The "ban on burning" is expected to be fully relaxed, and fireworks concept stocks "rise first for respect"

Recently, the comprehensive lifting of the ban on fireworks and firecrackers has once again become a hot spot of social concern. On December 26 last year, Shen Chunyao, director of the Legislative Affairs Committee of the Standing Committee of the National People's Congress, reported to the seventh meeting of the Standing Committee of the 14th National People's Congress on the filing and review work in 2023. A number of typical cases have been published in the filing review report. One of the cases involved the setting off of fireworks. According to the report, after communication, the formulating authority has agreed to make changes to the relevant regulations as soon as possible.

As some media news commentaries said, Chinese people should enjoy the joy of the New Year after a year of hard work, and should have the right to look up at the brilliant fireworks. The latest statement of the Legislative Affairs Commission on fireworks and firecrackers has once again aroused widespread discussion in the society, allowing the outside world to see the hope of the relaxation of the "ban on fireworks" on fireworks and firecrackers, and it has also made listed companies related to the industrial chain rise when they hear it.

It has been banned for nearly 10 years

Experts called for a reasonable method of discharge to be determined according to local conditions

According to data from the Ministry of Public Security, in 2017, fireworks were banned in 444 cities across the country, and 764 cities were restricted, and in 2018, fireworks were banned in 803 cities at or above the county level.

By the beginning of 2023, it has been nearly 10 years since the ban policy was fully implemented, and many places have taken measures to relax the regulations on the use of fireworks and firecrackers, changing "prohibition" to "restriction".

Wang Chengdong, a professor of administrative law at the China University of Political Science and Law, believes that the rational method of setting off fireworks that can be considered at present is to carry out fireworks in different regions and time periods, so as to allow the masses of the people to enjoy traditional culture, and the sound of fireworks and firecrackers is also a kind of taste.

Densely populated megacities and unlimited fireworks for a short period of time not only have a health impact on the general population, but may also cause greater damage to the sick, infants and young children. Therefore, within the area around the hospital, kindergartens, primary schools, and nursing homes, they can be appropriately controlled, and the location can be demarcated, and the fireworks can be carried out within the specified time.

"At the same time, we should also emphasize that what kind of environment we should live in, what kind of fireworks and firecrackers should be set off, and how to set off firecrackers, more choices should be given to the people," Wang Chengdong said, each city has its own characteristics, should not be too dull, according to the characteristics of each locality, the provincial conditions, city conditions, district conditions, county conditions to determine, more appropriate.

Relevant listed companies rose when they heard the news

The civil explosion concept sector performed well, up 4.35%

In the past few days, discussions and calls for the relaxation of the "ban on fireworks" have appeared in the newspapers. In this context, those involved in the fireworks business, or engaged in the fireworks business, and even civil explosive enterprises, have all attracted market attention.

On December 28 last year, the "first share of fireworks" ST Panda (600599.SH) opened the market. ST Panda, formerly known as Liuyang Fireworks, is currently mainly engaged in export trade, wholesale sales of domestic fireworks and firecrackers, supply chain services for professional fireworks and fireworks enterprises, and small loan business.

Nitric acid and other fireworks industry chain manufacturers Huaertai (001217.SZ) and Kailong shares (002783.SZ) all bid for the daily limit, and Deere Chemical (831304.BJ) once rose by more than 20%. In addition, Poly United (002037.SZ), Gaozheng Civil Explosives (002827.SZ), Guotai Group (603977.SH) and other civil explosive industry companies followed suit. According to data from Oriental Wealth Choice, the civil explosion concept sector performed well on the day, up 4.35%.

Among them, Huatai, which is engaged in the research and development and sales of chemical products, said on the interactive platform that the company's nitric acid products can be used to manufacture fireworks and firecrackers. In response to investors' questions about whether the production of fireworks and firecrackers will be laid out for the upcoming Spring Festival, Xinyu Guoke replied that the company does not produce fireworks and firecrackers at present, but only the subsidiary Guoke specially installed fireworks and firecrackers production line information transformation or automation equipment.

ST Panda issued a stock price change announcement

"There is no fireworks domestic sales team and channels"

In the first half of 2023, ST Panda's revenue and net profit attributable to shareholders of listed companies (hereinafter referred to as net profit) decreased by 35.09% and 41.07% respectively. The company explained that due to the decline in foreign market demand, the fireworks export business decreased significantly compared with the same period last year. ST Panda also said in the semi-annual report that the company is the general trend to restart the domestic market of fireworks this year, hundreds of product selections have been completed in the first half of the year, and hundreds of dealers have been cooperated.

On November 13 last year, ST Panda also said in response to investors' questions that in 2023, under the leadership of the restructured board of directors, the company has returned to its main business of fireworks and relaunched its domestic sales business.

However, on the evening of December 21, the announcement of the stock price change issued by ST Panda (600599), which has been three consecutive boards, poured some cold water on shareholders. The company said that there have been recent online rumors that the country will liberalize the fireworks policy, but this news has not been officially confirmed. The company's fireworks business is all OEM processing and exported abroad, there is no fireworks production capacity and domestic sales team and channels, and the policy is not expected to have an impact on the company's production, operation and financial condition.

