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
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Tag: glyphosate glycine pesticide