On Nov. 23, 2011, Anhui Huaxing Chemical Industry Co., Ltd. (Huaxing Chemical) announced that it would close one of its subsidiary. The constantly weak performance of Huaxing Chemical makes investors concern about its unadvisable and mutable strategies, and the company was criticized and blamed by investors. CCM’s December Issue of Herbicides China News shares with you the detailed story.
Huaxing Chemical lost USD20.1 million (RMB127.7 million) in net profit in the whole year of 2010, and witnessed continuously net profit loss of USD4.3 million (RMB27.6 million) in the first three quarters of 2011. As a result, Huaxing Chemical's stock price in the exchange market always appears sluggish and unstable after 2008.
Although current pesticide market is unfavorable, the investors doubt that the poor operation and management of Huaxing Chemical are the major reason why the company performed so badly. Take this subsidiary liquidation for example, Huaxing Chemical claimed that the liquidation of its subsidiary Anhui Huaxing Chemical Industry Chongqing Co., Ltd. (Huaxing Chongqing) is due to the current unsuitable situation. But some rumors indicated that the liquidation of Huaxing Chongqing is mainly attributed to the company's unsuccessful investment resulted from the unadvisable decision.
Specifically speaking, Huaxing Chemical's investment of 20,000t/a glyphosate technical transformation initiated in 2009 with accumulative amount of USD4.3 million (RMB27.7 million) is being delayed in the long term. The construction still stays at the installation stage of main equipments due to the weak glyphosate market. These vain investments even withdraw Huaxing Chemical's performance instead of enhancing company competitiveness. Moreover, Huaxing Chemical might probably encounter the problem of deficit in two consecutive years (2010–2011).
What’s worse, the recent suspended reorganization of Huaxing Chemical puts further stresses on investors. On Nov. 7, 2011, Huaxing Chemical suspended stock trade for laying out company reorganization. The company resumed stock trade on Nov. 11, 2011, and declared not to map out the reorganization in the future three months for it isn't at the proper time.
Coupled with industrial integration in Chinese pesticide, Huaxing Chemical will choose reorganization to boost its performance in an estimate. But it can't be predicted who will be the next cooperator of Huaxing Chemical. It can be sure that investors expect Huaxing Chemical to adjust its management and strategy on the right track. However, in fact, Huaxing Chemical's management team witnessed changes of personnel twice in the past eleven months of 2011.
Headline News of Herbicides China
-Jiangsu Lanfeng is favored by investors in Chinese stock market.
-Huaxing Chemical is oppugned by investors due to the weak performance.
-Shenyang Sciencreat doesn't run any capacity constructions about haloxyfop-R-methyl and diflufenican.
-Jiangsu Huifeng removes capital in two IPO projects for stronger overseas business.
-Vertellus launched 10,000t/a 3-cyanopyridine production unit around early Dec. 2011.
-Bifenox meets a weak situation in production and market in China
-Thaihot Group establishes an organofluorine project to take place of weak pesticide business.
-Fengshan Group runs trial production of 3,000t/a trifluralin technical which belongs to the first stage of the 5,000t/a trifluralin technical transformation.
-Tianrong group's whole relocation will go into the stage of Jiangsu Ruihe and Jiangsu Zhongyi's relocation in a short term.
-Hubei Huida runs plant relocation to meet governmental regulation for safe production.
-Five main herbicides such as glyphosate, paraquat, acetochlor, atrazine and quizalofop-P-ethyl all meet price hike at a slow pace in 2011.
-Glyphosate price keeps relatively stable in 2011.
… …
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