Two salt lakes: bizarre Potassium chloride benefits

Huai Cong March 11, 2008 SST Digital Change to "St Salt Lake", since then the stock exchange on the emergence of two "Salt Lake", one is "St Salt Lake" (000578), and the other is Salt Lake Potash (000792). The two "salt lakes" have a profound historical origin, the details of the reader self-examination. March 26, 2009, they also published the 2008 financial report, the two "Salt Lake" have made a huge profit, St Salt Lake also tipped ladies success, and officially renamed Salt Lake Group (below St Salt Lake, Salt Lake Group, group are referred to the same company).　　However, the detailed view of the two "Salt Lake" report published in the earnings situation, the author found some bizarre. First, two "Salt Lake" gross profit margin changes significantly reverse the Salt Lake Group and Salt Lake Potash fertilizer are rare in China's listed companies have business linkages, competition, and to consolidate the report of the two companies. Because Salt Lake Group into the SST Digital and successively renamed as St Salt Lake, Salt Lake Group, its performance has undergone tremendous changes in 2008 to achieve operating income of 4.925 billion yuan, the overall gross profit margin of 76.73%. Salt Lake Potash Fertilizer 2008 years of operating income of 4.069 billion yuan, the overall gross profit margin of 78.08%. In view of the two "Salt Lake" consolidated statement of the main business is potassium chloride and the business itself, the high yield characteristics of the Salt Lake Group's overall gross margin is slightly lower than the Salt Lake Potash fertilizer seems to be reasonable.　　However, the two "Salt Lake" in the first half and the second half of the overall gross margin changes in the direction is the opposite: Salt Lake Potash from 74.99% to 79.92%, Salt Lake Group from 79.59% down to 74.93%, two company gross profit margin on a bit, the direction of departure, the amplitude is almost the same! Because the Salt Lake Group Management Project is more miscellaneous, the overall gross margin of the two lacks comparability, so we do not have an in-depth analysis of their overall gross profit, but focus on the situation of potassium chloride business.　　Salt Lake Potash Fertilizer and Salt Lake Group potassium chloride business gross profit margin of the first half of 75.12% and 88.61%, respectively, 80.36% and 81.07% in the second half, Salt Lake Potash fertilizer rose 5.24%, and Salt Lake Group decreased by 7.54%, between the two deviations of up to 12.78%. If there are two unrelated companies, 12.78% or even higher differences may not have any problems.　　But the two "salt lakes" are different. Because of the deep roots of the two "salt lakes", for them, the potassium chloride business has a lot of similarities, raw materials, production technology, market conditions and even distributors have a lot in common, the most important thing is that Salt Lake Potash fertilizer as a subsidiary into the Salt Lake Group consolidated statements, in the group's potassium chloride business occupies the majority of (　　See table 1-table 3), but why are the benefits of potassium chloride so different? Table 1 2008 Two Salt Lake operating income income operating cost margin gross profit margin Salt Lake Potash potassium St Salt Lake Salt Saline potassium st Salt Lake Salt Lake Potassium St Salt Lake saline potassium St Salt Lake General situation406,890.20492,473.4889,192.22114,583.29317,697.98377,890.1978.08%76.73% Potassium chloride 404, 857.12428,265.5687,402.6669,080.59317,454.46359,184.9778.41%83.87% Table 2 2008 1-June two Salt Lake operating income income operating cost margin gross profit margin Salt Lake Potash potassium St Salt Lake Salt Saline potassium st Salt Lake Salt Lake Potassium St Salt Lake saline potassium St Salt Lake general situation 151, 856.47190,184.4937,976.6838,813.34113,879.79151,371.1574.99%79.59% Potassium chloride 150, 806.85158,788.9937,518.6718,081.34113,288.18140,707.6575.12%88.61% Table 3 2008 7-December two Salt Lake operating income income operating cost margin gross profit margin Salt Lake Potash potassium St Salt Lake Salt Saline potassium st Salt Lake Salt Lake Potassium St Salt Lake saline potassium St Salt Lake general situation 255, 033.73302,288.9951,215.5475,769.95203,818.19226,519.0479.92%74.93% Potassium chloride 254,　　050.27269,476.5749,883.9950,999.25204,166.28218,477.3280.36%81.07% data Source: According to the two "Salt Lake" 2008 Financial report to organize the second, other subsidiaries of potassium chloride business impact? Salt Lake Potash Fertilizer, a subsidiary of Salt Lake Group, was merged into its consolidated statement in 2008, so the Salt Lake Group's potassium chloride business was composed of two parts, one part was contributed by the merged Salt Lake Potash fertilizer and the other was contributed by other subsidiaries.　　Review of Salt Lake Group annual report that, in addition to Salt Lake Potash, there are Salt Lake technology, Oriental Potash and other subsidiaries operating potash business, if these subsidiaries potassium chloride business margin higher, it may be the Salt Lake Group's gross profit margin played a role in the overall. In the case of unrelated transactions, Salt Lake potash potassium chloride business in the group accounted for a large share, for example, January-June Salt Lake Group of potassium chloride income of 158,788 990,000 Yuan, Salt Lake Potash fertilizer 150,806 850,000 yuan, accounting for the entire group of 94.97%, Other subsidiaries accounted for only 5.03% of all potassium chloride revenues. If this 5.03% income can be the gross margin of potassium chloride from 75.12% to 88.61%, its gross margin must reach 343%. According to the calculation formula of gross margin, we know it is impossible!　　