Key takeaway

In 2025, under the complex and volatile external environment, the company adhered to seeking progress while maintaining stability, and coordinated the steady development of phosphorus compound fertilizer, phosphorus chemical, new energy material and soda ash businesses. While flexibly adjusting business strategies to cope with raw material price fluctuations, it deeply promoted the layout of "resource + industrial chain", and accelerated the implementation of important projects such as synthetic ammonia, phosphorus mine, and thermal phosphoric acid. We are optimistic about the company's continuous improvement of raw material and resource strategy, consolidation of the integrated industrial chain moat, and steady improvement of operational resilience and comprehensive industry competitiveness.

Event

The company achieved a revenue of RMB21.40bn in 2025, +5.01% YoY. The net profit attributable to shareholders of the parent company was RMB827mn, +2.81% YoY. The net cash flow from operating activities was RMB1.257bn, +99.36% YoY. Among them, the revenue in 4Q25 was RMB5.53bn, +23.73% QoQ. The net profit attributable to shareholders of the parent company was RMB152mn, -7.18% QoQ. The net cash flow from operating activities was RMB701mn, turning positive both YoY and QoQ.

Quick Take

Phosphorus compound fertilizer business establishes the basic fundamentals of the company's performance. In 2025, the company's phosphorus compound fertilizer business achieved a revenue of RMB13.535bn, +18.4% YoY. The sales volume was 4.6017mn tons, +10.10% YoY. The production volume was 4.7144mn tons, +7.44% YoY. Production and sales operated smoothly. As of the 2025 annual report, the company's phosphorus compound fertilizer production capacity has exceeded 9.4mn tons. The scale advantage was further strengthened. Through multi-base layout, channel sinking, and brand operation accumulation, stable profitability was guaranteed. In 2025, the segment recorded a gross profit margin of 12.73%, -1.39 pcts YoY, mainly squeezed by rising raw material costs. Among them, the revenue proportion of new compound fertilizer and phosphorus fertilizer has increased from 32.8% in 2024 to 38.2%. The gross profit margin recorded 15.05%, -2.39 pcts YoY.

Chemical segment shows differentiation, yellow phosphorus profitability improves significantly, iron phosphate continues to grow, and soda ash remains under pressure. In 2025, the company's yellow phosphorus/soda ash/iron phosphate products achieved revenues of RMB1.231bn/RMB638mn/RMB599mn respectively, -3.66%/-34.15%/+19.30% YoY. The gross profit margins were 30.44%/11.95%/7.72%, +12.94/- 3.70/+1.90 pcts YoY. During the reporting period, although the price of yellow phosphorus fluctuated greatly, the company's shipments were stable. The steady advancement of its own phosphorus mine construction is expected to further drive profitability improvement. The prosperity of iron phosphate improved, the company's products continued to iterate and upgrade, and profitability is in the recovery stage. The soda ash sales strategy was flexibly adjusted, and the company remained profitable under industry pressure. The completion and commissioning of 700,000 tons of synthetic ammonia will effectively reduce the cost of the co-production of soda ash and ammonium chloride business.

The company continues to improve its layout of raw materials and resources. 1) During the reporting period, the Yingcheng 700,000-tpa synthetic ammonia project has been operating stably at full capacity, and the subsequent commissioning of remaining supporting projects will help the company further increase the self - sufficiency rate of nitrogen fertilizer raw materials and deepen its cost moat. 2) On April 13, the company announced that it recently obtained the mining right for 4mn tpa of the western section of the Leibo Niuniuzhai phosphorus mine, thereby increasing its self-owned phosphorus mine mining design capacity to 10.9mn tpa. The western section of the phosphorus mine currently has proven resources of 229mn tons, with an average P2O5 grade of 19.15%. We are optimistic that the company will rely on its rich phosphorus mine resources to continuously improve the allocation of the entire phosphorus compound fertilizer industry chain, achieving efficient resource conversion and increasing the added value of the industry chain.

Earnings forecast and core investment view: We forecast the company’s net profit attributable to shareholders of the parent company for 2026–2028 to be RMB1.202bn/RMB1.517bn/RMB1.802bn, with EPS of RMB1.00/RMB1.26/RMB1.49, corresponding to PE multiples of 14.4x/11.4x/9.6x. We are optimistic about the company's deep advancement of the "resources + industry chain" layout. With the implementation of important projects such as synthetic ammonia, phosphorus mine, and thermal phosphoric acid, the industry chain integration moat will be further consolidated, and it is expected to achieve steady improvement in operational resilience and comprehensive industry competitiveness.

Risks:

(1) Risk of unexpected fluctuations in product and raw material prices: The company's core revenue and profit sources include products such as compound fertilizer, monoammonium phosphate, yellow phosphorus, and soda ash. 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. For example, more than 80% of the cost of the company's compound fertilizer products is raw material cost, so the fluctuation of raw material prices has a great impact on the cost of compound fertilizer. If raw material and product prices fluctuate significantly, it may affect the profitability of certain segments of the company.

(2) Risk of stricter safety and environmental protection policies: Currently, China vigorously promotes energy conservation, emission reduction, environmental protection, and sustainable agricultural development, and has issued a series of policies such as the "Ten Articles" on water, soil, air, and solid waste, the "Three Phosphorus Rectification", the "Dual Carbon" goals, and the efficient and high-value utilization of phosphorus resources, guiding the fertilizer and chemical industries to accelerate green transformation and upgrading. As the country increasingly emphasizes safe production and environmental protection, relevant standards and requirements may further increase. The company may face pressure from increased capital and technology investments and rising operating costs. If the company fails to adapt to policy changes promptly, its production and development will be restricted.

(3) Market risks caused by capacity expansion: As of the report disclosure date, the company's annual capacity of phosphorus compound fertilizer exceeds 9.4 million tons. The capacity expansion imposes higher requirements on the company's production, supply, and sales synergy and market development capabilities. If major market changes occur or market expansion is unsatisfactory, market risks caused by capacity expansion may arise.