China's largest aluminum company 'explodes thunder'! Many paint factories are affected!

China Zhongwang, the world’s second largest and Asia’s largest manufacturer of industrial aluminum extrusion products, recently announced that it has received notifications from its subsidiaries, Liaoyang Zhongwang Refined Aluminum Co., Ltd. and Liaoning Zhongwang Group Co., Ltd., because Significant losses, operational difficulties, and serious operational difficulties in its subsidiaries and their subsidiaries have made it impossible to solve the current problems on their own. At present, the subsidiary company is actively communicating with related parties and seeking help to maximize the subsequent smooth and orderly operation of the subsidiary company and its subsidiaries.

At the same time, all three independent directors resigned, which also made China Zhongwang's board lack of independent non-executive directors.

"Major losses", "difficulties in operation", "resignation of independent directors", "cannot solve the current problems on their own"...This "inside information" unveiled China Zhongwang's operating difficulties, the "kingdom of aluminum industry" The future of the company has attracted much attention.

The stock price fell 75%, and the aluminum kingdom's backdoor listing plan aborted

As a Chinese aluminum giant, China Zhongwang has maintained an operating income of more than 20 billion yuan in the past three years. In 2018 and 2019, its net profit reached 4.2 billion yuan and 3 billion yuan, respectively. In 2020, its net profit has declined, but it is also close to 18. 100 million yuan.

On August 30, which was the final deadline for the disclosure of semi-annual reports of listed companies as required by the Hong Kong Stock Exchange, China Zhongwang has not released it. Since August 30, 2021, China Zhongwang shares have been in a state of suspension. Data show that as of the suspension, China Zhongwang's share price was 1.68 Hong Kong dollars per share, which has fallen by about 75% from a relatively high level.

China Zhongwang's capital operation is also not smooth. On the evening of August 11, A-share listed company *ST Zhongfang issued an announcement on the termination of major asset restructuring. On the same day, Zhongwang’s Hong Kong stock listing platform, China Zhongwang, disclosed the relevant announcement on the “Termination of Proposal to Reorganize Assets through the Spin-off of Liaoning Zhongwang and China Real Estate”, announcing that Zhongwang’s A-share backdoor listing plan was aborted.

The industrial chain is affected, and the demand of 550,000 tons in the coating industry may be cold

Regarding the reason for the thunderstorm of Zhongwang Group, industry insiders said that on the one hand, the growth rate of its downstream industry chain has slowed. In response to the slowdown in the development of infrastructure and real estate industries in recent years, the corresponding demand for aluminum products will also decline simultaneously. on the other hand. Since the outbreak of the epidemic, the energy industry as well as the transportation, aviation, and real estate industries have all been impacted to a certain extent. For this impact, China Zhongwang failed to give early judgments and failed to take timely measures to increase revenue and reduce expenditure, and missed a move.

As a giant in the aluminum profile industry, Zhongwang Group’s current precarious state has a great deterrent effect on the powder coating industry. According to people familiar with the matter, Zhongwang Group has its own powder factory with counterpart services to provide powder coatings for it. Therefore, the current situation will also affect the market and price trends of raw materials such as resins, pigments, and barium sulfate in the upstream of powder coatings. At present, some upstream raw material companies are worried about whether Zhongwang Group's accounts can be recovered on time, and whether acceptance bills will be overdue like Evergrande.

According to public information, Zhongwang Group has become the world's second aluminum industry, with an annual production capacity of 800,000 tons. Today, its operating difficulties mean that the development of the aluminum profile industry has suffered heavy losses. Aluminum prices have risen by 117% since last year's 11,000 CNY/ton, a 15-year high. The gross profit of downstream aluminum materials has decreased by 25%, most aluminum profile companies have reduced orders by about 30%, and production lines have also stopped production. In addition, many leading real estate companies such as Evergrande and China Fortune Land have exploded, and the demand for the aluminum profile industry has weakened, which has also seriously affected the market for the aluminum profile industry. According to the relevant data of the Coating Purchasing Network, in recent years, there have been nearly 50,000 companies in the aluminum profile industry that have been cancelled, revoked, and closed in an abnormal state of business. In 2020 and 2021 alone, there will be nearly 1,000.

For coating companies, the aluminum profile industry is the largest application field of powder coatings, and the demand for powder coatings is also huge. In 2020, China's aluminum extrusion materials will be powder coated with 11 million tons, accounting for 69.8% of the surface-treated aluminum extrusion materials (15.75 million tons). In 2020, the domestic output of construction aluminum profile is 13.9 million tons, industrial aluminum profile is 6.12 million tons, and the output of construction formwork profile will reach 1.15 million tons. Calculated on the basis of 40-50kg of powder used for spraying per ton of aluminum, the consumption of powder coating for aluminum extrusion in 2020 is 440,000-550000t.

Nowadays, the market of aluminum profile industry has experienced a large-scale decline. For upstream coating products, it is tantamount to stirring up waves with one stone. Domestic aluminum profile powder coating manufacturers are mostly in the Guangdong market. Companies such as Guangdong Defusheng New Materials, Guangdong Shili Powder, Guangdong Huajiang Powder, Foshan Nanhai Jiadubai, Sunris Group and other companies have performed well in the aluminum profile industry. The brands Akzo Nobel, Tiger New Materials, and Nippon are also relatively well-known companies in the aluminum profile industry. If the aluminum profile industry market goes down, it means that the demand for powder coatings of 550,000 tons or will be reduced.

The explosion of the real estate leader Evergrande has led to the weakening of demand in the aluminum profile industry. The "operating difficulties" of the "Aluminum Kingdom" Zhongwang Group has also made the market for powder coating raw materials unstable. Under the combined action of multiple complex factors, it is no different The current plight of the powder industry adds another fire.