Stanley's net profit in the first three quarters of the first three quarters of multiple price increases pre-increased by 70% The low hoarding of 1.87 billion yuan on the book should cope with the increase in raw material prices

Yangtze River Business Daily news ● Yangtze River Business Daily reporter Wang Jing

Fertilizer raw material prices soared, compound fertilizer producer Stanley (002588. SZ) achieved substantial growth.

On the evening of October 13, Stanley released the first three quarters of 2021 performance forecast, and it is expected that the net profit from January to September 2021 will be about 347 million yuan, an increase of 70.03% year-on-year.

Stanley is mainly engaged in fertilizer manufacturing and raw fertilizer sales. Since the beginning of this year, the international fertilizer raw materials have continued to rise in prices, according to its semi-annual report, as of the end of June, urea rose by 57% from the beginning of the year, monoammonium phosphate rose by more than 53% compared with the beginning of the year, and potassium chloride rose by more than 80% from the beginning of the year.

In the case of repeated price increases, control of the rhythm of raw material procurement and low-price reserves of raw materials in the early stage, Stanley achieved performance growth.

However, it is worth noting that just recently, Sinochem fertilizer and salt lake potash fertilizer have been fined for price increases. In response to investor questions on September 29, Stanley said the company had not been fined for price increases or was under regulatory investigation.

The book capital reached 1.87 billion yuan

According to public information, Stanley was established in 1992, the company's main business is the research and development, production and sales of compound fertilizers, and in 2011, Stanley was listed on the Shenzhen Stock Exchange. In the following years, the company's performance continued to grow, and the net profit in 2015 reached a record high of 620 million yuan, however, due to the cyclical nature of the industry and other reasons, the performance of the following years fell continuously, and the net profit in 2019 was only 109 million yuan.

In 2020, due to the sharp rise in the price of downstream agricultural products, farmers' willingness to plant inputs has increased significantly, and the company's performance has rebounded to 288 million yuan.

The Yangtze River Business Daily reporter noted that Stanley's book funds are relatively abundant, at the end of 2020 and the first half of 2021, it was 1.447 billion yuan and 1.87 billion yuan respectively, and the asset-liability ratio remained at about 34%, which also ensured that the company can use its financial advantages to control the rhythm of raw material procurement and reserve raw material inventory at a low price in the early stage. Therefore, the company's operating costs can be reasonably controlled, and the expenses during the period have remained stable year-on-year.

It is worth mentioning that due to the abundant book funds, the company's wealth management business achieved good returns in the first half of the year, and the cumulative financial income was 47.5849 million yuan.

In terms of production capacity, Stanley has built production bases in many parts of the country, with an existing production capacity of 5.2 million tons per year.

Multiple price increases for products

Under the soaring upstream energy costs, the price of fertilizers has been rising this year, and the prices of nitrogen, phosphorus and potassium fertilizers have continued to grow, and are currently at the highest level in a decade.

For fertilizer enterprises, the cost of raw materials accounts for a large proportion of the total cost of products. Stanley production raw materials are mainly nitrogen fertilizer, phosphate fertilizer, potassium fertilizer and other basic fertilizers, namely urea, ammonium chloride, monoammonium phosphate, potassium chloride, potassium sulfate, etc., the cost of raw materials accounts for more than 80% of the total cost of the product. Raw material suppliers are mainly upstream nitrogen fertilizer, phosphate fertilizer and potassium fertilizer production enterprises.

However, in the face of rising costs, Stanley still achieved good results in the first three quarters of this year, and it is expected that net profit will increase by 70% year-on-year. Stanley said that this is due to the company's full use of capital advantages to do a good job in strategic procurement of raw materials, and according to the rise of raw materials and downstream demand for multiple product price adjustments, to ensure the gross profit space of the product, resulting in the growth of gross profit.

In fact, since November 2020, Stanley said in the investor interaction platform that the price of raw materials for compound fertilizers has risen recently, and the price of the company's products has also increased accordingly. On July 1 this year, Stanley once again said that since 2021, due to the impact of rising raw material prices, the company's products have also experienced multiple price increases. According to the different types and proportions of products, the price increase space is not the same, as of now, the company's products have accumulated price increases in the range of 600-1000 yuan / ton.

It is worth noting that just recently, Sinochem Fertilizer and Salt Lake Potash Fertilizer have been fined for price increases, and Stanley said in an answer to investor questions on September 29 that the company has not been fined for price increases or is under investigation by regulatory authorities.

Editor-in-charge: ZB

This article originated from the Yangtze River Business Daily