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China: Medium And Small Pesticide Enterprises Enter Stock Market To Obtain New Capital Sources

In 2015, the A-share market has fluctuated wildly in China, and IPOs were at one stage terminated. The capital market is always one of the best options for an enterprise to raise funds. In 2015, numerous pesticide enterprises raised capital for their ongoing development.

Among them, financially strong companies went listed on the A-share market, while small- and medium- sized enterprises chose to enter the New Third Board (the pilot national share transfer system for small and medium-sized enterprises, National Equities Exchange and Quotations=NEEQ) for financing.

In 2015, 7 agrochemical enterprises were listed on the New Third Board, while 3 enterprises which are mainly engaged in the fungicide business were listed on the A-share market, according to CCM.

7 pesticide enterprises were listed on the New Third Board

In H1 2015, China's stock market embraced a bull market, attracting many pesticide enterprises to list on the stock market. But since China's A-share market has high entry threshold and a long period before enterprises can complete the process of listing, only a few among the many pesticide enterprises that applied for an initial public offering (NYSEARCA:IPO) for A shares were successful in listing.

As a result, the New Third Board (National Equities Exchange and Quotations, the pilot national share transfer system for small and medium-sized enterprises) is the best option for medium- and small-sized enterprises because of its low entry threshold and the financial index-free filing of pesticide formulations. In 2015, many Chinese enterprises applied for entering the New Third Board, among which 7 were successful.

Enterprises enjoy many advantages by entering the New Third Board:

  • Enables enterprises to transfer their stocks and obtain more capital for reinvestment
  • Improves enterprises' governance standards
  • Improves enterprises' public image and cognition
  • Enables enterprises with less than 200 shareholders to trade
  • Short timeframe and low costs for listing
  • Fewer restrictions on share trading for controlling shareholders and actual controllers
  • Lower public relations costs and risks compared with directly listing
  • Ÿ Enables enterprises to issue preferred stock and extend their capital sources

List of the pesticide enterprises entered the New Third Board

Company

Stock code

Total revenue in 2014 (NYSEARCA:RMB)

Total revenue in H1 2015 (RMB)

Zhejiang Xinnong Chemical Co., Ltd.

831868

538 million

300 million

Henan HDF Chemical Co., Ltd.

832940

315 million

150 million

Jiangxi New Dragon Biotechnology Co., Ltd.

833098

26 million

18 million

Beijing Nutrichem Company Limited

833819

3.2 billion

--

Shandong Luba Chemical Co., Ltd.

834117

1.5 billion

310 million

Wujiang Dongwu Agrochemical Co., Ltd.

834330

147million

54.5 million

Jiangxi Heyi Chemicals Co., Ltd.

834637

380 million

170 million

Source: CCM

3 fungicide enterprises were listed on the A-share market

Numerous pesticide enterprises raised capital for their ongoing development. Financially strong companies went listed on the A-share market,

In 2015, 3 fungicide enterprises successfully went listed on the A-share market to raise capital for their ongoing development. This move is facilitating the development of the fungicide industry.

The three enterprises are Limin Chemical Co., Ltd. (Limin Chemical), Sichuan Guoguang Agrochemial Co., Ltd. (Sichuan Guoguang) and Anhui Guangxin Agrochemical Co., Ltd. (Guangxin Agrochemical).

List of the fungicide enterprises entered the A-share market

Company

Stock code

Total revenue in 2014 (RMB)

Total revenue in H1 2015 (RMB)

Limin Chemical Co., Ltd.

002734

758 million

430 million

Sichuan Guoguang Agrochemial Co., Ltd.

002749

580 million

520 million (Jan.-Sep.)

Anhui Guangxin Agrochemical Co., Ltd.

603599

1.2 billion

785 million

Source: CCM

In H1 2015, bull share market attracted lots of pesticide enterprises to get access to IPO. During H2, market crash caused IPO to terminate, but didn't slow down the pace of listing. In Nov., IPO activities were resumed after 4-month suspension. A new round of listing is emerging: Sino-Agri Leading Bioscinences Co., Ltd., Qingdao Hailir Pesticides & Chemicals Co., Ltd. and Jingo Agrochemicals Technology Co., Ltd. are key examples.

If you have more questions about China's pesticide market, get in touch by emailing econtact@cnchemicals.com or calling +86-20-37616606.