China XD Plastics Reports Revenue Decrease, Considers Going Private
With the virus exacerbating the weak auto market in China, the auto components supplier encounters uncertain fate.
Polymer composite materials supplier for the auto market, China XD Plastics Company Ltd. (Nasdaq: CXDC), saw its stock price up 3% on Monday despite reporting a revenue decrease.
The Harbin-based chemical company said in a statement today that revenue reached $310.5 million in the fourth quarter, down 11% from one year ago. Net loss in the three months through December hit $65 million, or 97 cents per share, compared with a net income of $13 million, or 20 cents per share, in the same period of 2017.
China XD Plastics reported sales volume halved in the fourth quarter.
"The trade tension between China and United States, the stricter environmental protection standard, and a larger reduction of subsidies on new energy vehicles, have generated a lot of pressure on the entire auto industry in China, resulting in depressed domestic demand," Jie Han, the chief executive officer, said in a statement.
The company saw an increase of 14% in revenue in full-year 2019 from $1.27 billion to $1.45 billion while the company got a net income of $3.1 million, down 96% year-over-year in 2019.
During the Covid-19 outbreak, the plastics company turned to the production of raw materials for personal protective equipment such as goggles and masks.
Additionally, the company expanded its marketing areas and customer bases in Northeast China, South China in Central China, and North China. For the international market, the company added new customers in UAE and India and shipped products to the end-users in Europe and Southeast Asia.
China XD Plastics announced that its board of directors has formed a special committee to consider a preliminary non-binding proposal letter from a firm owned by its chairman Han, XD. Engineering Plastics Company Ltd. According to the letter dated May 8, the buyer will acquire all of the outstanding shares of common stock at $1.1 per share.
Looking head, China XD Plastics didn't give any specific number of guidance but mentioned the over 30% decrease in the China auto industry during the first four months will impact the company through the supply chain.
After the lockdown and travel restriction, auto sales growth in China turned positive to 4.4% in April for the first time since July 2018, according to the China Association of Automobile Manufacturers.
Shares in China XD Plastics closed at 93 cents per share, up 3% on Monday.