On September 27, Caixin reported (Reporter: Liang Xiangcai) that after Delong Nickel Industry, a major customer of Xiamen Xiangyu (600057.SH), went bankrupt and was 'taken over' by the company's controlling shareholder two months ago, it continues to be of interest to investors.

During today's performance briefing, investors raised questions multiple times about issues related to Delong Nickel Industry. Lin Jing, the financial officer of Xiamen Xiangyu, stated that as a leading bulk supply chain enterprise in China with a relatively diversified customer base, they will reassess and adjust the cooperation with Delong based on the future production and operation of the Delong companies.

It is reported that on July 24, Delong Nickel Industry filed for bankruptcy. The company was the largest customer of Xiamen Xiangyu's metal mining sector in 2023, with sales reaching 7.107 billion yuan.

Also on the same day, Delong Nickel Industry's wholly-owned subsidiaries, Defeng Metal and Juhe Metal, both filed for bankruptcy. These two companies are suppliers to Xiamen Xiangyu, with Defeng Metal and Juhe Metal being the company's largest and fifth largest prepayment recipients respectively by the end of 2023, with book balances of 4.945 billion yuan and 1.37 billion yuan. In 2023, Xiamen Xiangyu purchased 20.178 billion yuan and 19.312 billion yuan from Defeng Metal and Juhe Metal respectively, including hot-rolled stainless steel and cold-rolled steel strips.

On July 29, Xiamen Xiangyu issued a cautionary announcement regarding the planned overall acquisition of Delong Nickel Industry's debt by its controlling shareholder and related party transactions, temporarily shifting the risks of Delong Nickel Industry's bankruptcy from its own operations. The company stated that in order to safeguard the interests of the listed company and the general investors, Xiangyu Group plans to acquire the debt of Delong Nickel Industry and its controlling subsidiaries as well as corresponding debts of the controlled subsidiaries like prepayments and accounts receivables.

Regarding the recent operating situation of Delong Nickel Industry, Xiamen Xiangyu stated in August on its investor relations platform that according to their understanding, the relevant companies of Delong Nickel Industry are currently operating under government supervision, continuing production operations normally, and have the ability for rolling deliveries.

Founded by the 'Steel King' Dai Guofang, Delong Nickel Industry is the world's second-largest stainless steel supplier. In the list of the Top 500 Private Enterprises in China for 2023 released by the All-China Federation of Industry and Commerce, it ranks 47th with a revenue of 169.5 billion yuan.

It is worth noting that the shipbuilding business of Xiamen Xiangyu is "booming". General Manager Qi Weidong stated that in the first half of the year, the company seized the ship market cycle, undertook orders for 16 stainless steel chemical ships, with 81 orders in hand by the end of the first half of the year, and achieved a historical high in ship delivery and production volume in the first half of the year.

The announcement shows that in August 2024, Xiamen Xiangyu won the core assets of Jiangsu Hongqiang Shipbuilding Co., Ltd. through judicial auction, and the annual production capacity of the company's shipbuilding sector is expected to increase by 60% after reaching production.

In terms of performance, in the first half of 2024, the company's revenue was 203.5 billion yuan, a year-on-year decrease of 12.87%; net income attributable to the parent company was 0.779 billion yuan, a year-on-year decrease of 12.60%.

In response, Lin Jing stated that in the first half of the year, downstream manufacturing customers' purchasing demand remained weak, and commodity prices were under pressure. Faced with market changes, the company's sensitivity to industry development trends, flexibility in strategy adjustments, and insufficient pre-positioning in customer risk control are still evident.