Press Release

(For immediate release)

China XLX Announces 2023 3Q Results

Comprehensive income attributable to owners of the parent surged 55% YoY

2023 3Q Results Highlights:

(5 November 2023, Hong Kong) China XLX Fertiliser Ltd. (“China XLX” or the “Company”, together with its subsidiaries collectively known as the “Group”) (HKSE:01866.HK) announced that the Group posted consolidated revenue of approximately RMB 5,461 million for the three months ended 30 September 2023, up 3% from a year ago. Net profit for the period grew 35% YoY to approximately RMB 378 million and the comprehensive income attributable to owners of the parent surged 55% YoY to approximately RMB 283 million.

In the first nine months of this year (the “Period”), the Group realized consolidated revenue of approximately RMB 17.52 billion, staying flat when compared to the same period of last year. Net profit for the Period reduced by 27% YoY to approximately RMB 1,156 million and the comprehensive income attributable to owners of the parent dropped 27% YoY to approximately RMB 829 million.

During the Period, the urea revenue declined by 4% YoY to approximately RMB 4,893 million, mainly due to lower urea prices caused by a supply glut and coal price slip. However, as the market supply and demand conditions improved and the feed costs gradually rebounded, urea prices for the third quarter edged up 5% from the previous quarter. The revenue from the sale of urea solution for vehicles in the Period dropped 21% YoY to approximately RMB 330 million. In view of higher demand for urea fertilisers compared to urea solution for vehicles, the Group further cut the output of urea solution for vehicles through flexible production, thus dragging down its sales volume.

Revenue from compound fertilisers for the first nine months of this year slightly decreased by 2% YoY to approximately RMB 4,687 million, mainly due to a drop in average selling price resulting from lower costs of feedstocks such as phosphate and potash fertilisers. Meanwhile, the impacts of lower price were partially offset by higher sales volume thanks to the Group’s enhanced efforts to expand into overseas markets and the completion of first batch of compound fertiliser export trade.

During the Period, revenue from methanol retreated by 9% YoY to approximately RMB 1,581 million. The decline was mainly attributable to lower average selling price of methanol as a result of ample market supply, slower-than-expected demand recovery and limited support from feedstock costs. However, as coal prices gradually stabilized, the methanol price declined at a slower pace in the third quarter when compared to the previous quarter. As the Group ramped up the overall utilization efficiency of its resources, the Jiangxi Production Base was named the Most Energy Efficient Model Enterprise (Methanol) in 2022. It was the first time that the production base was named the most energy efficient model enterprise both in terms of methanol and synthetic ammonia consumption, reflecting that the Group’s efforts to reduce energy consumption and increase efficiency have been widely recognized in the market.

Revenue from melamine for the first nine months of this year dropped 29% YoY to approximately RMB 571 million, mainly due to oversupply and soft demand in domestic market and lackluster demand in overseas markets. However, melamine price in the third quarter grew 9% from the previous quarter while the price of urea, the feedstock for melamine production, steadily picked up.

                                                                                                                                                                                                                      During the Period, revenue from medical intermediate business climbed 37% YoY to approximately RMB 439 million. The increase was mainly due to the continuous enrichment of the product mix, and higher sales volume brought by full utilization of newly-added production capacity. Revenue from liquid ammonia increased by 14% YoY to approximately RMB 1,684 million, mainly because the Group boosted liquid ammonia output and sales volume through in-depth flexible adjustment of production according to market demand and the profitability of its products. In the first nine months of this year, DMF generated revenue of approximately RMB 783 million, with the sales volume exceeded 174,000 tons and its market share reached 32%.

Looking ahead to the fourth quarter, Mr. Liu Xingxu, Chairman of China XLX, said, “International urea prices are set to rise sharply underpinned by the increase in energy costs and the world’s food prices amid global environment. As domestic coal demand for winter needs will be unleased, coal prices are expected to stay at high levels. Meanwhile, domestic urea supply will be capped on the government’s environmental policy to restrict production, hence keeping the market capacity at management levels in the short term. At the same time, fertiliser demand will be boosted by the expansion of arable area and the pent-up agricultural demand for autumn and winter needs. The market will remain in a tight balance, hence providing support to fertiliser prices. As for the chemical products, while favourable economic policies will be introduced one after another, demand from end-users will rebound and the business cycle for chemicals will resume to expand.”

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About China XLX Fertiliser Ltd.

China XLX Fertiliser Ltd. is one of the largest and most cost-efficient coal-based urea producers in China. It is principally engaged in developing, manufacturing and selling of urea, compound fertiliser, methanol, dimethyl ether, melamine, furfuryl alcohol, furfural, 2-methylfuran, pharmaceutical intermediates and related differentiated products. The Group adheres to the development strategy of “maintaining overall cost leadership and creating competitive differentiation" while strengthening the core fertiliser operations. With support of the resources in Xinxiang, Xinjiang and Jiangxi, it extends the value chain to upstream new energy and new materials and diversifies into coal chemical related products. The Company’s shares (stock code: 01866.HK) are traded on the main board of the Hong Kong Stock Exchange.

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