Tuesday, March 20, 2012

Several Public Companies with Lacklustre Performance Step into Phosphorus Industry in Succession

At present, investment on phosphorus industry upsurges amongst Chinese public enterprises that have never run a business on phosphorus industry, according to CCM International’s March issue of Phosphorus Industry China Monthly Report.
Less than three days after Sichuan Chemical Holding (Group) Co., Ltd. announced its phosphorus project, Wuhan East Lake High Technology Group Co., Ltd. (ELHT), as one public company that never gets involved in the business of phosphorus industry in China before, has released its new investment scheme to step into phosphorus industry on Feb. 19th, 2012. Before this investment, ELHT has experienced nine-month trade suspension since May 2011, to perform the asset restructuring.
In accordance with its announcement, ELHT will cooperate with its parent company—Hubei United Development Investment Group Co., Ltd. (HUDIG) to set up a 30:70 joint venture, namely Hubei United Development Investment Mining Co., Ltd. (HUDIM), to explore and exploit mines, especial phosphate mine. In the meantime, they have decided to take part in the exploration of phosphate mine in Yuan’an Region, Hubei Province.
The performance of ELHT in 2011 is far from satisfactory: It saw a decrease of 27.31% in the revenue of its main business compared with 2010. With this attractive phosphorus investment project, ELHT’s stock has hit the upper circuit limit on Feb. 21st, 2012 when it resumed trading.

In 2011, phosphorus chemical has performed rather well as a whole and will continue to be sought after by the market even when the SSE (Shanghai Stock Exchange) Composite Index fell to the current level, which is mainly attributed to the soaring prices of phosphorus ore and phosphate fertilizers.
Therefore, not only ELHT, it’s noteworthy that some other domestic public companies happened to launch phosphorus projects in succession at the beginning of 2012, either to expand business or to bounce from their losses.
Sichuan Hebang Co., Ltd. (the detail sees page 6, issue 2, Vol. 2: Sichuan Hebang to start IPO for phosphate chemical projects) which reached quite high asset-liability ratio from 2009 to 2011—respectively at 76.71%, 68.75%, 63.58%, made an announcement to start its IPO plan centering on fine phosphate chemical projects on Feb 14th, 2012.
And Sichuan Chemical Holding (Group) Co., Ltd. (the detail sees the article in this issue: Investors start focusing on phosphorus resources in Sichuan Province) which reportedly had a net loss between USD21.43 million and USD26.19 million in 2011, also intends to take part in the operation of phosphorus business in Leshan County, Sichuan Province.

Owing to the booming development of phosphorus industry, these public companies all seem to take phosphorus project as breakthrough to share the benefits from the current situation. In accordance with the data issued by National Bureau of Statistics of China, China acquired USD45.92 billion revenue and USD2.1 billion profit in the main downstream phosphorus products—phosphate fertilizers during the first ten months of 2011, increasing by 55.1% compared with the profit in the same period last year.
Source: Phosphorus Industry China Monthly Report 1203

Content of Phosphorus Industry China Monthly Report 1203:
Phosphorus Ore
Industry Dynamics: Several public companies with lacklustre performance step into phosphorus industry in succession  
Industry Dynamics: Investors start focusing on phosphorus resources in Sichuan Province 
Indusry Dynamics: Hubei government continues to guide local phosphorus industry 
Policy & Legislation: Hunan proposes general development goals for local phosphorus industry  
Yellow Phosphorus
Industry Dynamics: Yellow phosphorus tends to be tight in supply but with small rise in price   
Phosphate Fertilizer 
Indusry Dynamics: Fuquan Region to eliminate local phosphogypsum  
Company Dynamics: Kingenta to develop new fertilizers in Guizhou Province 
Global Insigt: India’s new subsidy policy to trigger slight fluctuation for international DAP market 
Fine Phosphate Chemical 
Company Dynamics: Hubei Xingfa to expand portfolio in favor of escaping depression in STPP  
Company Dynamics: Kailin Group to accelerate construction of phosphorus and coal chemical projects

Phosphorus Industry China Monthly Report, a monthly publication issued by CCM International on 15th of every month, provides you the latest information on company dynamic, industry dynamic, factors impacting the price fluctuation, technology improvement, supply & demand of China's phosphorus industry.

(Guangzhou China, March 16, 2012)
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