On October 22, Caixin reported (reporter Liu Jian Wang Ping'an): Against the backdrop of a significant drop in sugar prices compared to the same period last year, the performance of sugar companies seems to be on a downward trend as well. Cofco Sugar Holding (600737.SH) released its third-quarter report today, showing that the company's Q3 performance continued the year-on-year decline trend from Q2, with both net income and revenue declining year-on-year, and the decline trend compared to Q2 is expanding.

Specifically, the company achieved revenue of 22.713 billion yuan in the first three quarters, a year-on-year decrease of 4.86%; net income attributable to shareholders of the listed company was 1.162 billion yuan, a year-on-year decrease of 19.33%; basic earnings per share was 0.54 yuan. Among them, revenue in the third quarter was 7.757 billion yuan, a year-on-year decrease of 30.41%; net income attributable to shareholders of the listed company was 0.299 billion yuan, a year-on-year decrease of 55.41%. Regarding the reasons for the performance decline, Cofco Sugar Holding stated in the financial report, "Mainly due to the year-on-year contraction in the scale of processed and traded sugar."

Looking at the quarters, the company's revenue in Q1, Q2, and Q3 were 7.812 billion yuan, 7.145 billion yuan, and 77.57 billion yuan, with year-on-year changes of 62.84%, -9.90%, and -30.41% respectively; net income was 0.44 billion yuan, 0.422 billion yuan, and 3 billion yuan, with year-on-year changes of 60.71%, -14.64%, and -55.41% respectively. The company's revenue and net income have declined year-on-year for two consecutive quarters, with the decline trend expanding.

Caixin reporters noted that this performance change also seems to reflect the trend of sugar prices.

According to Choice data monitoring, sugar prices have been continuously rising since the beginning of last year, reaching around 6600 yuan/ton in the second quarter, and then maintaining above 7000 yuan/ton throughout the third quarter, even hitting around 7600 yuan/ton. Corresponding to this year, starting from Q1, sugar prices have been fluctuating above 6600 yuan/ton, relatively higher compared to the first quarter of last year. However, in Q2 and Q3, based on last year's high base sugar prices, there has been a significant decline in sugar prices, and the year-on-year decline in sugar companies' Q2 and Q3 performance seems inevitable.

In fact, at the previous semi-annual earnings conference, cofco sugar holding had previously indicated that the decline in performance in the second quarter was partly due to the high base number. In the second quarter of 2023, the single-quarter sales of sugar and tomato products both reached historical highs; on the other hand, this year, due to factors such as insufficient downstream market demand and the impact of uncontrollable factors such as the economic and political situation, the sales of sugar and tomato products in the second quarter of 2024 both decreased.

Currently, as seen, similar to the downturn in sugar prices, the trend of declining performance seems to have continued into the third quarter of this year. In addition, it is also important to note that the company's investment income in the first three quarters of this year was only 26.49 million yuan, compared to 0.193 billion yuan in the same period last year; asset impairment losses were -0.136 billion yuan, compared to 3.61 million yuan in the same period last year.

Looking ahead, the domestic sugarcane crushing season is about to begin. Some analysts believe that sugar prices may still be under pressure in the short term, as "the domestic new crushing season in the fourth quarter will be fully operational. With strong expectations for increased production, and timely replenishment of imported sugar sources by processing sugar mills when the raw sugar price was at 18 cents/pound, the supply in the new crushing season will be relatively ample, putting pressure on price increases."