Hongda Shares: Stripping Real Estate to Promote Multi-metal Strategy

Recently, HTC (600331) announced that it intends to spin off its real estate business. This is seen by the market as a prelude to a new round of asset integration.

It is understood that after the withdrawal of real estate projects, HTC will focus on the development of non-ferrous metals. According to people familiar with the matter, the company’s implementation of the multi-metal strategy is expected to progress in two areas: Sichuan Vanadium and Titanium Resources Development Co., Ltd. (hereinafter referred to as “Sichuan Vanadium and Titanium”), which is holding 51% of the company, has completed the pilot test for the sponge titanium project and is currently fighting for Panzhihua. The mining rights of Hongge vanadium titano-magnetite ore; annual output of 40,000 tons of molybdenum and 400,000 tons of copper smelting project has been reported after the completion of the provincial EIA.

Some analysts pointed out that due to the huge cost of the project, the financing needs of HTC shares are very urgent, and the transfer of real estate business has cleared its obstacles.

After the multi-metal strategy moves forward with evacuation of the real estate sector, the main business of HTC's shares will be concentrated in the non-ferrous metals sector, and the phosphorous chemical industry will be located in the auxiliary sector.

In 2008, HTC Co., Ltd. and 9 companies, including Pangang Group Steel City Enterprise Corporation, jointly invested in the formation of Sichuan vanadium and titanium, and carried out deep processing of vanadium, titanium, and iron in Panzhihua and comprehensive utilization of associated precious metals. Sichuan vanadium and titanium registered capital of 100 million yuan, of which the company invested 51 million yuan in cash, accounting for 51% of registered capital.

It is understood that the reserves of vanadium in Panxi area account for 52% of the total reserves and 11.6% of the world's total reserves; titanium reserves account for 90% of the country's total reserves and 25% of the world's total reserves.

A local market person in Chengdu told the reporter that Sichuan Vanadium and Titanium has completed the pilot test of the sponge titanium project and is currently seeking the mining rights of Panzhihua Hongge vanadium titanomagnetite. The data shows that titanium sponge is the main raw material for the production of industrial titanium alloys. The titanium sponge production is the basic part of the titanium industry. It is the raw material for titanium, titanium and other titanium components. "The company's current project construction is progressing steadily. If it progresses, it will be announced." On June 16, HTC Securities said to reporters.

At the end of November last year, HTC announced the establishment of Sichuan Hongda Molybdenum Copper Co., Ltd. (hereinafter referred to as "Hongda Molybdenum Copper") with a registered capital of 100 million yuan and plans to invest more than 101.88 billion yuan to build a comprehensive utilization project for deep processing of molybdenum-copper multi-metal resources. This molybdenum copper project mainly includes the construction of a molybdenum project of 40,000 tons per year and a copper project of 400,000 tons per year, all of which are large-scale smelting projects. At the same time, according to the company's plan, the investment funds for the 101.88 billion yuan will be resolved by three parts, namely, 123.171 million U.S. dollars in imports, 62.33 billion yuan in China, and 3.958 billion self-raised funds.

The newspaper also learned from the Deyang City Environmental Protection Bureau in Sichuan that the EIA monitoring task for the deep processing and comprehensive utilization of the Hongda molybdenum copper-molybdenum-copper polymetallic resources project has been completed. Yang Hao also stated that at present, the provincial-level EIA reports for Hongda molybdenum copper are all well done and the next step will be submitted to the national environmental protection department for approval.

The demand for refinancing is urgently "Honda's spin-off of its real estate business may also be a prelude to the resumption of the financing plan," said Yang Jian, research director of Swii Investment, to the newspaper.

On May 20 last year, HTC’s shares were suspended, saying that HTC Group is brewing major assets reorganization. However, due to the immature conditions related to trading target assets, the restructuring was aborted.

Hua Yetai Securities analyst Ye Yu pointed out that in the first quarter of this year, the company’s operating cash flow per share was -0.36 yuan, and the asset-liability ratio was nearly 80%. At the same time, its own hematopoietic function was hampered while debt ** encountered a bottleneck. In this context, the rights and interests** It should be a logical and realistic choice. However, starting in October last year, the China Securities Regulatory Commission has suspended the application for reorganization of real estate development companies. Therefore, the transfer of real estate business will remove obstacles to the operation of the capital market in the later period.

However, according to sources in the HTC Securities Department, it is not known that progress has been made on the issue.

Although HTC shares have strong expectations, the company's share price has fallen by more than 30% from its previous high. The reason for this is that the major shareholder has spared no effort to influence the reduction. From December 30 to December 31 last year, the company’s major shareholder, Hongda Industrial, reduced its shareholding in 50 million shares. In May of this year, it reduced its holdings of 30 million shares. In June, it reduced its holdings by 21.6 million shares and tens of billions.

On the 10th of June, the online chairman of HTC’s shares in the online briefing session said that “shareholders’ reduction through the secondary market is a form of market behavior that has no impact on the company.” Many analysts believe that HTC The pressure on the share capital was relatively high. Hongda Industrial had reduced its shareholding in **, perhaps in order to promote the molybdenum-copper project.

“The unpredictable major asset restructuring is always expected to exist, but the major shareholder reduction action constitutes a time constraint. We judge the company’s financing needs are very urgent, and the transfer of real estate business has cleared the obstacles to its refinancing, but the recent major shareholder reduction The holding time will be at least after November 10th, said Ye Hao, an analyst at Huatai United Securities.