Xiamen Tungsten’s Half-year Net Profit Reduces By Nearly 80% And Rare Earth Profit Increases By 240.54%

On July 15, 2019, Xiamen Tungsten Co., Ltd. (stock code: 600549, hereinafter “Xiamen Tungsten”), the largest tungsten producer in China, published its business results report of H1 2018. Based on the report, in H1 2018, the operating income was RMB 8.384 billion, down by 3.23% YoY, and the net profit attributed to listed shareholders was RMB 77.4066 million, significantly down by 76.83% YoY. These are only the preliminary accounting results, which are not audited by the accounting firm.

During the reporting period, due to the reduced downstream demand for tungsten and molybdenum, the prices of tungsten ores and tungsten smelted products showed declines YoY, and the tungsten inventory of Xiamen Tungsten suffered from depreciation and declined profitability. In H1 2019, the business sector of nonferrous metals as tungsten and molybdenum of Xiamen Tungsten achieved an operating income of RMB 3.819 billion (down by 17.42% YoY) and a total profit of RMB 131 million (down by 77.14% YoY).

In terms of lithium battery materials, the production and sales volume of Xiamen Tungsten realized continuous increase; due to product price fall caused by continuous decline of price of cobalt raw material, the profit during the reporting period showed a decline YoY. In H1 2019, the business of new energy battery materials (including hydrogen storage alloys and lithium battery materials) realized an operating income of RMB 3.403 billion (up by 15.90% YoY) and a total profit of RMB -43.2269 million (down by 143.70% YoY).

In terms of the rare earth business, due to the state’s restrictions on import of rare earth ore, the rare earth materials were in short supply, driving the increase in price of rare earth products. During the reporting period, the rare earth business scored an operating income of RMB 1.076 billion (up by 5.31% YoY) and a total profit of RMB 16.5582 million (up by 240.54% YoY).

Moreover, in terms of the real estate business, as the phase I of a real estate project developed by Chengdu Tongji Real Property Co., Ltd., a joint venture with the real estate division of Xiamen Tungsten, was successfully delivered, the corresponding income was recognized, thus increasing the recognized investment income of the real estate division. In H1 2019, the real estate business realized an operating income of RMB 86 million (up by 5.70% YoY) and a total profit of RMB 95.8676 million (up by 313.67% YoY).

Boasting the most complete tungsten industrial chain, Xiamen Tungsten is the largest producer and exporter of tungsten and molybdenum products and one of the six major rare earth groups in China. Xiamen Tungsten is mainly engaged in investment of tungsten and rare earth; smelting and processing of tungsten and non-ferrous metals; production and sales of tungsten alloy, processed tungsten products and processed products of rare earth metals; manufacturing technology, analysis & testing and engineered commercialization of technological achievements in terms of powder, hard alloy, precision tools, tungsten and molybdenum wires, new energy materials and rare earth metals; and real estate development and operation, etc.