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Sinofert’s Profit for 1H2018 Substantially Increases

Date:2018-08-31     source:

2018 Interim Results Highlights:

Revenue  grew 24.53%  year-on-year to RMB13.037 billion, with across-the-board revenue growth in all major fertilizer products.

银河彩票Profit attributable to the Company’s shareholders  substantially increased to RMB315 million when compared with the same period last year.

The Group will seize opportunities arising from the supply-side structural reform in agriculture  and the transformation of its industrial structure, optimize the business structure and carry out further measures to cut costs and improve operating efficiency, thereby driving the stable and sustainable development of the Company .

(30 August 2018, 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 2018  (the "Period").  The Group’s  revenue  for the Period  grew 24.53% year-on-year to RMB13.037 billion. Profit  attributable to  its  shareholders substantially increased to RMB315 million when compared to the same period last year. Earnings per share climbed nearly 24 times year-on-year to RMB4.48 fen.

During the Period,  the operating costs of fertilizer enterprises shot up due to stricter environmental regulations in China,  increased circulation expenses and the  imminent  implementation of  the “Classification of Fertilizers and Related Requirements”. Transformation and upgrading of fertilizer industry accelerated with market players expanding upstream and downstream so as to provide new integrated agro-services to farmers. In the face of tremendous challenges in the market, the Group seized the opportunities brought about by the government’s initiative to promote the development of modern agricultural system, producti on system and operational system. With an emphasis on business transformation and upgrading, it optimized its business structure and pursued various measures to reduce costs and boost operational efficiency hence ensuring the stable and sustainable development of its businesses. 

The Group expanded the scale of its strategic procurement in order to secure the stable supply of premier products. At the same time, it forged closer cooperation with core customers and took advantage of higher selling prices of major fertilizer  products  to enhance the integrated marketing services for downstream customers. As a result, the sales volume of its major fertilizer products, namely potash fertilizers, nitrogenous fertilizers, phosphate fertilizers and compound fertilizers,  grew by 16.79%, 10.73%, 8.33% and 9.09% from a year ago. The average selling price of these products increased by 12.85% year-on-year.

The breakdown of the  revenues  of major fertilizer products by type are as follows: the  revenue  of potash fertilizers grew by 23.51% year-on-year to approximately RMB2.925 billion; the revenue of nitrogenous fertilizers grew by 34.52% year-on-year to approximately RMB2.9 billion;  the  revenue  of 
compound  fertilizers  grew by 16.33% year-on-year to approximately RMB3.377 billion; the  revenue  of  phosphate fertilizers  grew by 27.04% year-on-year to approximately RMB2.667 billion.

Basic Fertilizer Division generated  revenue  of RMB8.641  billion in the Period, representing a  29.47% year-on-year growth and accounting for 66.28% of the Group’s aggregate revenue. This segment profit of this division amounted to RMB426 million, up 18.33% year-on-year and accounting for 91.59% of total profit. It remained the major profit contributor to the Group.

As for  the operations of  Distribution Division, the Group further expanded  in-depth distribution channel, technical marketing channel and selling channel for big customers  (DTS channels),  improved the product structure and  created a comprehensive  operational system  covering  procurement, production and marketing. As a result, the efficiency of its value chain substantially improved. The revenue from Distribution Division grew 20.94% year-on-year to RMB3.307 billion, while the segment profit of this division advanced by 29.94% year-on-year to RMB66 million.

Meanwhile, the operational efficiency of the Group’s major production units was further enhanced. Thanks to the stable production of  Sinochem Jilin Changshan Chemical, a subsidiary of the Company, the operating results of Production Division further improved. Its profit margin grew from 18.89% in the first half of 2017 to 21.88% for the Period.

The Group maintained a sound financial position with improvements in various major performance indicators. As at 30 June 2018, the return on its net assets improved by 4.19 percentage points to 4.35% when compared with the same period last year. Its debt-to-equity ratio decreased by 26.55  percentage points to 50.68%. Moreover, the Company’s credit rating was raised by  Fitch  Group from BBB+ rating to A- rating.

银河彩票Looking ahead,  Mr. Qin  Hengde, Executive Director and Chief Executive Officer  of Sinofert, commented, "With  further  implementation of the supply-side structural reform in agricultural sector, large-scale operating entities  are rising  with the transformation of domestic agriculture towards  mechanization, automation and  intelligence. Being a leading fertilizer enterprise  in China, Sinofert will actively promote the modernization of domestic agriculture and the healthy development of fertilizer industry. We will further strengthen our distribution channels and reinforce our cooperation with core suppliers of Basic Fertilizer Division. While enhancing our strategic procurement model,  we will step up efforts to expand the marketing regions so as to improve our marketing capability.”

Mr. Qin  Hengde  said, "The Group will centralize the brand planning for agricultural fertilizer operations, strengthen our product mix and marketing and promotion strategy management. While optimizing the distribution structure, we will further implement the DTS channels strategy, compress distribution layers and actively explored new business models for  developing a modern agricultural platform for cash crops, thereby serving large-scale growers directly. At the same time, we will beef up the overall management standards of our production units, strive hard to reduce efficiency and lower costs in conjunction with efforts to enhance risk management and our capability to secure stable supply of quality fertilizer products. By enhancing our overall competitiveness, we aim to create greater value to shareholders.”