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Changtian Plastic sinks deeper into the red
CHANGTIAN Plastic and Chemical has sunk deeper into the red for the third quarter ended September 30, 2016.
The Chinese maker of adhesive tapes reported a net loss of 4.4 million yuan compared to 2.4 million yuan a year ago. This was despite a 4.1 per cent improvement in revenue to 9.8 million yuan from 9.4 million yuan over the same period.
Changtian said China's economic growth continued to slow in Q3. While the average selling prices of all its products rose, orders for release papers and UV cured release film dropped over 20 per cent. This dampened the improvement seen in its core adhesive tapes and resulted in only a marginal increase in revenue.
It also saw a hefty 49.6 per cent hike in administrative expenses to 7.1 million yuan in Q3. This was related to the development of its Nylon-6 chips business. Construction works of the Nylon-6 chip development is expected to be completed by year end, with trial production beginning early 2017.
Following the payments for the purchases of plant and equipment related to its Nylon-6 chips business, Changtian's cash and cash equivalents fell significantly to 117.4 million yuan by end September, compared to 776.4 million yuan on December 31, 2015.
Due to a shortfall of cash and cash equivalents, as well as unpaid capital expenditure related to its Nylon-6 business, Changtian said it has obtained a written confirmation from its principal banker in China to make available up to 300 million yuan in loan. This involves a pledge of its plant and equipment.