Sichuan Yahua Industrial Group (002497) Q2 2024 earnings summary

Executive summary

• Revenue for the first half of 2024 was ¥3.94 billion, down 36.69% year-over-year due to a sharp decline in lithium product prices and lower sales volumes in both lithium and civil explosives segments.

• Net profit attributable to shareholders was ¥102 million, a decrease of 89.25% compared to the same period last year, mainly impacted by the lithium segment's profitability drop.

• The company maintained high operating rates for lithium production lines, with lithium salt sales volume up 114% year-over-year.

• Second quarter saw sequential improvement: revenue up 12.49% and net profit up 484.39% over Q1, driven by increased lithium sales and improved explosives subsidiary performance.

Financial highlights

• Operating income: ¥3.94 billion, down 36.69% year-over-year.

• Net profit attributable to shareholders: ¥102 million, down 89.25% year-over-year.

• Basic and diluted EPS: ¥0.0887, down 89.25% year-over-year.

• Operating cash flow: ¥398 million, a significant improvement from negative ¥120 million last year.

• Gross margin for lithium salts: 1.40%; for civil explosives: 35.57%.

• Total assets at period end: ¥14.02 billion, down 4.01% from year-end 2023.

Outlook and guidance

• Lithium salt and civil explosives sales are expected to continue growing in the second half of 2024.

• The Kamativi lithium mine's second phase is expected to be fully operational in 2024, increasing self-sufficiency in raw materials and reducing costs.

• Management anticipates improved profitability as new capacity comes online and cost controls remain in focus.