Baichuan invests 865 million yuan in the operating period of chemical projects

On September 20, Baichuan announced that the company intends to increase the capital of its wholly-owned subsidiary Ningxia Baichuan Technology Co., Ltd. (hereinafter referred to as "Ningxia Baichuan Science and Technology") by 480 million yuan. After the completion of this capital increase, the registered capital of Baichuan Science and Technology in Ningxia will be changed from 20 million yuan to 500 million yuan.

According to public information, Baichuan Science and Technology was founded on December 25, 2018, and operates in the technical research, production and marketing of nano-materials, new chemical materials, electronic-grade chemical industrial materials and chemical products (excluding dangerous and easy-to-manufacture drugs); sales of chemical raw materials (excluding dangerous and easy-to-manufacture drugs); self-operation and agency of various types of drugs; Import and export of goods and technology.

According to unaudited financial data, as of 30 June 2019, the total assets of Baichuan Science and Technology in Ningxia were 229.284 million yuan, the total liabilities were 3 million yuan, the net assets were 19.928 million yuan, the operating income was 100,000 yuan, and the net profit was -71.6 million yuan.

The reporter of Securities Daily learned that the company's capital for Baichuan Science and Technology Increase in Ningxia was mainly used for the annual production of 30,000 tons of Neopentyl glycol, 100,000 tons of trimethylolpropane (50,000 tons in the first phase, 50,000 tons in the second phase) and 2,000 tons of cyclic trimethylolpropane formaldehyde project. The total investment of the project is 865 million yuan, which is funded by the company's self-financing. The construction site of the project is Ningdong Energy and Chemical Industry Base of Lingwu City, Yinchuan, Ningxia Hui Autonomous Region. The construction period is expected to be two years. The average annual profit of the project is 284 million yuan, and the net profit is 241 million yuan. The payback period of investment after project income tax is 5.5 years (including two years of construction period). The project can recover investment quickly. The break-even point of the project is 51.23%. The project has a good ability to resist risks.

Baichuan said that this outward investment is in line with the company's future development strategic plan. It can make full use of the resources advantages of the Midwest, extend the industrial chain, expand the company's production scale and enrich the product categories, which is conducive to improving production capacity and market competitiveness, and will have a positive impact on the company's future development.

In addition, Baichuan shares emphasized that the source of funds for this outward investment is the company's self-financing, which will not have a significant impact on the company's financial situation and operating results, and there is no situation that damages the interests of the company and all shareholders. The company will do a good job in the analysis, control and prevention of all kinds of risks, and reduce operational risks by further improving the existing management system, establishing relevant management systems for subsidiaries and strengthening internal control management.