China XLX Fertiliser Ltd. (1866) AI Stock Analysis

• Market Cap: HK$15.48B
• Dividend Yield: 3.23%
• Average Volume (3M): 2.60M
• Price to Earnings (P/E): 2.6
• Beta (1Y): 0.55
• Revenue Growth: 0.82%
• EPS Growth: 2.99%
• Country: HK
• Employees: 11,787
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Agricultural Inputs
• EPS (TTM): N/A
• Shares Outstanding: 1,283,241,000
• 10 Day Avg. Volume: 2,461,100
• 30 Day Avg. Volume: 2,602,280
• PEG Ratio: 0.14
• Price to Book (P/B): 0.52
• Price to Sales (P/S): 0.20
• P/FCF Ratio: -3.07
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 71 Outperform
• Price Target: HK$11.50 ▲(35.61% Upside)
• Action: Reiterated Date: 02/03/26
• Date: Action: Reiterated 02/03/26

The score is driven primarily by solid financial performance in operations but constrained by high leverage and negative free cash flow. Technicals add support with an established uptrend and positive momentum, while valuation is a key positive with a low P/E and a moderate dividend yield.

Positive Factors

Stable revenue and gross margin

Consistent TTM revenue growth (1.29%) and a steady ~17% gross margin indicate durable demand for core fertilizer products. Stable gross margins reflect cost discipline and pricing power in an essential-input industry, supporting predictable earnings over months.

Efficient capital use and healthy operating margins

A ROE of 14.82% alongside healthy EBIT/EBITDA margins signals effective deployment of equity and strong operational profitability. This durability supports reinvestment capacity and potential shareholder returns even through agricultural cycles.

Scale and market positioning

Large production capacity and economies of scale enable competitive pricing and margin resilience. Strategic ties with distributors and cooperatives reinforce market reach for essential nitrogen fertilizers, underpinning structural demand and long-term market position.

Negative Factors

High financial leverage

A debt-to-equity ratio of 1.46 is a material leverage burden that can amplify earnings volatility and limit strategic flexibility. Elevated leverage raises refinancing and interest coverage risk, particularly if fertilizer prices or margins deteriorate over the medium term.

Weak cash conversion and negative free cash flow

Negative free cash flow and an OCF-to-net-income ratio of 0.18 point to weak cash conversion. Limited free cash constrains ability to pay down debt, finance capex, or return capital, increasing liquidity risk and reducing buffers against cyclical downturns.

Downward pressure on net margins

A decline in net margin to 6.31%, despite steady gross margins, suggests rising operating or financing costs or limited pricing power. Sustained margin compression would hinder earnings growth, weaken cash flows, and make deleveraging more difficult over time.

China XLX Fertiliser Ltd. Business Overview & Revenue Model

Company Description

China XLX Fertiliser Ltd. (1866) is a leading manufacturer and supplier of chemical fertilizers, primarily operating within the agricultural sector. The company specializes in the production of urea, ammonium nitrate, and other nitrogen-based fertilizers, which are essential for enhancing crop yield and quality. With a robust presence in the Chinese market, China XLX Fertiliser Ltd. focuses on meeting the growing demand for agricultural products driven by the country's increasing food production needs.

How the Company Makes Money

China XLX Fertiliser Ltd. generates revenue primarily through the sale of its chemical fertilizers, which are marketed to agricultural producers and distributors across China and potentially in other regions. The company benefits from economies of scale due to its large production capacity, enabling it to offer competitive pricing. Key revenue streams include direct sales of urea and ammonium nitrate, as well as potential value-added products or services related to fertilizer application and agricultural consultancy. Additionally, strategic partnerships with agricultural cooperatives and distribution networks enhance market penetration and customer reach, contributing significantly to the company's overall earnings.

China XLX Fertiliser Ltd. Financial Statement Overview

Summary

Income statement strength (stable revenue growth and healthy EBIT/EBITDA margins) is tempered by balance sheet leverage (debt-to-equity 1.46) and weaker cash flow quality (negative free cash flow and low operating cash flow to net income at 0.18).

Income Statement

China XLX Fertiliser Ltd. shows a stable revenue growth trajectory with a TTM revenue growth rate of 1.29%. The gross profit margin remains consistent at around 17%, indicating efficient cost management. However, the net profit margin has slightly decreased to 6.31% in the TTM, reflecting some pressure on profitability. EBIT and EBITDA margins are healthy, suggesting strong operational performance.

Balance Sheet

The company has a high debt-to-equity ratio of 1.46, indicating significant leverage, which could pose financial risks. However, the return on equity is robust at 14.82%, showcasing effective use of equity to generate profits. The equity ratio is not explicitly provided, but the balance sheet shows a solid equity base relative to assets.

