Shandong Qiaochang Delays Listing Plan Due to Suspension of SFH

CCM’s September Issue of Herbicides China News has come out recently. The top story of this issue is that Shandong Qiaochang may put off its listing process due to suspension of the assets reorganization towards SFH.

Shandong Qiaochang plans to get listed by assets reorganization towards SFH, a listed real estate company, which means that the assets exchange and stock issue will be achieved between Shandong Qiaochang and SFH, and Shandong Qiaochang's agrochemical businesses, including dominant herbicide, will be injected into SFH.

Unfortunately, the integration plan failed finally due to the suspension of SFH's stock trade.  According to SFH's announcement, the suspension is because of the sharp influence made by Chinese government's real estate regulations. Therefore, the two companies hung up the reorganization and SFH restored transaction in the share market on Aug. 9^th, 2011, thirty five days after its stock suspension. What's more, SFH declared in the announcement that it wouldn't plan the reorganization within the future three months.

Except the influence of the governmental real estate regulations, there are also many difficulties that hinder the listing plan of Shandong Qiaochang, if Shandong Qiaochang adopts current method of assets reorganization towards listed real estate companies. For example, weak R&D, overcapacity in domestic market and overwhelming competition from overseas agrochemical giants all force Chinese pesticide companies to enhance their competitiveness constantly.

It requires domestic pesticide companies including Shandong Qiaochang, must explore new ways to arm themselves immediately, such as integration, getting listed or cooperation. Moreover, Chinese pesticide companies also need strong competitiveness to face challenges.

The following highlights are covered in Herbicides China News:

-Jiangsu Changqing witnessed increase of 10.04% and 31.44% year on year in total revenue and net profit to USD77.40 million and USD9.96 million respectively in H1 2011.

-Jiangsu Huifeng slowed its performance down during the first six months of 2011.

-Sanonda's net profit jumped by 58.6% year on year to USD3.07 million in H1 2011.

-Shandong Qiaochang's listing plan by reorganizing towards SFH is put off.

-Jiangsu Changqing plans to establish a new production base and a new subsidiary in Yangkou Chemical Park of Rudong County, Nantong City.

-Taihe Group (Fujian Sannong) modified its commercial registration to be a real estate company.

-Worries about paraquat prospect is aroused in Chinese herbicide market due to its fatal poisoning trait.

-Florasulam meets relatively blank market in China nowadays.

-Pesticide marketing still see flagging in China due to the limited marketing influence on terminal consumers.

-Diflufenican market share in China still keeps relatively small nowadays.

-Fengshan Group will launch a new 5,000t/a trifluralin technical production line in Sept. 2011.

-Tangshan Chenhong can supply pyridine products now.

-China's herbicide export volume and value reached 136,000 tonnes and USD348 million respectively in Q2 2011, witnessing increase over the corresponding period of 2010.

-Influence of Pesticide Industry Policy on Chinese pesticide market witnesses growth, according to CCM International's questionnaire survey.

-In the past twelve months (Aug. 2010 –Aug. 2011), Chinese metolachlor technical price saw sharp fluctuation.

(Guangzhou China, September 19, 2011)

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Shandong Qiaochang Puts Off Its Listing Plan

The exact news about Shandong Qiaochang Chemical Co., Ltd. (Shandong Qiaochang)'s listing plan was detected firstly in the bulletin of Shanghai Fenghwa Group Co., Ltd. (SFH), but it's disappointing that Shandong Qiaochang may put off its listing process due to suspension of the assets reorganization towards SFH. At any rate, Shandong Qiaochang's ambition in stock market is very apparent, according to CCM’s September Issue of Herbicides China News.

In recent years, Shandong Qiaochang leads quiet effort to map out listing plan. The establishment of sales network and famous brands, as well as relocation into "Qiaochang Chemical Industrial Park" in Binzhou Northern Development Zone, can be all regarded as preparation for the company's listing plan. (More details about Shandong Qiaochang's events are mentioned in CCM International's report product: Company Profiles of Thirty Major Chinese Agrochemical Manufacturers)

As released in SFH's announcement issued on Aug. 9th 2011, Shandong Qiaochang intends to get listed at a fast pace by the way of the assets reorganization towards SFH, a listed real estate company. In detail, the assets exchange and stock issue will be achieved between Shandong Qiaochang and SFH, and Shandong Qiaochang's agrochemical businesses, including dominant herbicide, will be injected into SFH.

