CCM: Hubei Xingfa: revenue from glyphosate and glycine up 34.14 percent YoY in H1 2016 09-07-2016

On 26 July, 2016, Hubei Xingfa Chemicals Group Co., Ltd. (Hubei Xingfa, stock code: 600141) released its H1 2016 financial report, which showed that its revenue from glyphosate and glycine reached USD176.97 million (RMB1.17 billion), up 34.13% YoY, 18.29% of total revenue.

 


Source: Baidu


China's pesticide industry remained depressed in H1 2016. However, Hubei Xingfa's 60,000 t/a glyphosate project that runs better with its phosphorus and silicon business, was put into operation, reducing the company's cost of sales. Thanks to this, gross profit margin of glyphosate and glycine business maintained 13.31%. However, compared to H1 2015, the figure declined by 0.69 percentage point YoY, mainly because:

 

1. High spend in the glyphosate project and the short running time increased the cost of sales for Hubei Xingfa. In H1 2016, cost of sales from glyphosate and glycine business amounted to USD153.41 million (RMB1.02 billion), up 35.20% YoY, 18.26% of the total cost of sales.

 

2. Prices of glyphosate and glycine kept falling in H1 2016 – ex-works price of glyphosate 95% TC and glycine 98% was USD2,710/t and USD1,218/t, down 20.08% and 27.97% YoY respectively, according to CCM's price monitoring.

 

Notably, as of 30 June, 2016, Hubei Xingfa's total assets and total liabilities of glyphosate and glycine business hit USD474.71 million (USD3.15 billion) and USD249.08 million (RMB1.65 billion) separately.

 

Hubei Trisun Chemicals Co., Ltd. (Hubei Trisun), an subsidiary of Hubei Xingfa which is mainly engaged in glyphosate business, also achieved a total revenue of USD174.56 million (RMB1.16 billion) in H1 2016, up 25.05% YoY. Nevertheless, its net profit fell by 68.27% YoY to USD3.27 million (RMB21.67 million), only 7.94% of the 2016 contracted net profit USD41.19 million (RMB273.02 million). It is estimated that Hubei Xingfa is unlikely to reach the contracted performance this year.

 

                                                  Hubei Xingfa's financial figures by business, H1 2016

Item

Revenue (million USD)

YoY change (%)

Cost of sales (million USD)

YoY change (%)

Gross profit margin (%)

YoY change

Fertilizer

101.12

-19.28

95.83

-12.34

5.23

-7.51 percentage points

Glyphosate and glycine

176.97

+34.13

153.41

+35.2

13.31

-0.69 percentage point

                                    Source: Hubei Xingfa Chemicals Group Co., Ltd.'s H1 2016 financial report

 



Both total revenue and net profit of Hubei Xingfa recorded YoY falls in H1 2016:

  • Total revenue: USD997.89 million (RMB6.61 billion), down 0.84%
  • Net profit: USD5.21 million (RMB34.55 million), down 32.72%

 

"This was mainly because the slumping agricultural produce price and the continuously depressed international market dragged down the market price of phosphorus fertilizer," explained Hubei Xingfa. In H1 2016, Yidu Xingfa Chemicals Co., Ltd. (Yidu Xingfa), Hubei Xingfa's phosphorus fertilizer subsidiary, suffered a sharp YoY fall in financial performance and even made a loss. However, Hubei Xingfa said, "We can achieve a total revenue of USD2.10 billion (RMB13.90 billion) this year, a goal we set in early 2016, since 47.58% was completed in H1."

 

                                                              Hubei Xingfa's financial figures, H1 2016

Item

H1 2016 (million USD)

YoY change (%)

Total revenue

997.89

-0.84

Net profit

5.21

-32.72

-

As of 30 June, 2016 (million USD)

Change over 2015 (%)

Total assets

3,431.10

+6.4

Net assets

731.13

-0.51

                                        Source: Hubei Xingfa Chemicals Group Co., Ltd.'s H1 2016 financial report


 

In H2 2016, Hubei Xingfa may improve its profitability thanks to lower costs in financing. In H1, the company invested in glyphosate project, organic silicon project, phosphorus fertilizer project, etc., resulting in heavy liabilities. In respond to this, Hubei Xingfa is trying to reduce costs in financing through private placement, medium-term note issuance, and dedicated construction fund application.

 

Hubei Xingfa's major financing activities in H1 2016:

 

- 14 June: issued short-term financing bond, issue amount at USD75.44 million (RMB500 million), unit face value at USD15.09 (RMB100), issuing rate at 4.20%, value date: 16 June, 2016, date of payment: 16 June, 2017


- 18 April: planned for a private placement to raise no more than USD211.23 million (RMB1.40 billion), related work is in progress now


- 31 March: Yidu Xingfa obtained a capital increment of USD25.20 million (RMB167 million) from China Agricultural Development Key Construction Fund Co., Ltd. in cash, investment period lasts for 10 years, an annual return of 1.2% on investment


- 1 March: issued short-term financing bond mainly to repay the bank loan and reduce financing costs, issue amount at USD75.44 million (RMB500 million), unit face value at USD15.09 (RMB100), issuing rate at 3.78%, value date: 3 March, 2016, date of payment: 28 Nov., 2016

 

This article comes from Glyphosate China Monthly Report 1608, CCM 



 

About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.

 

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Tag: glyphosate  glycine  pesticide

 

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