Fireworks firms' share prices take hit

After a blanket of brown haze hovered over Beijing for two weeks in January, calls to cut back on fireworks during this year's Spring Festival celebrations have increased, making a dent on the stock performance of companies in the sector.

The share prices of fireworks makers usually shoot up before the Lunar New Year, as sales usually increase in the weeks surrounding Spring Festival.

However, this year, the performance of those companies may be below investors' expectations, analysts said.

Shares of Panda Fireworks Group, a major fireworks seller in Beijing, fell 5.11 percent on Monday after four consecutive days of declines.

Also on Monday, shares in Anhui Leimingkehua decreased 2.44 percent and Hunan Nanling Industry Explosive Materials' stocks dropped 1.99 percent.

People should curb the use of fireworks this year to improve air quality, an official with the Beijing Office of Fireworks and Firecrackers said on Friday.

Kang Jiyong, head of the Beijing Fireworks Association, said that Beijing's government may introduce a ban on fireworks if air pollution worsens.

A possible ban during the Spring Festival holiday has become a hot topic among users of Chinese social media websites, hitting the sales of fireworks companies.

Beijing's three major fireworks distributors - Panda Fireworks Group, Beijing Doudou Fireworks Co Ltd and Beijing Fireworks Co Ltd - have reduced their inventories to 750,000 cases for this year's holiday season, down from 810,000 cases last year, Xinhua News Agency reported last month.

And the government's licenses for fireworks retail outlets have been cut to 1,337 this year, compared with 1,429 last year, Xinhua added.

An analyst who declined to be named said that the recent heavy haze over Beijing was the main reason behind the reduction of inventories.

On Feb 1, a truck carrying fireworks exploded in Henan province, blasting off part of an expressway bridge and killing 10 people.

The accident increased worries over the safety of fireworks, and further hit the share prices of companies in the sector, the analyst said.

However, Wang Xiaomi, an analyst at Guoyuan Securities, was quoted as saying by the Wall Street Journal that the sales of fireworks may not fall substantially, as setting off fireworks is a Chinese tradition during Spring Festival.

Despite the falls in the shares of fireworks companies, stocks rose for a sixth consecutive day on Monday, driving the benchmark index to a nine-month high.

The Shanghai Composite Index rose 0.38 percent to 2428.15, to stand firmly over the psychologically important 2400 level.

huangtiantian@chinadaily.com.cn