Tuesday 2011-06-28  17:04 Publisher: CapitalVue
June 28 – Shandong Helon (000677.SZ) decided to halt production of viscose fiber in an attempt to cut losses, reports yicai.com, citing a company filing. The halted production lines are able to produce 185,000 tons of fiber, accounting for 68.52 percent of total viscose fiber production. The firm has not yet decided when it will restart production.

Viscose fiber sales generated 3.7 billion yuan in revenues in 2010, accounting for 78.27 percent of total revenues.

However, that category has been a loss-maker since 2010, with a gross profit margin of negative 1.78 percent on operating losses of 65.84 million yuan. The production cut will reduce viscose fiber revenues by half.

Helon incurred a loss of 370 million yuan in 2010 and another loss of 56.15 million yuan in the first quarter of 2011.

However, the firm offered 2.86 billion yuan worth of guarantees to third-party firms by the end of May, accounting for 297.68 percent of its most recently audited net assets.

Helon added another 250 million yuan of guarantees on June 26, bringing the percentage to 315.55 percent.

The China Securities Regulatory Commission (CSRC) recently began investigating the company, which is suspected of violating securities laws.

Company executives including the chairman, the board secretary and vice president have recently resigned.

Source:CapitalVue