Event: Cofco Sugar achieved operating income of 11.176 billion (year-on-year + 28.2%), net profit of 451 million (year-on-year + 5.3%) and non-net profit of 410 million (year-on-year-0.6%) in the first half of 2021.
In the second quarter, the company's operating income is 6.949 billion (year-on-year + 17.5%), net profit is 250 million (year-on-year-15.4%), and non-net profit is 247 million (year-on-year-17.7%).
In the first half of the year, sugar prices were generally strong on the outside and weak on the inside, and the company's sugar sales increased greatly compared with In the first half of the year, domestic sugar prices fluctuated from the bottom driven by the outer disk. The quarterly average spot prices of 2021Q1 and Q2 willow sugar were 5358 yuan / ton and 5541 yuan / ton, compared with the same period last year. The average spot price of international raw sugar was 15.63,16.85 cents / lb respectively, which was + 15% and + 52% respectively. The company seized the early low purchase opportunity of raw sugar, refined sugar production and sales increased significantly, making up for the adverse effects of falling sugar sales prices and rising freight costs, so that revenue maintained steady growth. However, in the case of a large increase in the cost of raw sugar imports compared with the same period last year, the company's overall gross profit margin in the first half of the year was 11.44%, year-on-year-2.09pct, narrowing profit growth. In terms of expenses, the company's sales, management and financial expense rates in the first half of the year were 3.02%, 2.20% and 0.79%, respectively, compared with the same period last year-0.23pct,-0.6 pct,-0.16pct. The improvement of sales scale brings continuous optimization of expense rate.
Adverse weather led to a reduction in production in Brazil, the main producing country, and international sugar prices continued to rise. In the first quarter, due to the postponement of India's export subsidies, poor international logistics and the impact of low production cuts in Thailand, global trade flows were tight in stages. Brazil's producing areas have experienced severe drought and frost since the second quarter. In the 22nd crushing season, sugarcane production in south-central Brazil was-6.7% year-on-year and sugar production was-7.5% year-on-year as of mid-August. In addition, India's domestic sugar companies have asked for an increase in the minimum price of sugar, and India may abolish sugar export subsidies in the new crushing season.
Risk tips: policy changes, natural disasters, sugar price fluctuations, crude oil price fluctuations, exchange rate fluctuations