SPC(SH:600688)2019-08-20 16:00Financial Performance - The financial report for the first half of 2019 is unaudited and covers the period ending June 30, 2019[4]. - The company's operating revenue for the first half of 2019 was RMB 51,992,583 thousand, a decrease of 0.37% compared to the same period last year[11]. - The total profit for the first half of 2019 was RMB 1,359,243 thousand, representing a significant decline of 69.90% year-on-year[11]. - The net profit attributable to shareholders of the parent company was RMB 1,137,241 thousand, down 67.73% from RMB 3,524,131 thousand in the previous year[11]. - The net cash flow from operating activities was RMB 245,974 thousand, a drastic decrease of 94.18% compared to RMB 4,227,404 thousand in the same period last year[11]. - The basic earnings per share for the first half of 2019 was RMB 0.105, down 67.79% from RMB 0.326 in the same period last year[11]. - The weighted average return on equity decreased by 7.94 percentage points to 3.676% compared to the previous year[11]. - The company's total assets at the end of the reporting period were RMB 43,987,092 thousand, a decrease of 1.24% from the previous year[11]. - The group's net profit after tax and non-controlling interests for the first half of 2019 was RMB 1.1436 billion, a decrease of RMB 2.4077 billion compared to RMB 3.5513 billion in the same period last year[23]. - The company's consolidated net profit for the same period was RMB 1,143,717 thousand, representing a decrease of 67.6% from RMB 3,531,485 thousand in the previous year[92]. Revenue and Sales - The overall sales revenue for the first half of 2019 was RMB 46.1251 billion, an increase of 0.17% compared to the same period last year[21]. - The sales revenue for synthetic fibers, resins and plastics, intermediate petrochemical products, and petroleum products were RMB 11.986 billion, RMB 50.542 billion, RMB 51.644 billion, and RMB 210.069 billion respectively[21]. - The revenue from synthetic fibers was RMB 1,219,618 thousand, with a gross margin of -7.78%, reflecting a 6.29% increase year-on-year[35]. - The revenue from petroleum products was RMB 26,623,478 thousand, with a gross margin of 24.53%, showing a 0.50% increase year-on-year[35]. - The revenue from exports surged by 92.81% to RMB 15,901,729 thousand, indicating strong international demand[36]. Costs and Expenses - The company's sales cost was RMB 45.2254 billion, an increase of 7.39% year-on-year, accounting for 98.05% of net sales[22]. - The average unit cost of crude oil processed by the group was RMB 3,309.34 per ton, up RMB 241.63 per ton or 7.88% year-on-year[22]. - The company experienced a significant increase in sales costs, which rose to RMB 43,664,730 thousand from RMB 40,707,831 thousand in the previous year[92]. Assets and Liabilities - The company's current assets totaled RMB 24,665,174 thousand, down from RMB 25,298,876 thousand at the end of 2018, indicating a decline of approximately 2.5%[90]. - The total liabilities reached RMB 15,061,177 thousand, an increase from RMB 14,053,456 thousand at the end of 2018, reflecting a growth of about 7.2%[91]. - The company's equity attributable to shareholders was RMB 28,803,061 thousand, down from RMB 30,370,126 thousand at the end of 2018, representing a decrease of approximately 5.2%[91]. - Cash and cash equivalents stood at RMB 12,965,476 thousand, compared to RMB 10,241,893 thousand at the end of 2018, showing an increase of about 26.6%[90]. - The company's inventory decreased to RMB 6,858,647 thousand from RMB 8,120,875 thousand at the end of 2018, indicating a reduction of approximately 15.5%[90]. Capital Expenditure and Investments - The group's capital expenditure for the first half of 2019 was RMB 350 million, primarily for clean fuel projects and other infrastructure[26]. - Capital expenditure for 2019 is expected to be around RMB 1.5 billion, funded through financing activities and some self-owned funds[43]. - The company is currently undertaking several projects, including a 40,000 tons/year clean gasoline component facility with an investment of RMB 794,640 thousand, and a PAN-based carbon fiber project with an investment of RMB 847,794 thousand[40]. Environmental and Regulatory Compliance - The company achieved a 100% compliance rate for wastewater discharge standards, with all treated wastewater being discharged into Hangzhou Bay[65]. - The company reduced sulfur dioxide and nitrogen oxide emissions by 26.52% and 23.67% year-on-year, respectively, in the first half of 2019[62]. - The company has a total of 93 environmental protection devices and has completed ultra-low emission upgrades for all boilers by November 2018[64]. - The company has received three administrative penalty notices from the Shanghai Ecological Environment Bureau, totaling RMB 2.15 million in fines due to emissions exceeding standards[62]. - The company has implemented a comprehensive environmental monitoring plan covering water quality, air quality, and noise monitoring[68]. Shareholder Information - The total number of ordinary shareholders as of the end of the reporting period is 85,489[72]. - The total number of ordinary shares held by the largest shareholder, China Petroleum & Chemical Corporation, is 5,460,000,000 shares, representing 50.44% of the total shares[73]. - The company did not issue any securities during the reporting period[71]. - There were no changes in the company's controlling shareholder or actual controller during the reporting period[74]. - The major shareholders collectively hold significant voting rights, with the largest shareholder controlling 50.44% of the voting rights[76]. Related Party Transactions - The company engaged in related party transactions, with raw material purchases from Sinopec Group amounting to RMB 28,161,639 thousand, representing 75.39% of the maximum limit[56]. - Sales of petroleum and petrochemical products to Sinopec Group reached RMB 30,594,624 thousand, accounting for 58.84% of the maximum limit[56]. - The company incurred rental expenses of RMB 35,860 thousand related to a leasing agreement with Sinopec Group's subsidiary for storage tanks[57]. - The company signed a technical service contract with Sinopec Group's subsidiary for an intelligent factory project, totaling RMB 30,580 thousand[57]. Risk Factors - The company faces risks from cyclical characteristics of the oil and petrochemical market, with significant sensitivity to macroeconomic conditions and raw material price fluctuations[41]. - The company imports over 95% of its crude oil, exposing it to procurement risks and potential cost increases due to rising oil prices[42]. - The company is subject to strict environmental regulations, which may lead to additional expenditures if stricter standards are implemented[44]. Corporate Governance - The company adhered to all provisions of the Corporate Governance Code as per the Hong Kong Listing Rules during the reporting period[86]. - The company confirmed compliance with the Securities Trading Code by all directors and supervisors during the reporting period[87]. - The company has not received any notifications regarding shareholding changes from individuals other than directors and senior management as of June 30, 2019[82].