Realized the net profit of 665 million yuan in the first three quarters.
From January to September 2017, Hongxing of Jiuquan Iron and Steel Co., Ltd. realized operating income of 30.461 billion yuan, an increase of 10.09 percent over the same period last year; net profit of 665 million yuan belonging to shareholders of listed companies, an increase of 47.23 percent over the same period last year; and earnings per share of 0.106 yuan, an increase of 47.16 percent over the same period last year. The performance in the third quarter improved significantly compared with the previous quarter. In a single quarter, the net profit attributed to shareholders of listed companies was 314 million yuan, an increase of 147.24% over the previous quarter; the net profit per ton of steel in the first three quarters was 207.85 yuan, 82.32 yuan and 199.24 yuan respectively, and the profit in the third quarter was lower than expected.
The boom in the industry promotes a sharp rise in prices
Benefiting from the supply-side reform, the iron and steel industry continues to improve, and the company's steel sales prices have increased significantly. From January to September 2017, the average tax prices of plate, strip, wire bar and stainless steel were 4161.08, 3885.24 and 11101.32 yuan per ton, respectively, an increase of 41.63%, 50.73% and 24.85% over the same period last year.
Provision of 588 million yuan for impairment of fixed assets
The company's holding subsidiary Yigang dismantled two 50-ton converters, so that the company's sintering, ironmaking and steelmaking production system no longer had the conditions for reproduction, and the provision for impairment of fixed assets was 488 million yuan; the disposal environment of the assets involved in the elimination capacity of Yugang, a wholly-owned subsidiary of the company, changed, resulting in the termination of the transfer of related equipment, with a provision of 100 million yuan. Affected by this, the total profit of the company from January to September was reduced by 588 million yuan. But full planning enables the company to travel light in the future.
The increase in net profit came from the reduction of financial expenses and income tax expenses in the first three quarters, the financial expenses of Hongxing of Jiuquan Iron and Steel Co., Ltd. was 417 million yuan, down 53.42% from the same period last year, with reference to the report that the reason was the decrease in exchange gains and losses caused by the appreciation of the RMB against the US dollar. Income tax expenses totaled 12 million yuan, down 95.37 percent from the same period last year, mainly due to the company's return of deferred income tax assets in 2016.
The resumption of production in Yugang is imminent
At present, the maintainability maintenance of the new system of Yugang has been completed, and it is planned to further restore production capacity from late October. Yugang is close to Longhai Railway with convenient transportation. If it can resume production smoothly, it will effectively reduce losses and fully enhance the profitability of the company.
Risk hint
Demand for steel has fallen sharply.
