Anhui Zhongyuan New Materials Co.Ltd(603527) : feasibility study report on the production line of 100000 tons of high-precision copper alloy strip and 50000 tons of copper strip blank of Yongjie Copper Co., Ltd. Anhui Yongjie Copper Co., Ltd
March, 2002
1、 Overview of the investment project
1. Project Name: annual output of 100000 tons of high-precision copper alloy strip and 50000 tons of copper strip blank production line project (hereinafter referred to as “project” or “this project”)
2. Project implementation subject: Anhui Yongjie Copper Co., Ltd. (hereinafter referred to as “Yongjie copper”)
3. Project location: Economic Development Zone, Nanling County, Wuhu City, Anhui Province. The total land area of the project is about 260 mu (subject to the actual measurement)
4. Main contents of project investment: the design scale of the project is 150000 tons. The project is put into operation in two phases. The first phase is a new production line with an annual output of 50000 tons of high-precision copper alloy strip and 50000 tons of copper strip blank; The phase II production project is a relocation and reconstruction project.
5. Project investment amount: the total investment of the project is 2016.1 million yuan, including construction investment of 803.5 million yuan. 6. Project construction period: the total construction period is 36 months, including 24 months for phase I and 12 months for phase II.
7. Mode of contribution: self raised funds for investment and construction.
2、 Basic information of this investment project
(I) overview of the construction unit
Company name: Anhui Yongjie Copper Co., Ltd
Unified social credit Code: 91340223664201163p
Registered capital: 80 million yuan
Legal representative: Feng Quanhu
Date of establishment: July 5, 2007
Business term: long term
Address: Economic Development Zone, Nanling County, Wuhu City, Anhui Province
Business scope: production, sales and processing of sectors, strips, tubes, rods, rows and wires of non-ferrous metals and ferrous metals; Acting as an agent for the import and export of various commodities and technologies (except for the commodities and technologies restricted or prohibited by the state).
Yongjie copper is a wholly-owned subsidiary of Anhui Zhongyuan New Materials Co.Ltd(603527) (hereinafter referred to as ” Anhui Zhongyuan New Materials Co.Ltd(603527) ” or “the company”).
(II) overall planning and construction objectives of the project
Based on the current situation that the company’s existing production capacity has reached full production and sales, according to the company’s strategic development plan, the company plans to build a project with an annual output of 100000 tons of high-precision copper alloy strip and 50000 tons of copper strip blank in Nanling County, Anhui Province, with Yongjie copper, a wholly-owned subsidiary, as the main investor. The project is implemented in two phases.
The first phase of the implementation project is the production line project with an annual output of 50000 tons of high-precision copper alloy strip and 50000 tons of copper strip blank. Yongjie copper purchased land to build factories and new production lines in Nanling County, Anhui Province.
Phase II implementation project is relocation and reconstruction project. According to the needs of urban planning, the people’s Government of Nanling County plans to collect and store the current plant area of Yongjie copper. After delivery and storage, Yongjie copper will move to the new plant as a whole, and increase the existing annual capacity of 35000 tons to 50000 tons.
After the implementation of the above new construction, relocation and transformation projects, Yongjie copper will have an annual production capacity of 100000 tons of high-precision copper alloy strip and 50000 tons of copper strip blank.
The new production line and relocation and reconstruction project will help the company expand production capacity, expand development space and strengthen the competitiveness of the company, so as to cope with the rapidly increasing market demand and improve market share.
(III) project investment calculation
The total investment of the project is 2016.1 million yuan, of which the construction investment is 803.5 million yuan.
(IV) economic benefit analysis
The average annual after tax profit of the project is 151.31 million yuan, the after tax financial internal rate of return of the project is 12.0%, and the after tax investment payback period of the project is 9.9 years (including the construction period).
(V) information of the project related to the items submitted for approval
The project has obtained the project filing form of Nanling County Development and Reform Commission (220234022304-01284010) issued by Nanling County Development and Reform Commission, and the relevant EIA is being handled.
3、 Necessity and feasibility of the implementation of this investment project
(I) background and purpose of the investment project
1. The state has issued a number of policies to support the development of the industry
The guidance catalogue for key products and services of strategic emerging industries (2016) covers five major fields and eight industries of strategic emerging industries. Among them, the advanced structural materials industry in new materials clearly refers to “high-precision copper and tube, rod and linear products” and “high strength and high conductivity copper materials”, “rolled copper foil” and other copper calendering materials for electronic products. Made in China 2025 proposes to promote the efficient recycling of resources, promote the standardized and large-scale development of resource recycling industry, strengthen the support of technical equipment, and improve the comprehensive utilization level of bulk industrial solid waste, waste metals, waste electrical and electronic products. Policy documents such as the development plan of nonferrous metals industry (20162020) and the guiding opinions on creating a good market environment to promote the structural adjustment of nonferrous metals industry, promote transformation and increase benefits (GBF [2016] No. 42) emphasize that high-end copper and other new material products should be listed as the development focus, improve the level of product processing technology, and improve product quality, grade and competitiveness, Further improve the global market share of copper processing materials.