Unfortunately, under the suspension of SFH's stock trade, the two companies' negotiation failed finally. According to SFH's announcement, the suspension is because of the sharp influence from the Chinese government's real estate regulations". As a result, the two companies hung up the reorganization and SFH restored transaction in the share market on Aug. 9th 2011, thirty five days after its stock suspension. What's more, SFH declared in the announcement that it wouldn't plan the reorganization within the future three months.

It's sure that Shandong Qiaochang's listing plan by reorganization towards SFH will be put off for three months at least. In terms of how to tackle this difficulty, Shandong Qiaochang doesn't release any information in response.

Although other new potential companies can be taken into account by Shandong Qiaochang, it can be predicted that more difficulties will be encountered if the current method, assets reorganization towards listed real estate companies, is adopted in Shandong Qiaochang's listing plan. It's because the Chinese government is making great efforts to handle overheated housing price nowadays that a series of relative regulations do impact on real estate companies to some extent.

Indeed, pesticide in China is also not a comfortable industry as a result of intense competition and Chinese government's stricter macro regulation. Relatively weak R&D, overcapacity in domestic market and overwhelming competition from overseas agrochemical giants all force Chinese pesticide companies to enhance their competitiveness constantly. And the Chinese government also strengthens regulation to push the development in domestic pesticide industry.

As demanded by the Chinese government, the number of domestic pesticide enterprises should reduce by 30% of present number by 2015, the leading 20 pesticide enterprises' sales value should approach 50% of the total in China. And the sales value should exceed 70% by 2020.

It means that current pesticide companies, including Shandong Qiaochang, must explore new ways to arm themselves immediately, such as integration, getting listed or cooperation. Moreover, in fact, Chinese pesticide companies also need stronger competitiveness to face challenges.

In addition, some industrial insiders commented on internet that integration between different industries may become another trend in Chinese M&A, because different dominance benefits each other. Take Shandong Qiaochang's this suspended reorganization for example, real estate attached to pesticide, even though SFH's performance is not nice in recent years.

Only in the first half of 2011, SFH witnessed loss of USD1.3 million in net profit, shrinking 7.25% year on year.

Founded in 1993, Shandong Qiaochang Chemical Co., Ltd. (Shandong Qiaochang) is one of the main agrochemical groups in China and the largest herbicide producer in Shandong Province.

Shandong Qiaochang has three subsidiaries and five branch factories. Its products cover five categories (herbicide, insecticide, fungicide, etc.) and 50 species. The major herbicide products in Shandong Qiaochang include paraquat, acetochlor (oil), butachlor, atrazine, 2, 4-D acid, etc. Apart from the agrochemicals, Shandong Qiaochang also produces chemical intermediates.

Shandong Qiaochang passed the ISO 9002 certification in July 1999. At present, products of Shandong Qiaochang are exported to more than 30 countries or regions. More than 30 kinds of bulk pesticides and formulations have been registered in South America, Middle East, Europe, Australia, Southeast Asia, etc.

Source: Herbicides China News 1109

http://www.cnchemicals.com/Newsletter/NewsletterDetail_11.html

(Guangzhou China, September 19, 2011)

Content of Herbicides China News 1109:

Jiangsu Changqing maintains performance increase in H1 2011

Jiangsu Huifeng slows its performance down in H1 2011

Sanonda sees increase of 58.6% in net profit in H1 2011

Jiangsu Changqing plans new production base in Nantong City

Shandong Qiaochang puts off listing plan

“Fujian Sannong” substituted by new name

Worries about paraquat aroused in China

Florasulam meets blank market in China

Poor pesticide marketing in China

Diflufenican maintains weak domestic market

Fengshan Group to launch new trifluralin capacity

Tangshan Chenhong initiates pyridine supply

Overview of China's herbicide export in Q2 2011

Questionnaire survey: Influence of Pesticide Industry Policy

Metolachlor technical price fluctuates sharply

Herbicides China News, a monthly publication issued by CCM International on 15^th 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.

Please visit http://www.cnchemicals.com for more information or contact econtact@cnchemicals.com