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Shen Yourong, reporter of Yangtze Business Daily Pentium News

Hongda Holdings (600331.SH), whose business is improving, announced that the company is facing a change of ownership.

On the evening of July 21, Hongda Co., Ltd. issued an announcement that on June 9, 2023, the People's Court of Shifang City, Sichuan Province, respectively ruled to accept the bankruptcy reorganization cases of the debtors Hongda Industry and Sichuan Hongda (Group) Co., Ltd. (hereinafter referred to as "Hongda Group"). After a series of procedures, on July 19 this year, the court issued a "Civil Ruling" and ruled to approve the reorganization plan.

According to the reorganization plan, Shudao Investment Group Co., Ltd. (hereinafter referred to as "Shudao Group") will take over the approximately 536 million shares of Hongda held by Hongda Industry, accounting for 26.39% of the company's total share capital. If the reorganization plan is successfully implemented, the company's controlling shareholder and actual controller will change. Before the equity change, the company's controlling shareholder was Hongda Industry and the company's actual controller was Liu Canglong; after the equity change, Shudao Group will become the company's controlling shareholder and Sichuan Provincial State-owned Assets Supervision and Administration Commission will become the company's actual controller.

According to public information, Shudao Group was established in May 2021. It is a provincial state-owned enterprise established through the reorganization and integration of Sichuan Transportation Investment Group Co., Ltd. and Sichuan Railway Industry Investment Group Co., Ltd., with a registered capital of 54.226 billion yuan. After equity penetration, Sichuan State-owned Assets Supervision and Administration Commission indirectly holds 90% of the shares, and Sichuan Provincial Department of Finance indirectly holds 10%. By the end of 2023, the company's total assets exceeded 1.34 trillion yuan, and its annual operating income exceeded 266 billion yuan.

Hongda shares mainly engages in metallurgy and chemical industry. The company and its affiliate Hongda Group were previously important shareholders of Sichuan Trust, holding 22.16% and 32.04% of Sichuan Trust's shares respectively. In 2020, after Sichuan Trust was exposed to a repayment crisis, four shareholders including Hongda Group, Hongda shares, Sichuan Haoji and Huiyuan Group were subject to regulatory compulsory measures. The former Sichuan Banking and Insurance Regulatory Bureau and the local government sent a working group to promote the company's risk disposal.

It is worth mentioning that in the first half of this year, Hongda Co., Ltd.'s business performance improved.

On July 10, Hongda Co., Ltd. released a profit forecast announcement. In the first half of this year, the company expects to achieve a net profit attributable to the parent company's owners (hereinafter referred to as "net profit") of 50 million to 60 million yuan, compared with -66.54 million yuan in the same period last year, and will turn losses into profits. The company also expects to achieve a net profit after deducting non-recurring gains and losses (hereinafter referred to as "net profit after deducting non-recurring gains and losses") of 50 million to 60 million yuan, compared with -70.5963 million yuan in the same period last year, and has also turned losses into profits.

In the first half of this year, Hongda Co., Ltd. turned losses into profits, which is related to two factors. First, in the phosphating industry, due to the favorable international market conditions, the domestic market pull and the support of export policies, the company's compound fertilizer product orders are sufficient, and the orders for phosphate series products have increased significantly, and production and sales are booming. Due to the significant increase in sales of phosphate series products and the decline in the cost of major raw materials, the operating performance has increased to a certain extent. Second, in the non-ferrous metal zinc smelting, the company's associated rare and precious metal extraction technology has made a major breakthrough, which has increased the recovery rate of associated rare and precious metals such as gold, silver, and copper in the raw materials; at the same time, due to the sharp increase in the prices of precious metals such as gold, silver, and copper, the value of by-products has increased significantly, which has effectively reduced the comprehensive production cost of zinc smelting, and the gross profit margin of zinc products has increased, and zinc smelting has turned losses into profits.

However, in terms of natural gas chemical industry, in the first half of the year, affected by factors such as the low price of foreign synthetic ammonia, the increase in domestic synthetic ammonia production capacity, and the decline in coal prices, the market price of synthetic ammonia continued to decline, and the company's synthetic ammonia product profitability declined year-on-year.