Shares of CHINA XLX FERT (01866) climbed more than 4% before the midday break. At the time of writing, the stock was up 3.88%, trading at HKD 11.78 with a turnover of HKD 30.57 million. The increase follows the company's release of a positive profit alert for the first quarter. CHINA XLX FERT anticipates revenue to be between RMB 6.7 billion and RMB 7.0 billion, representing a year-on-year increase of 15% to 20%. Net profit attributable to shareholders is forecast to be in the range of RMB 280 million to RMB 300 million, a significant surge of 41% to 52% compared to the same period last year. The company attributed the substantial earnings growth primarily to a simultaneous increase in both volume and price of its core products, which drove an overall improvement in gross profit margin. Analysis suggests that the company's profit recovery is not a one-time event but stems from the convergence of its capacity expansion cycle and an industry upturn. New projects were completed during a period of low industry sentiment and are now commencing operations just as market conditions improve, creating a powerful operating leverage effect where profit growth significantly outpaces revenue growth. Furthermore, a shift in valuation logic is underway. Historically, the fertilizer sector has been viewed by the market as a typical cyclical industry, with investors accustomed to valuing companies at a price-to-earnings (P/E) ratio of 5 to 8 times. The uniqueness of the current market phase lies in the industry's transition from being primarily driven by price fluctuations to being increasingly driven by fundamental value.