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Limited natural gas supply in winter leads to another shutdown of ST Yihua’s ammonia and urea production facilities. Author/Source: Tencent News Date: 2020-12-21 Clicks: 11 To meet people’s heating needs during winter, there is often a shortage of natural gas for industrial use, and this winter is no exception. On the evening of December 17, ST Yihua (000422) announced that it had received a notification from its subsidiary, Xinjiang Tianyun Chemical Co., Ltd. (hereinafter referred to as “Xinjiang Tianyun”) on that day; due to restrictions on natural gas supply during winter, the plants at Xinjiang Tianyun that are capable of producing 300,000 tons of synthetic ammonia and 520,000 tons of urea per year were shut down entirely starting from the 17th. As of December 31, 2019, Xinjiang Tianyun’s total assets amounted to 1.009 billion yuan, its liabilities were 977 million yuan, and its equity stood at 32.1027 million yuan. In 2019, Xinjiang Tianyun achieved operating revenue of 629 million yuan and a net profit of 162 million yuan. As of September 30, 2020, Xinjiang Tianyun’s total assets amounted to 966 million yuan, its liabilities were 838 million yuan, and its owner’s equity was 162 million yuan ； In the first three quarters of 2020, the company achieved operating revenue of 450 million yuan and a net profit of 48.0026 million yuan. Public information shows that ST Yihua is mainly engaged in the production and sales of fertilizers and chemical products. The company’s products cover more than 10 varieties in three main sectors: fertilizers, chemicals, and thermal power. It has the capacity to produce 3.3 million tons of urea, 1.3 million tons of diammonium phosphate, 1.14 million tons of polyvinyl chloride, 100,000 tons of pentaerythritol, 100,000 tons of antimony trioxide per year, as well as 1.3 billion kWh of electricity through thermal power generation. Additionally, it possesses the capability to extract 1.3 million tons of phosphate rock and 2 million tons of coal per year. In the first three quarters of 2020, ST Yihua achieved operating revenue of 9.778 billion yuan, but incurred a net loss of 25.248 billion yuan. Regarding the impact of this temporary suspension of production at Xinjiang Tianyun, ST Yihua stated that it is expected to result in a reduction of the company’s operating income for 2020 by 33.39 million yuan, as well as a decrease in the net profit attributable to the owners of the parent company by around 1.45 million yuan. The company states that this estimate is the result of preliminary calculations by its finance department, and the actual figures should be based on the company’s annual audit results for 2020. The company will actively coordinate the natural gas supply for Xinjiang Tianyun, striving to help it resume production as soon as possible. It is worth noting that this is already the latest time in recent days that ST Yihua has disclosed the suspension of operations at its ammonia and urea production facilities. Previously, the company’s subsidiary, Inner Mongolia Ordos United Chemical Co., Ltd. (hereinafter referred to as “United Chemical”), experienced restrictions on natural gas supply during winter, which led to the complete shutdown of its plants capable of producing 520,000 tons of synthetic ammonia and 1.04 million tons of urea per year, starting on December 7, 2020. At that time, ST Yihua stated that this temporary shutdown of United Chemicals was expected to reduce the company’s revenue for the year 2020 by 163 million yuan, and to decrease the net profit attributable to the owners of the parent company by around 13 million yuan.