A DISTRESSED Chinese fertilizer company said it may report one of the nation’s biggest-ever annual losses, sparking a slump in its shares and underscoring the challenges faced by some pockets of corporate China as the economy slows.

Qinghai Salt Lake Industry Co. expects to record a 2019 net loss of as much as 47.2 billion yuan (US$6.8 billion), largely due to asset writedowns, an amount that’s nearly twice as big as the company’s market value and one-seventh the size of its home province in northwestern China. The stock fell by the 5 percent daily limit at the open in Shenzhen, before paring its decline to closed down 0.23 percent yesterday.

While the loss was larger than some investors expected, it was triggered by an asset disposal plan that may help the Shenzhen-listed company emerge on a stronger financial footing. Qinghai Salt initiated a rare court-led debt restructuring last year, and analysts are watching it closely for clues on the magnitude of losses creditors may have to incur.

“The size of the writeoff is certainly larger than expected, but sometimes the scarier the number the less of a burden it will be going forward,” said Shi Junbo, fund manager at Hangzhou Xiyan Asset Management Co. “Once the company gets over this rough patch, there is still hope yet.”

Shi said the loss is among the biggest he’s ever seen in China.

Qinghai Salt said Sunday that 41.7 billion yuan in its expected loss is tied to asset disposals as a result of its bankruptcy restructuring plan. No buyer has emerged for the assets after five rounds of bidding. If a sixth round also fails, a firm backed by local State-owned firms may purchase the assets for 3 billion yuan. (SD-Agencies)