In the announcement on the evening of the 21st, ST Panda also reminded the following risks: 1. The company's grandson company Yinhu has been filed, and the relevant redemption work has not yet been completed, and the last installment of 40.04 million yuan of the 167 million yuan advanced to investors by Yinhu through Rongxintong will expire on December 31, 2022, and the payment has not been recovered so far. The Company was unable to determine whether the final listed company was jointly and severally liable for the outstanding balance of Silver Lake. 2. Recently, Zhao Weiping, the actual controller of the company, has been arrested on suspicion of illegally absorbing public deposits. 3. In 2021, the company failed to perform the necessary collection procedures in accordance with the relevant regulations due to the post-loan management of the small loan business, and due to the lack of overdue collection work, the company's 2021 audit report was issued, and the company's small loan business had an overdue amount of 88 million yuan, and its internal control had major defects. An audit report on the company's internal control was issued with a negative opinion. At present, the company still has some overdue small loans, and at the same time, the audit of the company's 2022 annual report has not yet begun, and there are still significant uncertainties about the type of audit opinion on financial reports and the type of audit opinion on internal control. 4. The company's shares have risen sharply recently, and there may be irrational speculation risks, so the company invites investors to pay attention to the risks of secondary market transactions, rational decision-making, and prudent investment.

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China's fireworks industry is well-known overseas, but it is trying to survive in the cracks of China

Find a way to solve the problem and launch creative fireworks such as "Gatling".

Julie Heckman, executive director of the American Fireworks Association, said: "90 percent of the fireworks set off in Americans' backyards come from China, and about 70 percent of the fireworks used in professional fireworks displays are made in China. "In terms of export value, from January to October 2022, China's fireworks and firecrackers exports reached 1.007 billion US dollars, a year-on-year increase of 52.1%, which has exceeded the peak in 2018.

While China's fireworks are well-known overseas, the domestic fireworks industry is trying to survive in the cracks. The production of fireworks and firecrackers in China is not Hunan, Jiangxi, where China's four major fireworks towns were born - Liuyang, Liling, Shangli, Wanzai, fireworks and firecrackers production and culture have a history of thousands of years. According to the data, the number, output value and export of fireworks and firecrackers production enterprises in Liuyang, Liling, Shangli and Wanzai 4 counties (cities) account for more than 70%, 80% and 90% of the country respectively. Among them, Liuyang is the most famous, "for every two flower cannons lit by Chinese, one comes from Liuyang"!

Liuyang is a well-known fireworks production area, 60% of domestic and 80% foreign fireworks are produced in Liuyang. China accounts for 97.4% of the U.S. market for imported fireworks, with the U.S. importing $580.3 million of fireworks from China in 2022, with Liuyang County alone contributing 60% of exports. Since the reform and opening up, Liuyang's economic development has been rapid, fireworks is its main pillar industry, in many remote villages, fireworks is an absolute enrichment industry, driving employment, stimulating the local economy, in Liuyang around the development of a complete industrial chain of fireworks, from pharmaceutical raw materials, pulp, packaging, fireworks production, fireworks machinery, transportation and other aspects have been very complete.

However, under the ban, the business of fireworks and firecrackers was not good, and the Liuyang government no longer relied on the fireworks and firecrackers industry, and turned wholeheartedly to biomedicine. Taking Liuyang as an example, has Liuyang really given up the fireworks industry? Liuyang Fireworks has been looking for a way to break the problem of fireworks ban and restriction and promote the transformation and upgrading of the fireworks industry. At present, Liuyang enterprises have cooperated with 18 domestic Fangte theme parks, Zhuhai Chimelong Ocean Kingdom, Shenzhen Window of the World and other scenic spots to create normalized fireworks display projects.

In 2022, Liuyang City issued the "Three-Year Action Plan for the High-quality and Safe Development of Liuyang City's Fireworks and Firecrackers Industry (2022-2024)", integrating culture and tourism, supporting the implementation of the "traditional fireworks and firecrackers making skills + tourism" model in rural tourist attractions, and at the same time promoting the fireworks cottage sales model, establishing fireworks cultural tourism projects, and creating a new model of cultural tourism and fireworks consumption.

To this end, Liuyang fireworks enterprises have launched a series of creative fireworks, such as changing the way of fireworks, launching shelf fireworks, subtitle fireworks, column fireworks and other products. Just like the "Gatling" that will fire in 2023, the appearance, the firing effect, and the Gatling machine gun strafing are quite popular among young people.

The reporter recently learned from the Liuyang Firecracker and Fireworks Industry Development Center that since 2023, Liuyang has carried out 49 creative fireworks activities, including 33 weekend fireworks, attracting more than 3 million tourists. In addition, in 2023, Liuyang fireworks enterprises have carried out more than 1,500 large-scale celebrations at home and abroad, occupying more than 90% of the national market share.

Written by: Nandu reporter Wang Wei and Zhao Weijia

Part of the content is integrated with CCTV Network, Nandu Appraisal and Evaluation Laboratory, Securities Times, Hunan Daily, Financial Breakfast, Reading and Creating Finance, etc

The mapping is generated by Tencent's hybrid model