Cash Flow

Operating cash flow remains positive, but free cash flow is negative, indicating potential liquidity challenges. The operating cash flow to net income ratio is 0.18, suggesting moderate cash generation efficiency. The free cash flow to net income ratio is low at 0.09, highlighting the need for improved cash management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	23.73B	23.13B	23.48B	23.07B	16.98B	10.44B
Gross Profit	3.62B	3.93B	4.17B	4.35B	4.39B	2.21B
EBITDA	3.24B	3.38B	3.75B	4.13B	3.83B	1.82B
Net Income	1.37B	1.46B	1.19B	1.33B	1.30B	347.66M
Balance Sheet
Total Assets	36.04B	32.52B	29.13B	27.87B	25.51B	20.96B
Cash, Cash Equivalents and Short-Term Investments	2.37B	895.06M	1.17B	1.48B	906.19M	698.13M
Total Debt	15.75B	13.07B	11.76B	12.71B	11.93B	9.94B
Total Liabilities	22.90B	20.00B	18.62B	18.30B	17.55B	14.53B
Stockholders Equity	9.55B	8.96B	7.69B	6.89B	5.69B	4.53B
Cash Flow
Free Cash Flow	-2.99B	-1.52B	1.86B	612.63M	-1.11B	-2.23B
Operating Cash Flow	2.52B	3.35B	5.33B	4.38B	2.75B	1.70B
Investing Cash Flow	-5.12B	-4.29B	-3.47B	-3.72B	-3.73B	-3.90B
Financing Cash Flow	2.94B	665.77M	-2.16B	-82.18M	1.19B	2.00B

China XLX Fertiliser Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 8.48
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:1866, the sentiment is Positive. The current price of 8.48 is below the 20-day moving average (MA) of 11.43, below the 50-day MA of 10.63, and above the 200-day MA of 7.85, indicating a bullish trend. The MACD of 0.33 indicates Positive momentum. The RSI at 58.93 is Neutral, neither overbought nor oversold. The STOCH value of 47.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HK:1866.

China XLX Fertiliser Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1866	71 Outperform	HK$15.48B	2.57	14.82%	3.23%	0.82%	2.99%
0297	71 Outperform	HK$13.28B	1.86	10.37%	3.66%	-0.34%	64.10%
3983	69 Neutral	HK$15.95B	3.45	5.56%	5.44%	-8.24%	-24.53%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
0609	61 Neutral	HK$1.30B	6.73	2.46%	3.52%	-5.29%	-32.47%
1702	59 Neutral	HK$1.04B	3.33	3.65%	2.20%	-8.51%	-68.34%
2198	52 Neutral	HK$5.02B	1.52	13.87%	―	9.20%	213.87%

China XLX Fertiliser Ltd. Corporate Events

China XLX Fertiliser Launches HK$200 Million Share Buy-Back Plan

China XLX Fertiliser Ltd. has approved a new share repurchase scheme that authorises market buy-backs of up to 10% of its issued share capital (excluding treasury shares), capped at HK$200 million, for the period from 13 January 2026 to 31 December 2026. The programme, which is contingent on the existing and future shareholder repurchase mandates, will see repurchased shares held as treasury stock to optimise the capital structure and provide flexibility for employee incentive plans and potential mergers and acquisitions, signalling management’s confidence in the company’s long-term prospects and its intention to enhance shareholder returns without impairing day-to-day operations, though execution will ultimately depend on market conditions.

The most recent analyst rating on (HK:1866) stock is a Hold with a HK$8.50 price target. To see the full list of analyst forecasts on China XLX Fertiliser Ltd. stock, see the HK:1866 Stock Forecast page.

China XLX Fertiliser Granted Waiver for Joint Company Secretary Compliance

China XLX Fertiliser Ltd., listed on the Hong Kong Stock Exchange, has been granted a new waiver from strict compliance with certain listing rules due to a change in joint company secretary. This waiver, effective until June 2028, allows Ms. Cheok Hui Yee to be assisted by Ms. Kam Mei Ha Wendy, ensuring compliance with corporate governance standards. The waiver could be revoked if there are material breaches of the listing rules, and the company must demonstrate Ms. Cheok’s capability to independently fulfill her role by the end of the waiver period.

The most recent analyst rating on (HK:1866) stock is a Buy with a HK$9.00 price target. To see the full list of analyst forecasts on China XLX Fertiliser Ltd. stock, see the HK:1866 Stock Forecast page.

China XLX Fertiliser Ltd. Announces Key Corporate Secretarial Changes

China XLX Fertiliser Ltd. announced a change in its corporate secretarial team, with Mr. Man Yun Wah resigning and Ms. Kam Mei Ha Wendy taking over as Joint Company Secretary, Authorised Representative, and Process Agent. The company also received a waiver from strict compliance with certain Hong Kong Listing Rules, which will remain in effect for three years, contingent on specific conditions.

The most recent analyst rating on (HK:1866) stock is a Buy with a HK$9.00 price target. To see the full list of analyst forecasts on China XLX Fertiliser Ltd. stock, see the HK:1866 Stock Forecast page.