Hongda Xingye defaulted on the 180 million resale and fell into a liquidity crisis

Small bonds are on the market

2024-06-28 14:15Creators in the field of finance and economics

The full text is 2519 words, and it takes about 8 minutes to read, so help me highlight the key points

Highlight the point

01 Due to the credit default of the controlling shareholder, Hongda Xingye has limited financing channels and broken capital chain, resulting in a large number of overdue loans.

02 The company announced that the current liquidity is not enough to cover the amount of the "Hongda Debt Surrender" this resale, and the principal and interest of the resale cannot be redeemed.

03Due to the shortage of funds of Hongda Xingye, the company will not be able to carry out normal production and operation activities for most of the time in 2023, and there may be large losses in the main business.

04In addition, the large overdue debts of Hongda Xingye and its subsidiaries may incur large overdue financial interest expenses, and the company has a significant risk of bankruptcy liquidation.

Technical support is provided by Tencent Hybrid Model

Affected by the credit default of the controlling shareholder, Hongda Industrial Limited its financing channels, broken capital chain, and a large number of loans were overdue.

01

default

On June 27, Hongda Xingye Co., Ltd. (hereinafter referred to as "Hongda Xingye") announced that the current liquidity is not enough to cover the amount of the "Hongda Debt Repayment", and the company is unable to pay the principal and interest of the resale due to insufficient liquidity.

Announcement of the resale results of "Hongda Debt Surrender".

According to the announcement, because the closing price of 30 consecutive trading days is lower than 70% of the current "Hongda Bond Surrender" conversion price, according to the agreement, the holder of the "Hongda Bond Surrender" convertible bond can exercise the right to sell back once, and the resale declaration period is from June 18 to June 24.

The resale declaration period of "Hongda Bond Surrender" has ended after the market close on June 24, 2024, with a resale amount of 180 million yuan.

Due to the overdue large amount of debts, some bank accounts and assets have been frozen/seized by the court and bank deposits have been deducted, etc., the company has difficulties in operation and is short of cash.

Due to the impact of factors such as the shortage of funds of Hongda Xingye, the company will not be able to carry out normal production and operation activities most of the time in 2023, and there may be a large loss of its main business.

In addition, large overdue debts of Hongda Xingye and its subsidiaries may incur large overdue financial interest expenses. The company has a significant risk of bankruptcy liquidation, and the possibility of entering bankruptcy reorganization or bankruptcy liquidation procedures in the future cannot be ruled out.

Hongda Xingye will apply for the termination of the resale business and apply for the release of the custody of the bonds that were frozen when the bondholders declared for resale.

In recent years, affected by the credit default of the controlling shareholder, Hongda Industrial has limited financing channels, broken capital chains, and a large number of loans have been overdue.

At present, a number of subsidiaries of Hongda Xingye are in bankruptcy reorganization procedures, with difficulties in production and operation, and serious loss of personnel in key positions, so the company cannot disclose the "2023 Annual Report".

In addition, Hongda Xingye's subsidiaries Inner Mongolia Wuhai Chemical Co., Ltd., Inner Mongolia Zhonggu Mining Co., Ltd., and Western Environmental Protection Co., Ltd. have all been ruled by the court to enter bankruptcy reorganization procedures.

In April this year, Hongda Xingye's parent company, Hongda Xingye Group Co., Ltd. (hereinafter referred to as "Hongda Xingye Group"), declared bankruptcy.

In fact, the crisis of Hongda Xingye Group should start from the end of 2020.

In December 2020, "20 Hongda Xingye SCP001" defaulted, which opened the prelude to the debt crisis of Hongda Xingye Group, and at present, all 5 bonds of the company have defaulted, with a default amount of 4.465 billion yuan.

In addition, Hongda Xingye Group also has a number of overdue loans from financial institutions, the company's financing channels are seriously blocked, and the liquidity risk is extremely high.

02

Lack of funds

According to the official website, Hongda Xingye Group was founded in 1991, headquartered in Guangzhou, with seven industrial systems of "resources and energy, salt lake development, chemical industry, environmental protection, new materials, exchange and equity investment", and is a large-scale comprehensive industrial group of resources and energy in China.

In 2004, Hongda Xingye was listed on the Shenzhen Stock Exchange and is a leader in China's "hydrogen energy, new materials, environmental protection and exchange" industries.

On March 18, 2024, Hongda Xingye shares were delisted from the Shenzhen Stock Exchange.

The official website of Hongda Xingye Group

From the perspective of equity structure, Hongda Xingye Group directly holds 7.17% of the shares of Hongda Xingye, Guangzhou Chengxi Economic Development Co., Ltd., the person acting in concert, holds 0.013% of the company's shares, and Zhou Yifeng is the actual controller.

Shareholding structure chart

Hongda Xing's commercial products and services include PVC, caustic soda, new PVC materials, environmental protection products such as soil conditioners, rare earth products such as rare earth smelting and separation, and bulk raw materials such as plastics, electronic trading, logistics and information services.

In recent years, the production and sales of PVC have declined significantly, and the price of PVC has declined, and the revenue of Hongda Xingye PVC has declined significantly.

In the first three quarters of 2023, Hongda Xingye achieved revenue of 2.22 billion yuan, a year-on-year decrease of 42.04%; The net profit attributable to the parent company was -820 million yuan, the first loss.

