M&A Lifts Lier Chemical's Q1 Performance

June 15, 2011 - PRLog -- June 14, 2011, CCM - Since the acquisition to Jiangsu Kuaida Agrochemical Co., Ltd. (Jiangsu Kuaida) was finished completely on Jan. 6th 2011, Lier Chemical Co., Ltd. (Lier Chemical) has been enjoying additional income injected by Jiangsu Kuaida. As a result, Lier Chemical witnessed rising performance in Q1 2011.

On April 26th, Lier Chemical issued its Q1 2011 performance report, indicating that both net profit and revenue rose by 50.27% and 58.26% year on year to USD6 million and USD37.7 million respectively in the first quarter of 2011, almost a half of annual net profit and revenue in 2009.

As explained by Lier Chemical in its Q1 2011 performance report, the company's nice performance is mainly attributed to the finished acquisition to Jiangsu Kuaida. In other words, Jiangsu Kuaida's income was counted into Lier Chemical's total performance in Q1 2011, directly contributing to doubled revenue and net profit.

Started in March 2010, Lier Chemical's acquisition to Jiangsu Kuaida has lasted for almost one year. After approved by China Securities Regulatory Commission on Dec. 30th 2010, Lier Chemical purchased Jiangsu Kuaida's over 64 million shares with per share price of USD0.39.

Stimulated by the successful acquisition, Lier Chemical's share price witnessed sharp soar. According to the former report, Lier Chemical's share price on Dec. 30th 2010 jumped by USD0.13 (RMB0.88) per share over the share price on Dec. 29th 2010 to opening price of USD2.72/share (RMB18.00/share). Until Jan. 6th 2011, when Jiangsu Kuaida's commercial registration was changed, Lier Chemical's share price still fluctuated at high level of USD2.72/share (RMB18.00/share). (Please refer to Herbicides China News 1101)

According to the favourable trend, in the Q1 2011performance report, Lier Chemical predicted hardily to achieved growth of 10% - 40% year on year in net profit in the first half year of 2011, still benefiting from the merged performance of Lier Chemical and Jiangsu Kuaida.

In the meantime, Lier Chemical has to endure additional operating cost from Jiangsu Kuaida. According to the merged performance report in Q1 2011, Lier Chemical's total operating cost in Q1 2011 ascended by about 71% year on year. Especially, largely caused by running the acquisition, in 2010, Lier Chemical witnessed drop of 29% year on year in net profit to USD11 million though the revenue reached USD68.2 million, up about 13% over that in 2009.

Although the large operating cost will repress Lier Chemical in the future, the company doesn't worry about the future development. In fact, the favourable case is that Jiangsu Kuaida's injection brought diverse product mix, material dominance and broad sales network. As a leading chloropyridine herbicide producer with relatively simple product mix, Lier Chemical needs badly complementary companies like JIangsu Kuaida with abundant product varieties. At present, Jiangsu Kuaida has more than 60 kinds of pesticide products which cover home pesticide market with widespread reputation. Especially, Jiangsu Kuaida's herbicide business owns strong competitiveness compared with other domestic agrochemical companies, and the market share of its sulfonylurea herbicide products ranks No.1 in China.

Lier Chemical, founded in 1993 by China Academy of Engineering Physics, is a Sino-foreign joint venture mainly engaging in R&D, production and sales of heterocyclic agrochemicals, nutritional agents and fine chemical intermediates. The company got listed in A share market of Shenzhen SME (stock code 002258) on 25 June, 2008, boosting the company to a new level for further development (Please refer to Herbicide China News 0807: Lier Chemical gets listed in A share market). It gained business income of USD59.24 million and net profit of USD12.86 million in 2008.

Source:  Herbicides China News June 2011, whose content is as follows:
http://www.cnchemicals.com/Newsletter/HerbicidesChinaNews...

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