Ammonium nitrate and melamine see simultaneous increases in volume and price! Xuefeng Technology achieves profit growth in the first half of the year despite the headwinds.

On the evening of August 17, Xuefeng Technology (603227) released its 2026 semi-annual report. In an environment where industry product prices are under pressure and revenue scale has contracted slightly, the company relied on the synergy between its energy-chemical and civil explosives dual main businesses to achieve a counter-trend increase in profits. The chemical sector became the core engine for profit improvement, further consolidating the profitability quality of the main business.

Semi-Annual Performance: Counter-Trend Profit Growth Amid Industry Pressure

In the first half of 2026, Xuefeng Technology achieved operating revenue of 2.537 billion yuan; net profit attributable to shareholders was 254 million yuan, a year-on-year increase of 9.85%; and net profit attributable to shareholders excluding non-recurring gains and losses was 238 million yuan, a year-on-year increase of 7.24%.

In terms of profit structure, non-recurring gains and losses were only 16.0204 million yuan, accounting for approximately 6.3% of net profit attributable to shareholders. Profit growth was mainly derived from the main business, not relying on one-time gains, indicating good profit quality. The company's business focus is rooted in Xinjiang, with the Xinjiang region achieving main business revenue of 1.783 billion yuan, accounting for 71% of total revenue, fully benefiting from market opportunities brought by local energy development and construction.

The company has constructed a Mining Service & Civil Explosives + Energy & Chemical dual main business model, opening up the complete circular industrial chain of "Natural Gas → Synthetic Ammonia → Ammonium Nitrate → Civil Explosive Products → Blasting Services." The upstream and downstream linkage of the chemical sector and the civil explosives sector realizes internal supporting of raw materials and industrial complementarity for efficiency gains.

Energy & Chemical Sector: Volume and Price Improvement of Multi-Category Chemical Products, Gross Margin Significantly Increased

As the only ammonium nitrate production enterprise in Xinjiang, Xuefeng Technology uses natural gas as the source to build a chemical circular industrial chain. Existing capacity covers 660,000 tons of ammonium nitrate, 400,000 tons of synthetic ammonia, 600,000 tons of urea, 210,000 tons of melamine, 900,000 tons of nitro-compound fertilizer, 300,000 tons of UAN liquid fertilizer, and 240,000 tons of LNG. The produced ammonium nitrate is directly supplied to the company's own civil explosives sector, achieving self-sufficiency in key raw materials.

During the reporting period, the chemical business achieved revenue of 1.239 billion yuan, a year-on-year increase of 4.56%. The sector's gross margin increased from 14.60% in the same period last year to 20.42%, becoming the main driver of the company's profit recovery. In the first half, the total sales volume of major chemical products such as urea, compound fertilizer, ammonium nitrate, and melamine was 532,800 tons, a slight year-on-year increase of 2.50%. Among them, the average market price of melamine increased by 14.02% year-on-year, and the price of ammonium nitrate increased by 3.09% compared to the beginning of the year. The recovery in volume and price, combined with internal cost control, drove a significant improvement in the profitability of the chemical sector.

Facing market price fluctuations of natural gas and LNG, the company actively adjusted the rhythm of LNG production and sales. The gross margin of this business turned from negative to positive, demonstrating the chemical sector's ability to resist cyclical changes.

Civil Explosives Business: Blasting Service Profitability Strengthens, Integration Offsets Decline in Engineering Volume

Relying on the supporting advantage of ammonium nitrate raw materials from the upstream chemical end, the civil explosives sector implements an integrated operation of production, sales, and blasting services, holding dual Grade-I qualifications for mining engineering construction general contracting and commercial blasting operations. Existing capacity includes 190,500 tons of industrial explosives, 11.43 million units of electronic detonators, and 12 million meters of detonating cord.

In the first half, 73,900 tons of industrial explosives were produced, a year-on-year increase of 24.28%; digital electronic detonators were 3.89 million units, a year-on-year decrease of 6.82%; and detonating cord was 2.04 million meters, a year-on-year increase of 16.72%. Affected by the market environment, the volume of earth and rock excavation and transportation engineering decreased by 30.74% year-on-year. However, blasting service business revenue was 844 million yuan, and the gross margin increased from 25.74% to 31.75%, the highest among all business sectors. Relying on the integrated service model and refined cost control, the civil explosives service sector achieved a counter-trend improvement in profitability.

R&D Investment Significantly Increased, Continuously Strengthening the Circular Chemical Industry Chain

During the reporting period, the company's R&D expenses were 22.027 million yuan, a significant year-on-year increase of 297.43%; a total of 276 patents have been granted, including 37 invention patents, and 5 high-tech enterprises have been cultivated. Investment in R&D related to intelligent manufacturing, chemicals, and civil explosives continues to increase.

The company's subsequent planning will continue to strengthen the "Natural Gas - Synthetic Ammonia - Ammonium Nitrate - Civil Explosive Products - Blasting Services" circular chemical industry chain, promote chain supplementation and strengthening, fully release the endowment of Xinjiang's natural gas resources and the advantages of full industrial chain synergy, continuously reduce costs and increase efficiency, and consolidate the business pattern of dual-wheel drive led by mining service & civil explosives and energy & chemicals.

>Tip: This article is based on the public semi-annual report of a listed company and does not constitute investment advice.