Coal Chemical Industry Soars: Record Profits in 2018 First Half in 5 Years
The financial statements for the first half of 2018 revealed the status of various industries in light of global economic factors, such as the increase in the global oil price. Among the industries, the petrochemical sector experienced a recovery, and the coal chemical industry also demonstrated positive performance.
Since the beginning of the year, there has been a notable rebound in the stocks of the coal chemical industry. According to data from iFinD, the overall net profits of 48 coal chemical concept stocks in the first half of the year increased from 9.38 billion yuan to 23.44 billion yuan (approximately 3.4 billion US dollars) compared to the previous year, indicating a substantial 66.7% year-over-year revenue growth.
Remarkably, the coal chemical industry achieved its best performance in the past five years during the first half of 2018, with an average net profit of ￥488 million (around $70.5 million). This stands out compared to the figures of the preceding years: ￥172 million (2014), ￥132 million (2015), ￥107 million (2016), and ￥293 million (2017).
An analyst specializing in the chemical industry explained that the stability in the price of raw coal, following the increase in petroleum prices, contributed to improved cost control for raw materials across the coal chemical industry. Consequently, the overall economic efficiency experienced a significant rise.
Out of the 48 mentioned stocks, 42 reported profits in the first half of the year. Noteworthy performers include Yanzhou Coal Mining Company Limited, China Coal Energy Company Limited, Luxi Chemical Group Co., Ltd., Shangdong Hualu-Hengsheng Chemical Co., Ltd., Datang International Power Generation Co., Ltd., and China National Chemical Engineering Co., Ltd. Their net profits saw growth rates of 31.89%, 16.96%, 5.5%, 5.45%, 10.8%, and 8.47%, respectively.
While Yanzhou Coal Mining Company Limited had the highest net profit, its operating revenue experienced a 5.52% year-on-year decrease. The company attributed this change to increased revenue from self-produced coal sales and sale prices, adding ￥9.24 billion, while other operating income decreased by ￥13.76 billion.
Additionally, statistics indicate that the net profits of 40 companies increased compared to the previous year, with 15 companies witnessing a multiplication of their profits. Notably, Guizhou Salvage Pharmaceutical Co., Ltd. and Shanxi Coking Co., Ltd. experienced remarkable increases of 4194.86% (to ￥128 million) and 4038.96% (to ￥823 million), respectively. Guizhou Salvage Pharmaceutical Co., Ltd. attributed its profit growth to factors such as the surge in the average selling price of carbamide and reduced selling costs due to stabilized chemical fertilizer production and increased sales volume.
Shanxi Coking Co., Ltd. achieved increased profits through the asset acquisition of Shanxi China Coal Huajin Energy Firm, resulting in confirmed benefits of 611 million yuan between March and June of 2018. Furthermore, industry analysts foresee continued growth in certain subdivided industries due to sustained environmental supervision efforts, while outdated and environmentally detrimental production facilities may face restrictions to control industry supply. Additionally, the higher pivot of oil and gas prices may lead to increased prices for correlated products, providing coal companies with excess profits and stable costs.
Since the beginning of the year, there has been a notable rebound in the stocks of the coal chemical industry. According to data from iFinD, the overall net profits of 48 coal chemical concept stocks in the first half of the year increased from 9.38 billion yuan to 23.44 billion yuan (approximately 3.4 billion US dollars) compared to the previous year, indicating a substantial 66.7% year-over-year revenue growth.
Remarkably, the coal chemical industry achieved its best performance in the past five years during the first half of 2018, with an average net profit of ￥488 million (around $70.5 million). This stands out compared to the figures of the preceding years: ￥172 million (2014), ￥132 million (2015), ￥107 million (2016), and ￥293 million (2017).
An analyst specializing in the chemical industry explained that the stability in the price of raw coal, following the increase in petroleum prices, contributed to improved cost control for raw materials across the coal chemical industry. Consequently, the overall economic efficiency experienced a significant rise.
Out of the 48 mentioned stocks, 42 reported profits in the first half of the year. Noteworthy performers include Yanzhou Coal Mining Company Limited, China Coal Energy Company Limited, Luxi Chemical Group Co., Ltd., Shangdong Hualu-Hengsheng Chemical Co., Ltd., Datang International Power Generation Co., Ltd., and China National Chemical Engineering Co., Ltd. Their net profits saw growth rates of 31.89%, 16.96%, 5.5%, 5.45%, 10.8%, and 8.47%, respectively.
While Yanzhou Coal Mining Company Limited had the highest net profit, its operating revenue experienced a 5.52% year-on-year decrease. The company attributed this change to increased revenue from self-produced coal sales and sale prices, adding ￥9.24 billion, while other operating income decreased by ￥13.76 billion.
Additionally, statistics indicate that the net profits of 40 companies increased compared to the previous year, with 15 companies witnessing a multiplication of their profits. Notably, Guizhou Salvage Pharmaceutical Co., Ltd. and Shanxi Coking Co., Ltd. experienced remarkable increases of 4194.86% (to ￥128 million) and 4038.96% (to ￥823 million), respectively. Guizhou Salvage Pharmaceutical Co., Ltd. attributed its profit growth to factors such as the surge in the average selling price of carbamide and reduced selling costs due to stabilized chemical fertilizer production and increased sales volume.
Shanxi Coking Co., Ltd. achieved increased profits through the asset acquisition of Shanxi China Coal Huajin Energy Firm, resulting in confirmed benefits of 611 million yuan between March and June of 2018. Furthermore, industry analysts foresee continued growth in certain subdivided industries due to sustained environmental supervision efforts, while outdated and environmentally detrimental production facilities may face restrictions to control industry supply. Additionally, the higher pivot of oil and gas prices may lead to increased prices for correlated products, providing coal companies with excess profits and stable costs.
