2019 Interim Results Highlights:
银河彩票l Sales volume grew by 3.87% year-on-year to 6.98 million tons.
l Revenue increased by 8.61% year-on-year to RMB14.159 billion.
银河彩票l Gross profit advanced by 3.04% year-on-year to RMB1.119 billion.
银河彩票l Operating profit remarkably improved with profit attributable to shareholders surged by 42.22% year-on-year to RMB448 million.
(27 August 2019, Hong Kong) Sinofert Holdings Limited ("Sinofert" or the "Company", together with its subsidiaries collectively known as the "Group") (stock code: 00297) announced the interim results for the six months ended 30 June 2019 (the "Period").
During the Period, the Group posted revenue of RMB14.159 billion, up 8.61% from a year ago. Gross profit increased by 3.04% year-on-year to RMB1.119 billion. The Group’s operating results remarkably improved with the profit attributable to shareholders surged by 42.22% year-on-year to RMB448 million.
The global fertilizer demand lost steam in the first half of 2019. On the other hand, China’s fertilizer imports and exports rejuvenated due to the favourable adjustment in its tariff policy. Domestic fertilizer businesses therefore developed a closer link with overseas peers. While the government implemented stricter environmental regulations, the structural reform of China’s agricultural sector gathered momentum, leading to reduced fertilizer consumption and lower selling prices. Meanwhile, more small-scale producers who did not meet the environmental requirements were squeezed out from the market, driving up the production side’s processing costs. Under the weight of upstream and downstream negative factors, the overall gross margin of fertilizer sector retreated. The market experienced dramatic changes and restructuring. As increased number of obsolete production facilities were eliminated, many producers stepped up efforts to drive business upgrade and transformation. Some of them extended their value chain to both upstream and downstream and provided farmers with new integrated agricultural services. The Group optimized its business structure and innovated its business model, striving to become a leading crop nutrition technology marketer and services provider in China.
During the Period, the Group continued to pursue professionalism and lean operation, further expanded the scale of strategic procurement, reinforced marketing efforts for differentiated products and enhanced marketing services for downstream customers. As a result, its businesses grew at a relatively fast pace. In response to the government’s call for reduced consumption and more efficient use of fertilizers, the Group implemented innovation strategy and shifted its product mix towards environment-friendly and high-efficiency fertilizers, thereby creating a competitive edge with product differentiation. In the first half of 2019, the sales volume of its differentiated products reached 490,800 tons, up 35.43% from a year ago. They generated revenue of RMB1.101 billion, representing an increase of 45.06% year-on-year.
银河彩票As for basic fertilizer business, the Group forged a closer strategic partnership with domestic and overseas core suppliers in order to secure supplies at competitive terms. Meanwhile, it stepped up efforts to promote technology-based new products and reinforced the loyalty of downstream customers. While the Group actively developed E-commerce platform Fertex, the number of its registered users outstripped the original target. In the first half of 2019, the revenue from differentiated products grew by 18.87% year-on-year to RMB315 million. The sales volume of nitrogenous fertilizers and phosphate fertilizers increased by 15% and 21% year-on-year respectively. The revenue from basic fertilizers segment amounted to RMB9.876 billion and the profit from this segment increased by 10.49% year-on-year to RMB345 million. It remained the Group’s major profit contributor.
银河彩票During the Period, the Group proceeded with DTS channel strategy and established an integrated operating system which combined procurement, production and marketing. With accelerated product mix adjustment, the production of low-efficiency fertilizers was scaled down and more efforts were directed to boost the production and sales of differentiated products. In the first half of 2019, the revenue from differentiated products reached RMB786 million, up 59.11% from a year ago. The revenue from distribution segment was RMB3.349 billion, and the profit from this segment amounted to RMB105 million, up 6% from a year ago.
The gross profit margin of Sinochem Jilin Changshan Chemicals Co., Ltd., a production arm of the Company, substantially improved when compared with the same period last year, as it actively expanded synthetic ammonia operation. While all of its production were sold out, it returned to profitability. Meanwhile, Sinochem Yunlong Co., Ltd. optimized the phosphate mine development plan and overcame the difficulties arising from the China-United States trade friction and African swine fever. The feed-grade monocalcium phosphate (“MCP”) it produced in the Period reached 170,700 tons and the sales volume of MCP increased by 7.50% year-on-year to 177,800 tons. Its operating results significantly improved.
银河彩票As of 30 June 2019, the Group’s current ratio was 1.19 and its debt-to-equity ratio was 54.71%. In view of the Group’s relatively high credit lines with banks, Fitch Ratings reaffirmed its A- credit rating. Despite the credit crunch in domestic financial market, the Group got access to a variety of funding channels and took various measures to maintain a sound financial position.
银河彩票Looking ahead, Mr. Qin Hengde, Executive Director and Chief Executive Officer of Sinofert, said, "In the second half of 2019, the fertilizer sector is set to face severe challenges as the China-United States trade frictions will wreck a havoc on domestic agriculture. Nevertheless, new opportunities are arising for the Group to pursue the development of new business model and further transformation while the Chinese government vigorously promotes rural revitalization strategy, supply-side structural reform in the agricultural sector and the opening up of domestic agriculture in an orderly manner.”
Mr. Qin Hengde said, "The Group will focus on business transformation and upgrading, vigorously promote modern agricultural development, optimize its business structure and innovate its business model, thereby ensuring the steady growth of its operating results. While relentless efforts will be made to deepen its strategic partnership with domestic and overseas core suppliers, the Group will also attach great importance to procurement efficiency and profitability. Greater collaboration among different subsidiaries will be sought and an integrated platform linking trades and services together will be established. At the same time, the Group will optimize its supply chain and provide customers with Big Data and financial services. It will adhere to the strategy of further cultivating DTS channels and enhancing product differentiation. Relentless efforts will be made to ensure that the Yanjiang Industrial Park in Jiangling County developed by Sinochem Eco-agricultural Technology (Hubei) Company Limited (formerly known as Hubei Sinochem & Orient Fertilizer Co., Ltd.) will commence operation as scheduled. The Group will also carry out measures to ensure the smooth relocation of Sinochem Chongqing Fuling Chemicals Co., Ltd. Moreover, a market-driven R&D system will be developed, and enhanced R&D efforts on the development of technologies for the integration of irrigation and fertilization, core master batch of blended fertilizers and high-end compound fertilizers will be made. The Group will also exercise more stringent risk and safety management to ensure its safe operation.”