Hualian's zirconia hype lifts shares as real business stays weak
Zirconia/MLCC theme drives a six-day limit-up rally, but it is only 1.15% of revenue Speculation that Hualian's zirconia powder could supply MLCC makers sent the stock up six straight limit-ups, rising 62% in September. The company itself warned the business is tiny — just 6.64 million yuan, 1.15% of revenue — still in small-volume qualification with no stable sales, so the rally rests on hype, not earnings.
This is the main force behind the recent price surge and the company's own warning is the key counterweight.
EU anti-dumping duty jumped to 79% and export tax rebate ended, cutting first-half results Hualian's first-half revenue fell 20.77% and non-GAAP profit fell 31.42%. The EU raised anti-dumping duties on its ceramic tableware from 18.3% to 79%, the export tax rebate dropped to zero, and the yuan strengthened over 4%, all squeezing its core colored-glaze ceramics export business.
This explains the weak underlying business that the speculative rally is ignoring.
UK opens anti-dumping review on Chinese ceramic tableware, adding tariff risk Britain's trade authority began reviewing anti-dumping measures on Chinese ceramic tableware and kitchenware. Hualian's current UK duty is 18.3%, and the company warned the UK could add further tariffs. This threatens another export market while its main EU market is already heavily taxed.
A new trade barrier directly threatens Hualian's export revenue and is a fresh negative.
Vietnam plant still ramping; third-quarter profit expected to keep falling Hualian said its Vietnam base phase one is still ramping up, so near-term capacity is too small to offset overseas trade barriers, and it expects third-quarter earnings to decline again year on year. The new plant is meant to dodge tariffs but is not yet big enough to help.
It shows the hoped-for fix for tariff losses is not yet delivering, keeping earnings under pressure.