Sichuan Meifeng: 2021 Annual Report Summary

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Sichuan Meifeng: Summary of the 2021 Annual Report
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Date: April 27, 2022
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On April 26, the company released its 2021 annual report. During the reporting period, it achieved operating revenue of 4.091 billion yuan, a year-on-year increase of 40.47%. The net profit attributable to shareholders of the listed company reached 569 million yuan, up 448.61% from the previous year. The net profit attributable to shareholders after deducting non-recurring gains and losses was 542 million yuan, representing a year-on-year growth of 494.76%. The basic earnings per share amounted to 0.9642 yuan.

On the same day, the company also released its first-quarter report for 2022. It reported operating revenue of 1.252 billion yuan, a year-on-year increase of 60.13%; net profit of 179 million yuan, up 245.3% compared to the same period last year; and a basic earnings per share of 0.3051 yuan. Overview of main businesses or products during the reporting period: During the reporting period, the company’s main business activities involved the manufacturing and sales of urea, compound fertilizers, vehicle-grade urea, melamine, nitric acid, **, plastic packaging products, and LNG (liquefied natural gas). During the reporting period, an analysis of the company’s main business activities and operational performance is as follows: 1. Fertilizer business – The company’s urea and compound fertilizers fall under the category of fertilizer products, which are used to improve soil fertility, promote crop growth, and enhance agricultural productivity. During the reporting period, the company produced 409,500 tons of urea and 316,400 tons of compound fertilizers ； 357,400 tons of urea produced internally were sold, along with 304,600 tons of compound fertilizers. The company’s current products can meet the nutritional needs of different crops at various growth stages in various regions. They are suitable for both field crops and cash crops; field crops mainly include wheat, rice, corn, rapeseed, etc., while cash crops include vegetables, fruit trees, medicinal herbs, and flowers. Urea-based compound fertilizers are mainly used for field crops, applied primarily as base fertilizers or topdresses. Sulfur-based and nitrosulfur-based compound fertilizers are primarily used for cash crops (vegetables, fruit trees, medicinal herbs, flowers, etc.). Sulfur-based compound fertilizers are mainly applied as base fertilizers, while nitrosulfur-based compound fertilizers are mainly used as topdresses. The company’s urea products are primarily used as top-dressing for various crops. 2. Automotive urea business: Diesel engine exhaust treatment fluid (commonly known in China as automotive urea or vehicle urea) is an aqueous solution made from high-purity urea and ultrapure water, with a urea concentration of 32.5%. It is primarily used in passenger vehicles, commercial vehicles, and heavy-duty off-road diesel engines equipped with SCR (Selective Catalytic Reduction exhaust after-treatment systems). It is an essential consumable in SCR technology; within this system, it works together with the catalyst to convert the harmful nitrogen oxides emitted by diesel engines into harmless water vapor and nitrogen, thereby effectively reducing the emission of pollutants from diesel engine exhaust. Vehicle urea is a consumable, with an average consumption rate of 3-5% of the diesel used. During the reporting period, the company produced 246,400 tons of urea for use in vehicles, and sold 245,000 tons of it. The SCR system includes a urea tank (for storing urea solution) and a catalytic reaction tank ； The operation of the SCR system is as follows: when the vehicle’s computer detects nitrogen oxides (harmful gases that need to be purified) in the exhaust pipe, the urea system automatically sprays urea solution. The urea solution and nitrogen oxides undergo a redox reaction in the SCR catalytic reactor, resulting in the formation of pollution-free nitrogen gas and water vapor, which are then released into the exhaust system. If vehicle urea solution is not used, or if its purity is insufficient or its quality is poor, the vehicle may slow down or even become unable to move. At the same time, low-quality urea solutions can contaminate the catalysts in the SCR catalytic converter, causing severe damage. 