Jiutian Chemical Group posts record FY20 net profit of $35.5 mil on surge in gross profit, other income and absence of impairment losses

Jiutian Chemical Group has posted earnings of RMB173.7 million ($35.5 million) for the FY2020 ended December, reversing from losses of RMB248.4 million in the FY2019.

This is the group’s highest earnings yet due to a surge in gross profit, other income and absence of impairment losses.

Earnings per share (EPS) for the FY2020 stood at 9.39 RMB fen from loss per share of 13.66 RMB fen.

For the 4QFY2020, Jiutian reported earnings of RMB86.2 million from losses of RMB237.6 million.

FY2020 revenue grew by 9% y-o-y to RMB1.15 billion due mainly to higher selling prices of dimethylformamide (DMF) and methylamine.

EPS for the 4QFY2020 stood at 4.66 RMB fen from loss per share of 13.07 RMB fen.

The average selling prices (ASPs) of DMF and methylamine were RMB5,983 per tonne and RMB7,525 per tonne respectively over the FY2020, 34% and 3% higher y-o-y than that of FY2019.

However, sales volume of DMF and methylamine stood 15% lower and 10% higher y-o-y

The increase in ASPs were mainly due to the recovery of China’s economy from the Covid-19 crisis, which resulted in stronger demand for the group’s products and the closure of one of its largest competitors in the market.

Gross profit for the FY2020 surged 267% y-o-y – or over three times – to RMB274.8 million due to the higher ASPs and lower purchase price per tonne of methanol, one of the group’s key raw materials.

As a result, gross profit margin (GPM) surged to 24% y-o-y in FY2020 from 7% y-o-y.

Other income increased almost 10 times – or 725% y-o-y to RMB30.5 million mainly due to reversal of impairment loss of property, plant and equipment arising from the significant improvement in financial performance of Anyang Jiutian.

Share of loss of associated companies for the FY2020 improved 94% y-o-y to RMB9.5 million from RMB146.8 million in FY2019.

The RMB136.6 million improvement in other expenses for the year came about from the absence of impairment of property, plant and equipment at Henan Herunsheng Isotope Technology Co, a subsidiary of the group.

As at end-December, cash and cash equivalents nearly doubled to RMB256.7 million.

No dividend has been declared.

“2020 was an extraordinary year for us. Despite the global market uncertainty caused by the Covid-19 pandemic, we are pleased to see a significant improvement of our operating results in FY2020 compared to the corresponding previous year,” says Han Lianguo, Jiutian’s chairman.

“The positive results are due to the continuing recovery of China’s economy from the depth of the Covid-19 crisis and a surge in demand for our main products of DMF and methylamine from downstream users, who in turn are experiencing strong growth in both local and export markets for their products.”

“Going forward, to meet the rising demand for our methylamine products from users in sectors experiencing high growth rates including electric-vehicle batteries, semiconductor, pharmaceuticals and animal feeds, we are in the process of finalising an expansion plan comprising a new 100,000 ton methylamine plant adjacent to our current 120,000 ton methylamine/ DMF facility. Details of the proposed expansion plan will be announced in due course,” he adds.

Shares in Jiutian closed flat at 10.7 cents on Feb 23.