China Chemical signed another 65 billion contracts, with 40.8 billion yuan in monetary funds and 10 billion yuan in debt, and stable financial operation

China Chemical (601117. SH) signed another big order.

On the evening of October 8, China Chemical Corporation, one of the leaders of the Belt and Road Initiative, announced that its wholly-owned subsidiary signed a general contracting contract for the natural gas-to-methanol chemical complex project with Russia's Baltic Methanol Co., Ltd., with a total contract amount of 8.4 billion euros (equivalent to about 65.05 billion yuan).

In the first eight months, China Chemical signed nearly 213.8 billion yuan in new contracts. According to this estimate, in the first nine months, the company signed nearly 300 billion yuan in new contracts.

A reporter from Changjiang Business Daily found that the contract of more than 65 billion yuan is the second big order signed in the history of Chinese chemistry. Four years ago, the company signed a large order close to 100 billion, also for the Russian project.

China Chemical is mainly engaged in chemical engineering contracting, survey, design and service, in recent years, the company has continued to develop steadily. In the first half of 2018, the company's operating income and net profit attributable to shareholders of the parent company (hereinafter referred to as "net profit") continued to increase.

As a project contracting enterprise, China Chemical has strong payment recovery ability, which in turn makes the company's financial situation relatively stable. As of the end of June this year, the company's monetary funds were about 40.8 billion yuan, and the corresponding debt was about 10 billion yuan.

Sign a sky-high contract after four years

China Chemical re-wins sky-high contracts.

China Chemical announced that recently, China Chemical Engineering Seventh Construction Co., Ltd., a wholly-owned subsidiary of the company, signed a general contracting contract for the Russian Baltic natural gas to methanol chemical complex project with Russian Baltic Methanol Co., Ltd. The contract period is 48 months, and the total contract amount is about 65.050 billion yuan.

The project site is Ustroga, St. Petersburg, Leningrad Region, Russia, and the business model is FEED+EPC (front-end engineering design + design, procurement, construction) contract mode, and the settlement method is agreed upon when signing supplementary agreements at each stage.

Contracts of up to 65.050 billion yuan, accounting for about 41.25% of the audited operating income in 2022. China Chemical believes that the signing of the contract is expected to have a positive impact on the company's financial position and operating results in the future fiscal year.

However, China Chemical also warned that in the process of contract performance, there are uncertain risks in relevant policies and regulations, markets, exchange rates, etc., which may affect the normal performance of the contract. The company will fulfill its information disclosure obligations in a timely manner in accordance with relevant laws and regulations according to the progress of the project.

The rare 65.050 billion yuan contract shocked the market, in fact, it is not the largest single contract signed by China Chemical Corporation. Four years ago, in October 2019, China Chemical announced that China Chemical Engineering Seventh Construction Co., Ltd., also a wholly-owned subsidiary, signed a general contracting contract for the Russian Baltic chemical complex project FEED+EPC with Baltic Chemical United Co., Ltd., with a total contract amount of about 12 billion euros (equivalent to about 94.3 billion yuan).

In October 2020, the company announced that the supplementary agreement for the first phase of the project was officially signed on October 31, 2019, with a contract amount of 112.5 million euros, and in December 2019, the company received the first phase advance payment of 28.125 million euros. On July 22, 2020, the supplementary agreement for the work of the second phase of the project was officially signed with a contract amount of 5.6 billion euros, and in October 2020, the company received an advance payment of 760 million euros for the second phase.

Judging from the information disclosed in the announcement, the above-mentioned contract of nearly 100 billion yuan has been successfully performed.

The reporter of Changjiang Business Daily found that since the beginning of this year, China Chemical has signed many contracts.

On the evening of September 15 this year, China Chemical disclosed that in the first eight months, the company signed 3,402 contracts, with a contract amount of 213.830 billion yuan. Among them, the number of construction project contracts is 1,891, and the contract amount is 202.645 billion yuan.