3. Melamine business: Melamine, commonly known as melamine, is a white monoclinic crystal that is virtually tasteless and slightly soluble in water. It is a nitrogen-containing heterocyclic organic compound of the triazine type; it is produced from urea and is used as a chemical raw material. It cannot be used in food processing or as a food additive. Melamine is an organic chemical intermediate, primarily used to condense with formaldehyde to produce melamine-formaldehyde resin (a type of amino resin). During the reporting period, the company has an annual production capacity of 50,000 tons of melamine. In 2021, it produced 51,900 tons of melamine and sold 51,900 tons of the same. 4. The **nitric acid business is focused on areas such as the production of polyamine resins using it as a flame retardant, modifier, and chemical intermediate. It is widely used in the plastic and coating industries; it can also be used as a treatment agent to prevent folding and shrinking in textiles. Its modified resins can be used to create metal coatings with bright colors, good durability, and high hardness. It is further employed in the production of strong, heat-resistant decorative sheets, moisture-proof paper, in electrical equipment manufacturing, as a tanning agent for gray leather, as an adhesive for synthetic fire-resistant panels, and as a fixing or hardening agent for waterproofing materials. It is an important organic chemical raw material. *AO acid an, abbreviated as **. **It is a highly efficient nitrogen-containing solid fertilizer, in which nitrogen exists in the forms of nitrate nitrogen and ammonia nitrogen. Pure **Nitrogen content: 35%. Plants absorb nitrogen from ammonium nitrogen more slowly, whereas they absorb nitrogen from nitrate nitrogen quite rapidly, as it is highly soluble in water. After being applied to the soil, the ammonium nitrogen gets adsorbed by the colloids in the soil; under the action of nitrifying microorganisms, it is gradually oxidized into nitrate nitrogen, which can then be absorbed by plants. Therefore, **it is a nitrogen fertilizer with extremely low acidity, making it suitable for use in soils of various types.** Once the nitrogen compounds in it are absorbed, no substances that could harm the soil remain in it. As long as the amount and timing of fertilization are appropriate, the effects can be seen in the appearance of the crops quite quickly. From the perspective of agricultural chemicals that affect yield, **it has a high fertilizing effect on various types of soil and can be used as a top dressing for both irrigated and dryland crops. Its effectiveness is even greater in cotton cultivation, making it one of the ideal nitrogen fertilizers. *AO acid AN can also be used for industrial and military purposes**. It can also be used in insecticides, refrigerants, nitrogen oxide absorbents, and for the production of laughing gas and fireworks. The company currently has an annual production capacity of 180,000 tons of dilute nitric acid and 225,000 tons of *ao acid an. During the reporting period, the company produced 253,500 tons of liquid **, and sold 167,000 tons of ** products (the part available for sale). 5. Liquefied Natural Gas (LNG) business: Natural gas is a combustible gas naturally extracted from gas fields; it mainly consists of methane. Liquefied Natural Gas (LNG) is natural gas that has been compressed and cooled to its boiling point of -161.5°C, turning it into a liquid. It is colorless, odorless, non-toxic, and non-corrosive. Its volume is about 1/625 of that of the same amount of gaseous natural gas, and its mass is roughly 45% of that of water with the same volume. This property allows it to **save space in storage and transportation; it also has a high calorific value and excellent performance characteristics. It is recognized as the cleanest and most efficient fossil fuel on Earth. LNG is typically stored in cryogenic tanks at around -161.5°C and 0.1 MPa, and it is transported using specialized ships or tankers, where it is vaporized again when used. The company currently has the capacity to liquefy 1 million cubic meters of natural gas per day. During the reporting period, the company produced 224,700 tons of LNG and sold 219,100 tons. 6. Packaging Business: The main products under the company’s packaging segment include plastic woven bags, heavy-duty films (FFS films), PE films, injection-molded pallets, and plastic containers. Plastic woven bags are primarily used in industries such as chemicals, food, and feed. Heavy-duty films (FFS films) are mainly utilized in the petrochemical industry. PE films find extensive application in the food and consumer goods industries. Plastic containers and injection-molded pallets are chiefly employed in logistics and liquid packaging. During the reporting period, the company produced 8,600 tons of plastic packaging products, with sales volume reaching 10,400 tons (including trade-related sales).