On October
10, 2019, Yunnan Yuntianhua Co.,Ltd (Yunnan Yuntianhua) announced its Earnings
Preannouncement for the first three quarters of 2019. It is demonstrated that
the net profits attributable to the shareholders of listed companies are
expected to reach about USD 18.36 million (RMB 130 million). Compared with the
net profits in the same period last year, which were USD 11.7 million (RMB
82.93 million), a sharp increase by 56.76% is likely to be witnessed.
Besides, the
amount of non-recurring gains and losses is around USD 26.4 million (RMB 187
million), with a year-on-year growth of USD 2.8 million (RMB 19.61 million). The
earnings are mostly attributed to equity acquisition from joint ventures, land
acquisition and governmental subsidies.
It is estimated
that a year-on-year reduction of losses at the value of USD 3.8 million (RMB
27.46 million) is able to be reached.
Yunnan Yuntianhua's net profits grow despite decreasing
prices of formaldehyde and methanol
According
to Yunnan Yuntianhua, the main reasons for the performance change are as
follows:
On the one
hand, the decreasing market prices of phosphorus compound fertilizer as well as
nitrogen fertilizer in the first two quarters of 2019 and the less demand of
the downstream market in the first quarter of 2019 have led to cheaper selling
prices of the formaldehyde and the methanol products of the company. Therefore,
a month-on-month reduction has been seen in the gross profits of the company's
main products.
On the
other hand, the improvement of cost competitiveness in the company's main
business plays an important role: thanks to the effective operational
management of the company's production equipment, the fixed costs of products
have been accordingly reduced in an effective way. Additionally, by means of
optimizing bulk purchase of raw materials, the purchasing costs of raw
materials have been cut down. Besides, the decrease of administrative expenses
is beneficial from strengthening the internal control and management of the
company. Furthermore, the major shareholding companies experience growth in net
profits and income from an investment. All these facts make a contribution to an
increase of the company's operating profits.
Yunnan Yuntianhua has an annual capacity of 10
million tonnes chemical fertilizer and 9.1 million tonnes phosphorus compound fertilizer
Yunnan
Yuntianhua is a large state-owned listed company in China. With phosphorus as its
core industry, the company is regarded as a manufacturer of phosphate
fertilizer, nitrogen fertilizer and co-POM. It mainly engages itself in chemical
fertilizer and modern agriculture, phosphate mining and phosphorus chemical
industry, organic new materials as well as trading and manufacturing services. The
company can annually produce 10 million tonnes of chemical fertilizer, 9.1
million tonnes of phosphorus compound fertilizer with high concentration and 18
million phosphate.
Under Yunnan
Yuntianhua there are eight subsidiaries, which can be divided into Chongqing
Polycomp International Corporation, Tianmeng Agricultural Chain Co., Ltd., Yunnan
Tianchi Logistics Co., Ltd., Yunnan Tianan Chemical Co., Ltd., Zhaotong Tianhe
Co., Ltd., Chongqing Tianqin Material Co., Ltd., Yunnan Tianteng Chemical Co.,
Ltd. and Hulun Buir Jinxin Chemical Co., Ltd.
In the
aspect of new energy battery business, Newmi Technological Co.,ltd. is a
subsidiary of Yunnan Yuntianhua. The subsidiary has an expertise of diaphragm technology
system and diaphragm products with the sizes of 5μm and 12μm. At present, Newmi
Technological owns a total capacity of 120 million square meters of diaphragm
and 2 production lines for dry method and wet method. LG, Li Shen battery,
Zhenhua Technology, Ha Guangyu and Weike battery all serve as the main clients
of Newmi Technological. It is reported that the company had an income of USD
22.3 million (RMB 158 million) in 2018 in terms of its diaphragm business. In
the first half year of 2019, the company achieved USD 918 thousand (RMB 6.5
million) as its operating income.
For more
information about Chinese phosphorus market, please have a look at our monthly
newsletter Phosphorus
Industry China Monthly Report.