Significant Restructuring in A-Shares!

On the evening of September 6th, Zhengdan Shares (300641) announced that the company plans to establish a new holding subsidiary in Singapore in conjunction with Hua Xing Investment, a shareholder holding more than 5% of the company's shares, and to invest in the construction of a production base in Malaysia.

According to the announcement, the preliminary plan is to build an annual production project of 50,000 tons of TMA (Trimellitic Anhydride) and an annual production of 20,000 tons of new material specialty monomer project. The project is planned to be built in phases, with an investment amount not exceeding 80 million US dollars, and is intended to be funded with both self-owned and raised capital.

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The equity structure reveals that for the newly established Singapore company, Zhengdan Shares will hold 70% of the shares, and Hua Xing Investment will hold 30%. Once the Singapore company is established, it will become a holding subsidiary of the company and will be included in the company's consolidated financial statements.

Zhengdan Shares stated that this project aligns with the company's strategic development plan. Upon completion, it will help the company to improve its overseas production capacity layout, effectively meet the needs of downstream customers and the expansion of overseas markets. It will also aid in improving the industrial layout, expanding into international markets, building a global delivery capability, better satisfying the order demands of international customers, continuously increasing the global market share, and further consolidating and enhancing the company's industry position. Additionally, by leveraging Malaysia's regional advantages in land, labor, and tax policies, the company aims to optimize its comprehensive competitiveness.

This year, Zhengdan Shares has become a market focus with the maximum increase of 10 times its value. According to the company's semi-annual report for 2024, Zhengdan Shares is a high-tech enterprise in the field of specialty fine chemicals, always committed to providing high-quality, high-end, environmentally friendly new material products for customers in various downstream fields. In the first half of this year, the company achieved a revenue of 1.382 billion yuan, a 86.52% increase compared to the same period last year; the net profit was 286 million yuan, a 1015.51% increase compared to the same period last year.

Recently, during investor research, institutions have shown particular interest in the reasons for the price increase of TMA and subsequent sales conditions. Zhengdan Shares indicated that since April 2024, there have been rumors circulating in the market about the permanent closure of the TMA (Trimellitic Anhydride) production facility by the American company Ineos, and the TMA product has gradually shown a state of supply not meeting demand, with sales prices and quantities gradually increasing. The company's investment in the construction of an annual production of 65,000 tons of green upgraded transformation project of trimellitic anhydride is currently under construction, with a total construction period expected to be 24 months. In the future, with the development of downstream industries such as plasticizers, powder coatings, high-grade insulating materials, high-temperature curing agents, and high-grade lubricating oils in China, the demand for trimellitic anhydride in China will maintain a continuous growth trend.

This time, Zhengdan Shares is building a production base in Malaysia, also aiming to accelerate the global capacity layout of TMA products.

Zhengdan Shares stated that with the withdrawal of overseas production capacity and the continuous development of downstream industries, the demand for TMA in overseas markets is growing rapidly. At the same time, Sino-American trade frictions have led to increased trade tariffs on the US, prompting the company to meet the demands of overseas markets and build a global delivery capability. After careful consideration of various factors such as Singapore and Malaysia's resource endowments, policy systems, and investment economic benefits, the company has decided to invest in the construction of a new production base in Malaysia, marking the first step in the company's global capacity layout.

The implementation of this project will effectively meet the market demand for TMA in regions such as the Americas and Europe, further expanding the company's sales scale and production capacity advantages, enhancing the company's core competitiveness, and achieving sustainable business development.

Zhengdan Shares further stated that this investment in building a production base in Malaysia is a deep practice of the "going global" international operation strategy following the company's exploration of international markets. Malaysia has signed free trade agreements with the European Union, Australia, Japan, India, Turkey, and many other countries and regions, which not only allows for the enjoyment of relevant tax preferential policies but also provides the convenience of operating in a broader, international market space, conducive to achieving cost reduction and efficiency enhancement for the company's products.Additionally, Malaysia's unique geographical location, at the strategic chokepoint of the Strait of Malacca, serves as a crucial transportation hub, playing an extremely important role in reaching out to the entire Southeast Asian, Indian, Middle Eastern, and Australia-New Zealand markets. The implementation of this project will help to consolidate and enhance the company's competitive edge and influence in the global market. The construction of this project aligns with the company's long-term internationalization strategy and contributes to the improvement of the company's sustained profitability.