The Latest: Stainless steel pipe maker Huadi International Group Co. Ltd. (HUDI.US) said on Thursday it has signed a strategic partnership agreement with a key construction contractor of China National Petroleum Corp. (PetroChina), China’s largest oil producer.

Looking Up: Huadi could win major business through its new position as a first-tier supplier of stainless steel seamless pipes and tubes to China Huanqiu Contracting & Engineering Co.

Take Note: Huadi may need to compete with many of Huanqiu’s other first-tier suppliers, which could force it to lower its prices and limit the new partnership’s profit potential.

Digging Deeper: Huadi makes steel pipes, and raised $25 million in its U.S. listing in 2021. The company’s revenue grew 23% to $36.8 million in the six months to March 31 last year. It posted a $9,150 net loss for the period, reversing a $642,000 profit a year earlier. The swing appeared related to a drop in government grants the company received in the latest period. Huadi may also be feeling the impact from a sharp slowdown in new building construction as China’s property market experiences a sharp slowdown after years of breakneck growth.

Market Reaction: Huadi’s stock rose 10.6% on Thursday after the announcement came out. The stock is up about 27% year to date.

To subscribe to Bamboo Works weekly free newsletter, click here

Reporting by Doug Young

Recent Articles

Illustration of Chinese government pumping confidence into stock market

China’s state-driven stocks, and its corporate wars abroad

China's stock market rally is fast approaching its one-year mark, with the benchmark Hang Seng and Shanghai composite indexes both up around 40%. How much longer can it last, especially given the weak state of China's economy? And internet giants Meituan and DiDi have sued each other in Brazil, where they are competing in the takeout dining market. How is this case likely to end up?