CHINA XLX FERT (01866) saw its shares rally more than 6% following the release of its interim results. As of the time of writing, the stock was trading 6.05% higher at HK$11.21, with turnover reaching HK$9.9255 million.

According to the company's 2026 interim report, revenue climbed 24.27% year-on-year to RMB 15.74 billion, while net profit surged 62.36% to RMB 1.23 billion. Profit attributable to owners of the parent increased 53.64% to RMB 921 million. The significant earnings growth was primarily driven by higher sales volumes of urea and synthetic ammonia, coupled with lower production costs that lifted gross margins. Additionally, price increases for self-produced chemical products such as methanol, DMF, and melamine also contributed to improved margin performance.

During the first half of the year, urea revenue rose 23% year-on-year to RMB 3.98 billion, with sales volume up 21% to 2.34 million tonnes. The average selling price increased 2% to RMB 1,704 per tonne, while the gross margin improved to 26.9%.

Analysts at CICC believe that with new capacity expansions and continuous technological upgrades, the company's economies of scale will become increasingly pronounced. This is expected to lower urea production costs and, in turn, drive profitability. The anticipated growth in urea and compound fertilizer production and sales volumes is set to sustain the company's earnings growth over the next two years.