The Zhitong Finance App learned that Southwest Securities released a research report saying that for the first time, China Heart Link Chemical Fertilizer (01866) was given a “buy” rating. The net profit compound growth rate for the next three years is expected to be 31%, 10 times PE in 2026, and the corresponding target price is HK$12.83 (calculated based on the median exchange rate of HK$1 = RMB 0.85712). The company released its 2026 three-quarter report. In the first three quarters of 2026, the company achieved operating income of 23.047 billion yuan, up 28% year on year; net profit to mother was 1,138 billion yuan, up 42% year on year; of these, the third quarter achieved operating income of 7.307 billion yuan, up 38% year on year; and net profit to mother was 217 million yuan, up 8% year on year.
The main views of Southwest Securities are as follows:
Urea compound fertilizer integration leader, continuing to expand business layout
China Heart Link Chemical Fertilizer started in 1969 and was listed on the Hong Kong stock market in 2009. It is a leading domestic urea and compound fertilizer enterprise with advanced coal gasification technology as the core. Relying on three mature bases in Xinxiang, Henan, Manas, Jiangxi, and two major bases under construction in Zhundong and Guangxi, it has built a diversified product system of “main fertilizer industry+basic chemical+fine chemicals/new materials”. The products include urea, compound fertilizer, automotive urea solution, liquid ammonia, methanol, dimethyl ether, melamine, DMF, etc. A variety of products, leading the industry in urea production and sales volume, and ranking first in the industry in compound fertilizer production and sales. The company insists on focusing on the upgrading and development direction of clean coal chemicals to ensure the advantages of the main fertilizer business, while developing new energy and new materials and chemicals, forming an industrial development pattern of “fertiliser-based, fertiliser combined”.
Continuously optimize the product structure to achieve a sharp rise in product volume and price
Thanks to product structure optimization and cost control, the company's overall gross profit increased by 43% year on year; as Jiangxi Phase II and the new chemical materials project were put into operation on schedule, urea production increased by 780,000 tons year on year, and sales of high-efficiency urea increased 17% year on year. With gross profit per ton of 34 yuan higher than ordinary urea, the overall gross profit of urea increased by 450 million yuan. Through the cost advantage of coal-to-methanol integration, we promoted the upgrading of various chemical products to high-value-added fields, increased the share of differentiated products such as pharmaceutical-grade DMF and modified polyformaldehyde, achieved a sharp rise in the volume and price of chemical products, and promoted a year-on-year increase of 650 million yuan in gross profit of chemical products in the first three quarters, an increase of 77%.
Capacity expansion combined with product structure optimization to consolidate low cost+differentiation advantages
The new chemical materials project urea plant at the Xinxiang base was successfully put into operation in September 2026. The project uses the patented technology for extracting urea from international advanced casali ammonia vapor, and the energy consumption of the device has been significantly optimized, which effectively reduces the unit production costs of liquid ammonia and urea at the Xinxiang base by 45 yuan/ton and 26 yuan/ton respectively; Xinjiang Zhundong Phase I (320,000 tons of melamine+500,000 tons of high-efficiency compound fertilizer) has entered joint testing. It is expected to be put into operation in the fourth quarter of 2026. Guangxi Guigang Phase I (1.2 million tons of synthetic ammonia +650,000 tons of urea + 1 million tons of high-efficiency fertilizer) The plan progresses and is expected to be in 2027 It was put into operation in the third quarter. After delivery, the above projects will further reduce the company's costs and enhance market competitiveness. In addition, the company has built platforms such as the Central Research Institute and the Greater Bay Area Polyformaldehyde Modification Research and Development Center to promote the transformation of technological achievements into high-value-added products. Black urea targets high-end cash crops, and brings the company an annual profit of over 100 million yuan.
Risk warning: risk of export policies and trade barriers; risk of new project commissioning and progress falling short of expectations; safety and environmental risks.