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China First Chemical: Further achieving glorious results by utilization of resources in the west of the PRC and in reliance on technology and branding
Hong Kong, 12 April 2013 – China First Chemical Holdings Limited (“China First Chemical”, stock code: 2121), one of the leading specialty chemical providers in the PRC, announced that it has entered into an agreement with Chengdu Huaxi Hope Group Co., Ltd, a renowned private enterprise in the PRC, to the purchase of 30% of the equity of Sichuan Minjiang Snow Salt Chemical Industry Co., Ltd (“Sichuan Minjiang Snow”), it controlled company, by way of acquisition at a consideration of RMB Nil (hereinafter referred to as the “Transaction”) . The Transaction will bring a win-win success for both the Company and Chengdu Huaxi Hope Group Co., Ltd.
Chengdu Huaxi Hope Group Co., Ltd was founded in 1997, the chairman of which is Chen Yuxin, the founder and the general manager of the Hope Group. Hope Group ranked the first among the Top 500 Chinese private enterprises, representing an icon of Chinese private enterprises.
Sichuan Minjiang Snow Salt Chemcial Industry Co.,Ltd is a chlorate enterprise under Chengdu Huaxi Hope Group Co., Ltd with total assets of RMB1 billion. Sichuan Minjiang Snow was established in 2008. With its production base locating in the Mao county, Aba prefecture of Sichuan Province, Sichuan Minjiang Snow principally engages in the production and development of a series of chlorate products such as sodium chlorate and potassium perchlorate. With the ample hydroelectric resources in Aba prefecture and the full support from Huaxi Hope Group, Sichuan Minjiang Snow has experienced rapid growth since its establishment. Sichuan Minjiang Snow currently possesses a product line with a combined production capacity of 180,000 tons of chlorate per annum, representing a two-fold production capacity of sodium chlorate comparing with that of the Company. It is now the largest sodium chlorate production base in the PRC with its chlorate production capacity ranked number one across Asia.
As the largest sodium chlorate producer in terms of production capacity in the PRC, Sichuan Minjiang Snow keeps solidifying and expanding its sales channels and its marketing model is well-recognized among its peers. Since Sichuan Minjiang Snow has just commenced production for a short time, its production capacity has not come into full swing. Upon the completion of the Transaction, the Company will unleash its production capacity with its technological and branding advantages, so as to prune its costs and enhance its product quality. With its competitive edges and profitability strengthened, the Company will improve its market shares and area distributions in the specialty chemical (such as sodium chlorate) product industry in the PRC.
The Transaction represents an important step for the Company to implement industry consolidation and expansion strategy. On one side, it enables the Company to benefit from the complementary advantages with the largest domestic enterprise in terms of sodium chlorate production capacity, continuing to boosts its competitive edges and influence in the domestic and global markets. On the other side, production costs will be pruned efficiently by resources sharing, production capacity expanding and economy of scales brought by the consolidation of the production lines and purchase of raw materials of the two enterprises. The Company also intends to consolidate the distributors of the two enterprises and integrate the distribution channels so as to expand its distribution network. Meanwhile, the sales strategies of the two enterprises will go hand in hand. Through coordinating their marketing and promotion activities, it is expected that the operating expenses will be effectively held down to achieve cost effectiveness, thereby enhancing the Company’s profitability.
Mr. Chen Hong, an executive director and the Chief Executive Officer and Executive Officer of China First Chemical, said, “we are delighted to enter into this transaction which is very important to the development of our Company. Both being the top players in the sodium chlorate industry in the PRC, China First Chemical and Sichuan Minjiang Snow complement each other with their own advantages and therefore forge a strong tie. We are convinced that the Transaction will strengthen our Company by continuously enhancing China First Chemical’s competitiveness in the domestic and international markets, which lays a concrete foundation for its development in the future.
The production technology and product quality of China First Chemical are acclaimed unanimously by its peers as well as local and foreign customers, creating a synergy by complementing and sharing resources with Sichuan Minjiang Snow in the aspects of cost competitive advantages and economy of scales. The strong tie between the two enterprises is bound to secure a win-win success. Shrewdly grasping the golden opportunity offered, the Company is destined to be successful with a good support. It is believed that the cooperation with Sichuan Minjiang Snow will help China First Chemical go further to the next level.”
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