Shandong Humon Smelting faces repercussions from fatal accident

China Chengxin International (CCXI) is closely monitoring Shandong Humon Smelting (SZSE:002237) following the release of the investigation report regarding the August 3, 2023, scalding accident that resulted in fatalities and injuries. The report, approved by the Shandong Provincial People's Government, concluded that the accident was a major production safety responsibility incident caused by inadequate risk identification, malfunctioning equipment, and improper handling of a water leak, with the company also found to have concealed and misrepresented the facts. Eight individuals face criminal charges, and administrative penalties are recommended for both the company and 15 executives, including the chairman and president. While CCXI believes the current shutdown of one smelting unit has not significantly impacted the company's credit rating, the accident highlighted gaps in safety protocols. CCXI will be observing the company's subsequent corrective actions and performance. In 2023, the affected smelting unit contributed CNY 1,309,094.22 to revenue and CNY 9,513.70 to net profit.