China XLX Fertilizer (01866) was first covered by Guotai Junan Securities (Hong Kong)

Guotai Junan Securities (Hong Kong) first covered China XLX Fertilizer (01866) on June 21. The research report pointed out that China's fertilizer market is transforming to high-quality compound fertilizer, and XLX company can further expand its market share by virtue of its technology and cost advantages, and achieve higher revenue and net profit growth than its peers. "Buy" rating with a target price of HK $5.70.

  The bank said that XLX  has a dual driving force of technical advantages and cost advantages. The company has invested heavily in research and development over the years, and has always been at the forefront of domestic technology in terms of energy conservation and emission reduction, and has continuously developed high-quality fertilizer products that meet the needs of China's modern agriculture.

  By expanding production capacity and optimizing the supply chain, the company has greatly reduced costs and improved the market competitiveness of its products. To produce high-quality fertilizer products at a cost better than the national standard and lower than the industry average standard, so that the company can seize the opportunity in the high-quality development and transformation of the fertilizer industry.

  As an industry pioneer, the company has an extensive marketing network and brand awareness. With the further consolidation of the fertilizer industry, the company will leverage its advantages to achieve greater market expansion and profit growth.

  The competition in the high-end compound fertilizer market is not as fierce as expected. Xinlianxin has a mature high-end compound fertilizer brand, and takes the lead in positioning itself as "China's efficient fertilizer advocate" in the industry, establishing a distinct image of high-end compound fertilizer manufacturers.

  The current growth potential of overseas markets is underestimated, and global fertilizer demand will continue to grow, especially in regions such as Africa and Asia, where population growth is rapid and agricultural potential is huge. With the establishment of Jiangxi XLX Supply Chain and XLX Chemical Co., LTD. (Thailand) in August 2023, the company is further accelerating its international trade layout, and overseas markets are expected to become an important growth engine for the company in the future.