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Revenues exceed 20 billion for the first time! Hubei Yihua expands its investments in the new energy sector. Author/Source: BDO Research Institute. Date: 2023-03-16. Clicks: 63. On the evening of March 12, Hubei Yihua, China’s leading company in the nitrogen fertilizer industry, officially released its performance report for 2022. During the reporting period, the company’s total operating revenue was approximately 20.8 billion yuan, representing a year-on-year increase of 12.17%; its net profit attributable to the parent company was around 2.157 billion yuan, with a year-on-year increase of 37.45%. This marks the first time since the company went public in 1996 that its revenue has exceeded 20 billion yuan, and its net profit has surpassed 2 billion yuan. The main reason for the significant increase in the company’s profits in 2022 was its effective allocation of resources, which led to a reduction in interest-bearing debt; as a result, interest expenses decreased by 166 million yuan on a year-on-year basis ； Disposal of a subsidiary resulted in investment income of 328 million yuan ； Large receivables were recovered, reducing impairment losses by 127 million yuan. The significant growth in the company’s annual performance is also thanks to the strong momentum in the industry. Huang Yinbin, an analyst at Huaxin Securities, stated in a research report on the basic chemicals industry that during the first three quarters of 2022, the gross margin and net profit margin of China’s basic chemicals industry remained at relatively high levels. The chemical raw materials industry, to which Hubei Yihua belongs, showed a 26% year-on-year increase in revenue when compared with other industries, ranking third ； In terms of profits, it achieved a 20% year-on-year positive growth, ranking second. As reflected in the products of Hubei Yihua, in terms of production costs, according to Wind data, the prices of the company’s main chemical products such as urea, diammonium phosphate, and PVC remained high in the first half of 2022; although they declined in the third and fourth quarters, they still increased by 33.71%, 27.95%, and 3.3% respectively on a year-on-year basis. Hubei Yihua stated that, under these circumstances, it took advantage of the high prices of its key products such as urea, diammonium phosphate, and polyvinyl chloride during the first half of the year, and flexibly responded to price fluctuations in the second half. By simultaneously exploring domestic and international markets, it ensured the efficient and stable operation of its production facilities, strictly controlled costs, and managed to achieve year-on-year growth in its performance. It is worth noting that, amid the increasing production of new energy vehicles and the growing installation volume of lithium iron phosphate, as well as the continuous rise in the price of lithium iron phosphate, Hubei Yihua has entered the new energy sector. It is reported that the company focuses on chemical new materials and high-end specialty chemicals as its development areas, and it advances project progress by cooperating with leading enterprises in the downstream industry in order to create a second growth curve. Yi Fertilizer Industry, a subsidiary of Hubei Yihua, joined forces with a subsidiary of CATL in 2021 to establish Bangpu Yihua, which is responsible for projects related to the production of ferric phosphate, nickel sulfate, and related raw materials ； It is also planned to put into operation projects such as a 550,000 tons per year ammonia alcohol plant in Yichang City, Hubei Province ； At the same time, cooperation has also been established with Stanley to carry out projects related to iron phosphate precursors, new energy materials, and new types of fertilizers. In addition, Hubei Yihua has a 60,000-ton/year PBAT project ； Projects for 300,000 tons per year of lithium iron phosphate and 200,000 tons per year of nickel sulfate are expected to begin operations gradually in the fourth quarter of 2023. In February this year, Hubei Yihua released a plan to issue A-share stocks to specific investors; it intends to issue up to 160 million shares to no more than 35 eligible investors, including the company’s controlling shareholder, Yihua Group. The funds raised will amount to no more than 2.5 billion yuan, to be used for the renovation, upgrading, and relocation of projects related to clean coal pressurized gasification and combined production. In response, the company issued a statement saying that the application has been accepted by the Shenzhen Stock Exchange and is currently awaiting approval. The company will continue to strengthen its advantages in basic industries, upgrade the three traditional sectors of coal chemicals, phosphate chemicals, and salt chemicals, and steadily work to extend, supplement, and enhance these industrial chains. It will also pursue transformation and development in the fields of high-quality phosphate chemicals, new chemical materials, and environmental-friendly materials, thereby continuing to drive industrial upgrading.