Arya’s fundamental analysis / The government’s pressure circle on petrochemicals became tighter – Tejaratnews

According to Tejarat News, a look at the production line of Aria Sasol Polymer Company shows that more than 80% of the company’s production cost is related to raw materials and consumables. Therefore, the profitability of the company is highly dependent on the feed rate received by Aria Sasol.

The gas feed that brought a lot of news in the past week and it seems that its price ceiling has reached seven thousand tomans. In case of selling gas feed with the current price ceiling and considering its dollar value which is about 14 cents, it should be noted that the dollar exchange rate for calculating the feed price should be 50 thousand tomans so that the company does not face losses.

Meanwhile, petrochemical companies are now pricing their dollar earnings at a rate of 28,500, and this is the biggest alarm line for petrochemicals and Aria Sasol.

It should be noted that the sales price of Aria Sasol polymer products is determined based on global prices, the price announced by the Petrochemical Employers’ Association (direct intervention of the government) and the commodity exchange (indirect intervention of the government).

Also, Aria exports its products such as light, medium and heavy polyethylene based on global rates after supplying its products in the Iranian market and meeting domestic needs. Ethylene and C-Triplus are two other products of the company whose main customer is the domestic market and they are exported in case of surplus.

The dark shadow of the government on income generation

The investigation of the sales of the company’s products shows that the shadow of the government weighs heavily on the internal transactions of Aria Sasol and the export restriction has caused the company to supply its products to the Iranian market at a lower price.

If the government does not interfere in pricing, Aria Sasol and other petrochemical companies can sell their products at the daily rate and increase their income. In addition to this, the government has severely suppressed the price of the raw material and the exchange rate of these companies and in some way, it has suppressed the income generation of petrochemicals in several ways.

Decrease in production and sales

Aria Sasol’s annual production and sales report shows that the company’s production did not increase last year. It should be noted that if the current conditions of feed rates and government pressures continue, more production will not be economical and the continuation of this trend is not far from expected.

In this way, the amount of production of Aria Sasol Polymer Company in 1401 compared to 1400 has decreased by more than 6.5% and has reached one million 783 thousand tons.

This trend is also formed in the sales amount of the company, and in the annual report of Aria Sasol, a decrease of 2.23% in the sales amount can be seen.

Of course, the company’s sales income has grown by 3.44% due to the increase in sales rates, which is not an acceptable growth considering the current inflationary situation. In this way, Aria Sasol Polymer managed to earn 27,445 billion Tomans from the sale of its products last year.

It should be mentioned that if the price of the company’s products in the domestic market was determined by supply and demand and the company would exchange its dollar income earned from exports at the free dollar rate, such a situation would not have arisen for Aria Sasol.

Of course, the report of the company’s independent auditor and legal inspector considers the growth of the company’s income independently due to the increase in the exchange rate, which the financial statement numbers show in a different way; Because the rate of most of the products sold in 1401 has increased.

On the cost side, the numbers are slightly different, and the finished price of Aria Sasol’s polymer products has grown by about 21%, which is a significant number. This increase in the cost of the company is mainly due to the increase in the price of direct consumables during the last year and the cost of production overhead.

So that the total price of the company’s products sold in 1401 has reached 16 thousand 684 billion tomans.

This caused the company’s profitability to decrease. So that the operating profit of Aria Sasol last year went from 11,968 billion tomans in 1400 to 10,605. Once again, the contradiction is seen in the report of the independent auditor and the company’s legal inspector. Because the decrease in the company’s profitability is attributed to the drop in global rates, which seems not to be the case.

It should be noted that the decrease in the company’s profitability in this period is due to the suppression of the company’s income generation by controlling the dollar exchange rate and interfering in the pricing along with the increase in the production costs of Aria Sasol, following the growth in the price of raw materials.

Finally, it must be said that if the government continues the same policy and increases the pressure on petrochemicals’ revenue generation and on the other hand makes feed prices more expensive, this trend will continue in the following years and it is not unlikely that petrochemicals will suffer losses in the coming years.

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