Yunnan Yuntianhua estimates to gain growth in net profits in the first three quarters of 2019 10-16-2019

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.

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