Guangzhou, Guangdong -- (SBWIRE) -- 12/26/2011 -- Triggered by an announcement about subsidiary liquidation issued on Nov. 23, 2011, Anhui Huaxing Chemical Industry Co., Ltd. (Huaxing Chemical) encountered a trouble of being blamed and questioned by investors. In detail, Huaxing Chemical is criticized for acting with unadvisable and mutable strategies. Although the criticism seems subjective to some extent, it's observed that Huaxing Chemical has witnessed constantly weak performance indeed these years, according to CCM’s DecemberIssue of Herbicides China News.

Clouded by the shrinkage of company performance in 2009, 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, and the global stock market is also impacted by some severe social events such as the European Debt Crisis.

As to the responsibility behind such a weak performance, the investors' fire burns toward Huaxing Chemical's operation and management rather than current unfavorable pesticide market. Take this subsidiary liquidation for example, Huaxing Chemical put its subsidiary, Anhui Huaxing Chemical Industry Chongqing Co., Ltd. (Huaxing Chongqing), into liquidation because of current unsuitable situation, according to Huaxing Chemical's explanation in the announcement. But some rumors indicated that the liquidation of Huaxing Chongqing, who runs a 34,000t/a IDAN project (initiated in 2009) valuated at USD5.6 million (RMB35.5 million), is mainly attributed to the company's unsuccessful investment resulted from the unadvisable decision.

As Huaxing Chemical indicated, owing to the depressed glyphosate market, the whole glyphosate production chain is trapped in dilemma at present. Intense competition and overcapacity lead to many suspensions and stops of the relative productions such as IDAN in China.

In Huaxing Chemical's investments, a 20,000t/a glyphosate technical transformation initiated in 2009 with accumulative investment of USD4.3 million (RMB27.7 million) is being delayed in the long term. In detail, 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. Huaxing Chemical will probably encounter the problem of deficit in two consecutive years (2010–2011), implying that the company will meet special treatment in stock market if the loss happens again in 2011.

Although Huaxing Chemical acquired local government's subsidy of USD11.8 million (RMB75 million) in total last month, the reduction of deficit risk can't alleviate investors' worries. What's more, recent suspended reorganization of Huaxing Chemical tenses the investors' nerve further.

According to Huaxing Chemical's bulletin issued on Nov. 11, 2011, Huaxing Chemical resumed stock trade on that day, and declared not to map out the reorganization in the future three months for it isn't at the proper time. On Nov. 7, the company suspended stock trade for laying out company reorganization.

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.

Source: Herbicides China News 1112
http://www.cnchemicals.com/Newsletter/NewsletterDetail_11.html

Content of Herbicides China News 1112:
Jiangsu Lanfeng favored in weak stock market
Huaxing Chemical oppugned
Shenyang Sciencreat clarified confusion about new constructions
Jiangsu Huifeng pushes overseas business
Vertellus launches 10,000t/a 3-cyanopyridine production
Only two bifenox registrations in China
Thaihot Group: Pesticide production to fluorinated-chemicals business
Fengshan Group runs trifluralin trial production
Acetochlor supply shortage alleviates in Nov.
Lier Chemical's glufosinate-ammonium construction always late
Fire pushes relocation in Shandong Zhongshi
Tianrong group to meet new stage of relocation
Hubei Huida runs plant relocation
Review of five popular herbicide prices in 2011
Glyphosate price in the first eleven months

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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