Net profit attributable to the parent company

As of the end of September 2023, Hongda Xingye's total assets were 18.479 billion yuan, total liabilities were 8.977 billion yuan, net assets were 9.502 billion yuan, and the asset-liability ratio was 48.58%.

The analysis of the debt structure of "Small Debt Market" found that Hongda Xingye is mainly based on current liabilities, with current liabilities accounting for 96% of total liabilities, and the debt structure is unreasonable.

As of the same reporting period, Hongda Xingye's current liabilities were 8.579 billion yuan, mainly short-term borrowings, and its total short-term liabilities were 5.558 billion yuan.

However, compared with short-term liabilities, Hongda Xingye's liquidity has gradually dried up, and its monetary funds on its books are only 35.4099 million yuan, and the company has a huge short-term debt repayment risk.

In terms of bank credit, as of the end of March 2021, the total credit line of Hongda Industrial Bank was 7.855 billion yuan, and the unused credit line was 2.527 billion yuan, and the data disclosure date is relatively long.

Bank credit

In terms of liabilities, Hongda Xingye also has non-current liabilities of 398 million yuan, of which long-term interest-bearing liabilities are 291 million yuan.

On the whole, the total scale of Hongda Xingye's rigid debt is 5.849 billion yuan, mainly short-term interest-bearing debt, and the interest-bearing debt ratio is 65%.

In terms of financing channels, Hongda Xingye has diversified channels, and it relies heavily on short-term borrowings, in addition to borrowing and issuing bonds, it also finances through leasing, accounts receivable, equity, equity pledge and other means.

However, since the debt default of Hongda Xingye Group, Hongda Xingye's financing channels have been interrupted, and the company's net financing cash flow has continued to net outflow in the first three quarters of 2023, and the refinancing pressure is very high.

Financing cash flow

In terms of equity pledge, Hongda Xingye Group and persons acting in concert pledged a total of 353 million shares of Hongda Xingye, accounting for 91.88% of the company's shares held by it; Its equity pledge rate to Zhongtai Chemical is 99.98%, and it is in a state of judicial freezing.

Equity pledge statistics

In terms of asset quality, Hongda Xingye's accounts receivable and inventory are large, and the turnover efficiency continues to decline, which not only forms a large occupation of funds, but also has a certain risk of price decline and recovery.

It is worth noting that Hongda Xingye's external guarantee enterprises are large in scale and face greater compensation risks. As of the end of June 2023, the company and its affiliates had a total guarantee of 10.589 billion yuan, accounting for 108.13% of net assets.

On the whole, Hongda Xingye's performance is at a loss, and the protection of debt and interest has deteriorated; Heavy debt, facing greater financial pressure and liquidity pressure; The asset quality is average, and the refinancing pressure is high.

03

Tens of billions of Chaoshan billionaires

In 1991, Zhou Yifeng, who was exposed to the ears and eyes of his family since childhood, founded Guangzhou Chengxi, the predecessor of Hongda Xingye Group, to produce plastic raw materials and other chemical products.

After ten years of intensive cultivation and extraordinary business insight, Guangzhou Chengxi has also developed vigorously.

However, this industry was seriously affected by the economy, and in the 2001 economic crisis, most of the domestic counterparts chose to reduce production capacity or even stop production, but Chengxi still continued to produce under pressure and risk.

Fortunately, the economic crisis did not last long, in 2002 the market had a warming trend, with the increase in demand for plastic raw materials at home and abroad, the price of plastic raw materials recovered.

Affected by the economic crisis, the reserves and production capacity of domestic plastic raw material enterprises are very low, and there is a situation where supply exceeds demand, and Zhou Yifeng, who survived, seized this opportunity and began to develop rapidly.

Zhou Yifeng, chairman of Hongda Xingye Group

In 2004, Chow Yifeng once again encountered a milestone event in his life - the acquisition of Wuhai Chemical Plant in Inner Mongolia.

In July 2003, founded in 1952, the old state-owned enterprise Wuhai Chemical Plant went bankrupt due to poor management, Zhou Yifeng acquired the company, and carried out a series of upgrading and reform, and now Wuhai Chemical has become a large-scale plastic chemical raw material manufacturing enterprise with an annual production capacity of more than 2 million tons.

In 2005, Chow Yifeng founded the country's first plastics exchange, the Guangdong Plastics Exchange, and the domestic plastics trading has entered the electronic era, with an annual trading volume of more than 10 million tons and 300,000 domestic and foreign customers.

The growth history of Hongda Xingye Group

Since then, Chow has embarked on an ambitious path of acquisition and expansion.

At the end of 2011, Hongda Xingye Group acquired Jiangsu Qionghua (002002. SZ) became a major shareholder, changed its name to Hongda Xingye in June 2013, and established a wholly-owned subsidiary, Jiangsu Jincai Technology, and began to enter PVC products.

While the business landscape continues to expand, so does Chow's personal wealth.

In the 2014 Hurun China rankings, Yifeng Chow ranked 547th, with a net worth of only 4.1 billion yuan, and three years later, his personal wealth has soared to 10.5 billion yuan.

In recent years, Chow Yifeng has encountered another economic downturn and a downturn in the chemical industry, coupled with the sequelae of his aggressive expansion in recent years, and the debt crisis is imminent.

View original image 145K

• 

• 

• 

• 

• 

• 

• 

• 

• 

•