On 26 April, 2016, Henan Billions Chemicals Co., Ltd. (Henan Billions) released its financial figures for the first quarter
of 2016 (Q1 2016). Key figures for this period are:
Revenue: USD97.58 million (RMB630 million),
up by 1.60% YoY
Net profit: USD2.56 million (RMB16.53
million), up by 14.70% YoY
Source: Bing
Henan Billions expects its net profit to reach USD10.83-14.44 million
(RMB69.95-93.26 million) in the first half of 2016, with a sharp YoY growth of
about 50%-100%, as the TiO2 price continues to grow and the company further
enhances its management and reins in operating costs.
It is worth noting that the price at which Henan Billions is currently selling
TiO2 is still lower than that in the corresponding period last year despite
five consecutive price rises in 2016. Its comprehensive gross profit margin
also dropped by 1.2 percentage points YoY to 17.70% in Q1 2016. The growth of
both revenue and net profit in this period was mainly due to the significant
increase in the volume of TiO2 sales.
In March 2016, general secretary of Henan Billions, Shen Qingfei, predicted
that the TiO2 price would continue to grow over the first half of the year. His
prediction was based on a sharp fall in the company's inventory level (compared
to that in Jan. 2016), which fell to about 10,000 tonnes, the company receiving
plenty of new orders, and increased trading frequency for a wide variety of
products, which has led to tight supply.
Sichuan Lomon Titanium Co., Ltd. (Sichuan Lomon), a leading domestic company
acquired in 2015 by Henan Billions, stopped taking any new orders in April for
the following two reasons:
1. It had already taken on too many orders, and because of this had a long
two-month lead time for processing orders;
2. The possibility that the TiO2 price may continue to grow in the near future
spurred Sichuan Lomon to hold off on taking new orders for the time being.
Effective control over production costs and high product quality boosted Henan
Billions' sales volume and sales price of TiO2 in Q1 2016. Based on this, CCM
believes that Henan Billions will improve its performance in the near future as
the domestic TiO2 leader keeps enriching its business profile and expanding its
market shares.
On 22 April, 2016, Henan Billions announced that it has been providing
financing guarantees for its four subsidiaries. In particular, it has provided
a financing guarantee for its wholly-owned subsidiary Billions (Hong Kong) Co.,
Ltd. for USD92.93 million (RMB600 million), which will be used to boost the
development of the subsidiary's import and export business.
Henan Billions has
guaranteed financing for another of its wholly-owned subsidiaries, Billions
Europe Limited, guaranteeing USD36 million to help the company further explore
the European market.
On 26 April, 2016, Henan Billions announced that it plans to cooperate with
Zhejiang United Pigment Co., Ltd. to build a joint venture (Jiaozuo Billions
United Pigment Co., Ltd.). The new subsidiary will be mainly engaged in the
production of iron oxide pigments with a designed iron oxide production
capacity of nearly 100,000 t/a.
The iron oxide production line will take full
advantage of ferrous sulfate supplied by Henan Billions (a by-product of TiO2).
Utilizing by-products of its TiO2 will help Henan Billions to further improve
its profit margin.
This article comes from Titanium Dioxide China Monthly Report 1605, CCM
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Tag: TiO2 Chemicals