If divided by regional distribution, the domestic contract amount is 195.226 billion yuan, and the overseas contract amount is 18.604 billion yuan.

Since China Chemical has not yet disclosed its September business briefing, judging from the announcement of signing the 65.050 billion yuan contract, the contract may have been signed in September considering the "double festival" long holiday. Well, in the first nine months of this year, the company signed contracts with a contract amount of nearly 300 billion yuan.

In 2022, China Chemical's operating income will be 158.437 billion yuan, and the new contract amount of nearly 300 billion yuan will be nearly double that of 2022.

Revenue increased by 100 billion yuan in five years

The business performance of China Chemical, which has a strong ability to collect orders, has shown steady and rapid growth on the whole.

In 2017, China Chemical achieved an operating income of 58.571 billion yuan, which exceeded the 100 billion mark for the first time in 2019, reaching 104.129 billion yuan, and increased to 158.437 billion yuan in 2022, and the operating income in 2022 increased by 99.866 billion yuan compared with 2017, close to 100 billion yuan.

The corresponding net profit was 1.557 billion yuan in 2017, and 1.932 billion yuan, 3.061 billion yuan, 3.659 billion yuan, 4.633 billion yuan and 5.415 billion yuan from 2018 to 2022, respectively, an increase of 24.05%, 58.48%, 19.51%, 26.64% and 16.87% year-on-year. The net profit in 2022 increased by 247.78% compared to 2017.

In the first half of this year, the company's operating income and net profit were 91.350 billion yuan and 2.946 billion yuan, respectively, a year-on-year increase of 21.54% and 11.23%, and the net profit of revenue reached a new high in the same period of history.

Why can China Chemical achieve double growth in revenue and net profit for five consecutive years, and what kind of competitiveness does it have? In this year's half-year report, the company said that it is a knowledge-intensive engineering construction enterprise integrating R&D, investment, survey, design, procurement, construction and operation, and is currently the most complete qualification, the most complete function, the most complete business chain, and the relatively knowledge-intensive engineering company in the industry, and its business areas mainly include construction engineering (chemical engineering, infrastructure, environmental governance), industrial and modern service business, and its engineering performance covers all provinces in China and more than 80 countries and regions around the world. The company adopts the world's most advanced delivery technology and tools to provide safe, professional, intelligent and advanced engineering services for owners, and build world-class modern production plants and facilities.

The construction engineering business is the core business of China Chemical, covering the fields of chemical industry, coal chemical industry, petrochemical industry, new materials, new energy, electric power, environmental protection, infrastructure and medicine. At the same time, the company explores the integrated development model of "technology + industry", takes technology research and development as the "core", focuses on the research and development of new chemical materials and special chemicals such as high-performance fibers, special synthetic rubbers, engineering plastics, etc., focuses on "neck" technologies such as caprolactam, adiponitrile, aerogel, and environmentally friendly degradable plastics, and expands the field of high value-added products in the new material industry.

In the first half of this year, the company's new chemical material production, intelligent equipment manufacturing, power station operation, sewage treatment and other industrial projects in operation achieved "stable and long-term, full and excellent" operation.

Engineering contracting enterprises often have the problem of payment collection, and China Chemical has a strong ability to collect payment. At the end of 2021 and 2022, the book value of the company's notes receivable and accounts receivable was 31.688 billion yuan and 33.418 billion yuan, respectively, an increase of 5.46% in 2022 compared with 2021, which was significantly lower than the growth rate of operating income in the current period. At the end of June this year, the book value of its notes receivable and accounts receivable was 36.138 billion yuan, a year-on-year increase of 6.92%, which was also significantly lower than the growth rate of operating income in the current period.

China Chemical's financial position is relatively good. As of the end of June this year, the company's book currency funds were 40.805 billion yuan, and the total long-term and short-term debts were 10.058 billion yuan, of which short-term debts were only 1.018 billion yuan. In the first half of the year, the company's financial expenses were -185 million yuan.

This article is from Changjiang Business News