phosphate rock resources and the advantages of its integrated phosphorus-silicon-sulfur-saltfluorine industrial chain to accelerate its strategic expansion centered on high-end new materials and the new energy industry, and gradually transform from a leading traditional phosphorus chemical producer into a technology-driven, green chemical new materials company.

Event

1) The company released its 1H26 report, posting revenue of RMB17.452bn, up 19.37% YoY; net profit attributable to shareholders of the parent company of RMB836mn, up 14.97% YoY; and net profit excluding non-recurring gains and losses of RMB871mn, up 30.91% YoY. In 2Q26, revenue reached RMB10.000bn, up 35.29% YoY and 34.20% QoQ; net profit attributable to shareholders of the parent company was RMB579mn, up 39.10% YoY and 125.59% QoQ; and net profit excluding non-recurring gains and losses was RMB660mn, up 51.21% YoY and 213.64% QoQ. The difference between net profit excluding non-recurring gains and losses and net profit attributable to shareholders of the parent company in 2Q26 may have mainly resulted from higher non-operating expenses due to charitable donations.

2) The company also announced its proposed profit distribution plan for 1H26, under which it plans to pay a cash dividend of RMB2.00 per 10 shares, including tax, for a total cash payout of approximately RMB239mn.

Risks:

(1) Risk of unexpected fluctuations in product and raw material prices: The company's core revenue and profit sources include products such as phosphate rock, glyphosate, organic silicon, and new material chemicals. The prices of these bulk chemicals are significantly influenced by global macroeconomic conditions, grain prices, energy costs (such as sulfur and synthetic ammonia), and supply-demand dynamics, demonstrating strong cyclical characteristics. If raw material and product prices fluctuate significantly, it may affect the profitability of certain segments of the company;

(2) Risks of stricter safety and environmental policies: Under China's "Dual Carbon" goals and the Yangtze River ecological protection strategy, environmental standards in the chemical industry continue to tighten. As a key industry under safety and environmental supervision, the phosphorus chemical industry may face impacts from increasingly stringent safety and environmental policies as well as rising compliance costs, potentially affecting operational indicators such as production capacity utilization rates.

(3) Risks of international trade friction and export policy changes: As a leading global exporter of phosphate fertilizers and glyphosate, China faces uncertainties stemming from international geopolitical conflicts, trade barriers (such as tariffs and anti-dumping investigations), and adjustments to domestic fertilizer export inspection policies.