Thursday, March 22, 2012

Huaxing Chemical Flees from Deficit in 2011

Anhui Huaxing Chemical Industry Co., Ltd. (Huaxing Chemical) went through 2011 at last, without worrying about consecutive deficit following 2010 which will lead to special treatment for the company in stock market. According to 2011 performance forecast released on Feb. 24, 2012, Anhui Huaxing was predicted to meet the fruit of performance growth that net profit and revenue rose by 103% and 9.19% year on year to USD0.6 million and USD0.15 billion respectively last year, according to CCM International’s March Issue of Herbicides China News.

Even though the data of Huaxing Chemical's 2011 performance hasn't been confirmed by the accounting firm yet, it can be sure that Huaxing Chemical had overturned the deficit situation of 2010 in 2011 with the financial assistance from the local government.

Admitted by Huaxing Chemical in the forecast, the governmental subsidy has improved Huaxing Chemical's finance of 2011 indeed. Aiming to save Huaxing Chemical from continuous deficit and the risk of special treatment in stock market, in detail, the local government in Anhui Province had given Huaxing Chemical USD11.8 million (RMB75 million) in the name of research subsidy at the end of 2011.

It's noteworthy that Huaxing Chemical's sales profit in 2011 was still negative, which reached USD-14.2 million with year-on-year growth of 28.74%. As explained by Huaxing Chemical, it was because abnormal climate impacted on the company's insecticide businesses and stagnant glyphosate market eroded the company performance in 2011. Especially, limited profit room in glyphosate production always exerts pressure on Huaxing Chemical, whose main business focuses on glyphosate with technical capacity of about 70,000t/a, though the company has been taking effort to improve current glyphosate performance by adjusting market strategy and management.

Thus, Huaxing Chemical's weak behavior still tenses investors' nerves, and even led them to oppugn company operation once. Some opinions pointed out that Huaxing Chemical's poor performance in recent years has much to do with the company's unadvisable and mutable strategies. As indicated in this opinion, for example, Huaxing Chemical mapped out large investment in the 34,000t/a IDAN project and 20,000t/a glyphosate technical transformation (both initiated in 2009), but can't gain profit from these investments. (Herbicides China News 1112: Huaxing Chemical oppugned)

It probably can relieve the investors a little that Huaxing Chemical's share price (Share code: SZ002018) appears upward recently, but the truth is that the whole uptrend of share market in China contributes primarily to this. According to the tracing as of Feb. 24, 2012, SZSE Component Index has jumped by almost 1,500 points on the basis of the opening level in 2012 of about 8,600 points.

At any rate, Huaxing Chemical's glyphosate business always faces various challenges. Shadowed by shrinking demand in overseas market due to global economic turbulence, Chinese glyphosate encountered anti-dumping investigation from Australian government and price reduction of Roundup recently. It can be said that Chinese glyphosate manufacturers creep for survival in this industry.

As to Huaxing Chemical's performance in 2012, it can't be estimated how the company's performance will be impacted by the complicated market factors, though Huaxing Chemical has been putting large effort to change current situation.

Source: Herbicides China News 1203

Content of Herbicides China News 1203:
Chinese pesticide export in 2011-the cahier in 2012 CAC Conference
Huaxing Chemical flees from deficit in 2011
Assets exchange of Huayang Technology blocked
Jiangsu Changqing launches 300t/a nicosulfuron IPO project
Sanonda to launch 10,000t/a pyridine production
MAX (Rudong) emphasizes innovative herbicide technology
Jiangsu Repont to relocate sulfonylurea herbicide production
Pesticide companies promote herbicide sales in March
Chinese 2,4-D witnesses growth in 2011
Decreasing doses of herbicide application researched in China
Chinese paraquat meets demand increase
Dicamba meets supply shortage in Feb.
Wanquan Hongyu's clethodim does not out-sold
Jiangsu Jiannong to resume clomazone supply
Herbicide price fluctuates slightly in early March

Herbicides China News, a monthly publication issued by CCM International on 15th of every month, provides you with the latest occurrences, exclusive analysis on the market trend as well as professional reviews on competitiveness of companies, products and relative industries in China’s herbicide industry.

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