The recent crash in China has wiped
trillions of dollars off the value of China’s two main stock exchanges in
Shanghai and Shenzhen. Between June 12 and July 10, each exchange lost 25% and
33% of its value respectively.
Many of China’s leading glyphosate
producers are publicly listed, and they have not escaped the fallout. Here is a
quick roundup of how badly each has been affected and the tactics they have
adopted in an attempt to mitigate the damage:
Source: Sina.com.cn
Nantong
Jiangshan
Nantong Jiangshan’s stock price has
plunged 48% in the past month, from USD7.19/share (RMB43.97/share) to
USD3.48/share (RMB21.25/share).
On July 10, the company made an
announcement with three key promises designed to reassure shareholders and
stabilize its share price:
1.
It announced that Sinochem
International Corporation and Nantong Industries Holding Group, the company’s
two largest shareholders have promised not to reduce their stock holdings for
at least the next six months
2.
Nantong Jiangshan’s directors,
supervisors and senior executives have also guaranteed that they will not sell
any company shares for six months
3.
The company pledged to undertake
further measures to placate its shareholders, including offering equity
incentives.
Zhejiang
Wynca
Zhejiang Wynca’s shares dipped even
more dramatically over the same period, from USD3.38/share (RMB20.64/share) to
USD1.41/share (RMB8.62/share), a decline of over 58%.
This prompted the company to
initiate a trading halt on July 8. This temporary reprieve gave the company
time to reorganize its finances:
·
On July 11, Zhejiang Wynca
announced that it would invest USD4 million (RMB25 million) to increase its
equity in Chongyao (Shanghai) Technology to 50%.
·
Meanwhile, the company raised
USD24.9 million (RMB152.3 million) by selling 5.68 million shares (or 33.4%
equity) in Hangzhou Research Institute of Chemical Technology to Zhejiang Jolly
Holding Group at USD4.4/share (RMB26.8/share).
On July 13, the company resumed
trading.
Lier
Chemical
The crash has knocked 46.5% off the
share price of Lier Chemical in the past month, from USD6.1/share
(RMB37.5/share) to USD3.3/share (RMB20.1/share).
This has prompted the company to adopt
a number of tactics in a bid to contain the panic:
·
Lier Chemical has encouraged
shareholders to increase their stock holdings. Sichuan Forever Holding Co. has
already agreed to increase its equity and not to reduce its holdings for at
least six months
·
The company has also encouraged
senior executives to increase their holdings. Gao Wen, the director of Lier
Chemical, bought 100,000 shares and more purchases could follow in the near
future
·
The company directors, supervisors
and senior executives have also released a commitment to not reduce their stock
holdings for the next six months
·
Lier Chemical will refinance
through a share placement. The company’s three largest shareholders (which
between them own over 60% of the shares) have all agreed to fully subscribe the
share placement.
Jiangsu
Yangnong
Jiangsu Yangnong’s stocks have
taken a 51.7% hit in the past month, falling from USD8.0/share (RMB49.1/share)
to USD3.9/share (RMB23.7/share).
Shenghua
Biok
Fortunately for Shenghua Biok, it
has been under a trading halt since March due to an ongoing non-public
offering, meaning that the company has been shielded from the effects of the
crash up to this point.
Source: Sina.com.cn
Shandong
Shengli
Shandong Shengli’s stock price has
slumped by 52%, from USD2.1/share (RMB12.5/share) to USD1.0/share
(RMB6.0/share).
This prompted the company to halt
trading on its stocks on July 8 on the grounds that it was planning some major
issues. Three days later, the company announced that it would be taking four
measures to ensure future stability:
1.
Shareholders and senior executives
promised to increase their stock holdings over the next twelve months
2.
Shandong Shengli would also
encourage its staff to increase their stock holdings through an ESOP, equity
incentives and other methods
3.
The company promised that no
shareholders with over a 5% stake in the company, directors, supervisors or
senior executives would reduce their holdings through the secondary market
4.
The company also vowed to
accelerate its strategic transformation through mergers and acquisitions, with
the goal of restructuring its business towards the clean energy and natural gas
sectors.
CEFC
Anhui
CEFC Anhui halted trading on its
stocks on June 15 for an assets reorganization, so it managed to largely avoid the
effects of the crash. However, industry insiders worry that its stock price may
plummet as soon as trading resumes.
Sichuan
Hebang
Sichuan Hebang also halted trading,
though slightly later on July 3, as the company was planning to set up a
private bank through sponsorships. However, on July 11 Sichuan Hebang was
forced to announce that this plan had failed to win government approval and
trading on its stocks resumed on July 13.
Between June 12 and July 10,
Sichuan Hebang’s shares declined 41% in value from USD4.7/share (RMB28.5/share)
to USD2.8/share (RMB16.9/share).
Hubei
Xingfa
Hubei Xingfa released a statement
on July 10 with the following announcements:
1.
Yichang Xingfa Group, the controlling
shareholder of Hubei Xingfa, plans to invest at least USD3.3 million (RMB20
million) in increasing its holdings in the company within the next two months
2.
Hubei Dingming Investment also
plans to invest at least USD1.6 million (RMB10 million) in the company within
the next six months
3.
Hubei Xingfa pledges that if its
closing stock prices are lower than the net asset value per share audited in
2014 for five trading days or more during the period July 9 – September 9, the
company will initiate a share buy-back scheme.
CCM
will continue monitoring closely how China’s glyphosate market is affected by
the crash and we will release regular updates on the situation in our Glyphosate E-Journal.
For
more information on CCM and our coverage of China’s agrochemicals market,
please visit www.cnchemicals.com or get in touch directly by
emailing econtact@cnchemicals.com or calling +86-20-37616606.