A similar bizarre conclusion can be drawn from the annual data analysis. Therefore, asOther subsidiaries of potassium chloride business in the group accounted for a small, they can not have a very significant impact on the gross margin, nor is it caused by the two "Salt Lake" potassium chloride benefits of a huge difference. Third, the impact of related transactions on gross margin in the presence of some types of related transactions, the Salt Lake Potash fertilizer and group of potassium chloride gross margin may also appear significant differences.　　In general, related transactions may be two ways to play a role in gross profit, one is operating income, the other is operating costs. From the point of view of potassium chloride income, if Salt Lake Potash fertilizer in the reporting period to the group to sell a large number of potassium chloride related business, it may be due to the combined statements in the cancellation of the Salt Lake Potash fertilizer income in the group, the proportion of potassium chloride income from other subsidiaries is relatively higher. In this case, other subsidiaries of the business may have a significant impact on the group's gross margin, because, when the other subsidiaries of the large share of potassium chloride, the group's earnings will not need too high gross margin, which may be in a reasonable margin range. However, the group's associated trade in the sale of potassium chloride to Salt Lake Potash will not have a significant impact on the conclusions given above, since the offsetting of such transactions in the consolidated statements does not reduce the share of Salt Lake Potash in the group.　　The Salt Lake Potash fertilizer published product sales related transactions, found that there are two: 1, 2008, the company to the Sino-chemical Fertilizer Company sales of potassium chloride amounted to 1,205,147,000 yuan; 2, 2008 company to Shanxi Wen Tong Salt Bridges Compound Fertilizer Co., Ltd. sales of potassium chloride amounted to 537.258 million yuan. Medium chemical Fertilizer and Shanxi Wen Tong Salt Bridges Compound Fertilizer Co., Ltd. is not a subsidiary of Salt Lake Group, so it is not included in the merger scope. The Salt Lake Group also has no information on the procurement of products to Salt Lake Potash in the note 6 main financial statement project notes for the parent company.　　In view of this, Salt Lake Potash fertilizer has not been to the Salt Lake Group sales of products, the two "Salt Lake" of the difference in the potassium chloride is not caused by such transactions. From the point of view of the cost of potassium chloride, if the related transaction can reduce the operating cost of potassium chloride in the consolidated report, it will also lead to the rise of the group gross profit. According to the annual report of Salt Lake Potash, 2008 years it (including its subsidiaries) paid 510 million yuan of mineral resources to St Salt Lake. And from the Salt Lake Group procurement of water, electricity, woven bags, pharmaceutical, according to the relevant provisions and annual reports, Salt Lake Potash should be the first of these expenditures are recorded in the inventory, After its sale and then into the operating costs of potassium chloride, the Salt Lake Group parent, in turn, credited the income to "other business receipts", which would reduce the operating costs of potassium chloride without reducing the cost of potassium chloride (because it included "other business income"), in which the associated transactions were offset in the consolidated statement Thus increasing the group's potassium chloride gross margin.　　So, this is not the two "Salt Lake" The reason for the bizarre changes in the return of potassium chloride? Since Salt Lake Potash fertilizer is highly similar to the potassium chloride operating environment of other subsidiaries and the business proportion of other subsidiaries is very small, we do notIt is assumed that the potassium chloride yield of other subsidiaries equals to the group's potassium chloride yield, that is, the first half, the second half and the whole year, respectively, 88.61%, 81.07% and 83.87%, which excludes the influence of other subsidiaries on the difference in the gross margin of potassium chloride of the two "salt lakes",　　Only consider the change of gross profit margin brought by the merger and cancellation of related transactions, that is to say, the difference between the gross margin of two "salt lakes" is caused by offsetting the associated transaction. In the first half of 2008, the yield of potassium chloride was 75.12% and 88.61%, the difference was 13.49%, that is, offset the operating cost of Salt Lake potash potassium chloride income of 13.49%, the absolute amount of 203.4384 million yuan. Similarly, the second half of the operating costs offset the Salt Lake potash potassium chloride income of 0.71%, the absolute value of 18.0376 million yuan.　　The operating costs offset by the whole year accounted for 5.46% of Salt Lake potash potassium chloride income, the absolute number of 221.052 million yuan (due to other subsidiaries of the gross profit margin made a set of assumptions, so the second half of the operating costs offset the sum and the annual data there is a small difference). Salt Lake Potash fertilizer in the first half of 2008 of potassium chloride income of 150,806 850,000 yuan, the second half of 254,050 270,000 yuan, the first half of the increase of 68.46%, but its carry-over (also is the combined statement offset processing) Associated transaction costs fell from 203.4384 million yuan to 18.0376 million yuan, accounting for the first half of the 5.32%.　　From the relationship between Salt Lake Potash fertilizer and group, these items should have a strong positive correlation with the production and marketing of potassium chloride, but the result of inference is surprising! Does Salt Lake Potash have the problem of adjusting profit by artificially adjusting operating costs?