2. The company is committed to optimizing the product structure and continuously extending to high value-added products
Since its establishment, the company has mainly engaged in the R & D, production and sales of red copper strip foil. Based on the non-ferrous metal rolling processing industry, after years of technology accumulation, the company has mastered the technical process of the key links in the production of red copper strip foil products. As of December 31, 2021, the company has a total of 82 patents independently developed. The company uses a number of patented technologies and production processes independently developed to organize production and provide customers with a series of red copper strip foil products. The company’s products are widely used in transformers, power cables, communication cables, radiators, heat exchangers, electronic appliances, new energy and other fields.
The company has always paid attention to technological transformation and continuously improved its manufacturing capacity to lay the foundation for high-quality product manufacturing. The company has always been committed to optimizing the product structure and continuously extending to high value-added products.
3. Expand production base, improve production capacity and increase market share
After the completion of the project, it will effectively expand the production capacity of high-precision copper alloy strip, expand the development space and strengthen the competitiveness of the company, so as to cope with the rapidly increasing market demand and improve the market share.
4. Enhance the company’s sustainable profitability and maximize the interests of shareholders
This project focuses on the company’s main business, conforms to the relevant national industrial policies and the company’s overall strategic development direction in the future, and has good market development prospects and expected economic benefits. The implementation of the project will help to enhance the company’s sustainable profitability and maximize the interests of shareholders.
(II) necessity of implementation of this investment project
1. Necessary choices to meet the needs of market and Industry Development
With the development of global economy, the demand for copper processing products such as copper strip, copper bar and wire in the world continues to grow steadily, providing a broad market for copper processing enterprises. On the whole, China’s copper processing industry has maintained a rapid and sustainable development trend, and has become an important copper production, consumption and trade country in the world. However, the production of high-precision copper is still mainly concentrated in the United States, Japan and Germany, and China’s copper processing industry still has great room for improvement.
In recent years, with the rapid development of the national economy, the acceleration of the digital process, the popularization of new energy vehicles, and the transformation and upgrading of traditional industries such as electrical and communication, the demand for high-end copper strip has ushered in a new round of rapid growth.
2. Enhance the company’s copper sector and strip manufacturing capacity and further enhance the industry position
Since its establishment, the company has been focusing on the R & D, production and sales of red copper strip foil. After more than ten years of development, the production capacity of red copper strip foil products of the company has gradually increased from 6000 tons / year at the beginning of establishment to 100000 tons / year at present. At present, the company has become an enterprise with large business scale and leading technical strength in the subdivided industry of copper sector, strip and foil in China, with economies of scale. The company has a prominent position in the field of copper sector and strip manufacturing, and has the ability to further optimize the manufacturing process and improve the market share.
After the completion of the project, it will effectively expand the production capacity of high-precision copper alloy strip, expand the development space and strengthen the competitiveness of the company, so as to cope with the rapidly increasing market demand, improve the market share and further enhance the industry position.
(III) feasibility of this investment project
1. In line with the national industrial policy and the development plan of non-ferrous metal industry
Made in China 2025, the guiding opinions of the general office of the State Council on creating a good market environment, promoting the structural adjustment of non-ferrous metal industry, promoting transformation and increasing benefits (GBF [2016] No. 42), the outline of the national medium and long-term scientific and technological development plan (20062020), the plan for the adjustment and revitalization of non-ferrous metal industry and other relevant policies, Systematically planned the development strategy of copper processing industry and increased the support for copper processing enterprises.
The national development and Reform Commission issued the Guiding Catalogue for industrial structure adjustment (2019 version), which listed “production of new non-ferrous metal materials in transportation, high-end manufacturing and other fields”, “continuous metal coils for new energy, semiconductor lighting and electronic fields, vacuum coating materials and high-performance copper foil materials” as national encouraged projects. The guidance catalogue of key products and services of strategic emerging industries covers five major fields and eight industries of strategic emerging industries, among which “high-precision copper and tube, rod and linear products” and “high-strength and high conductivity copper materials” are clearly mentioned in the field of advanced structural materials industry among new materials. The construction of the project conforms to the national industrial policy and the development plan of non-ferrous metal industry.
2. The company has the advantages of product structure upgrading and capacity expansion
In recent years, affected by the changes in the macroeconomic environment outside China, fluctuations in downstream demand, fierce industry competition and other factors, the reshuffle and reorganization pattern of the copper processing industry has begun to take shape gradually, and some enterprises with small scale, poor capital strength, lack of core technology, weak independent innovation ability and low product added value have been gradually eliminated by the market. With the progress of science and technology, copper processing products are gradually developing in the direction of high performance, high quality, high precision and low cost. Copper processing enterprises are facing both opportunities and challenges.
Since its establishment, the company has been focusing on the R & D, production and sales of copper strip and foil. It has become an enterprise with large business scale and leading technical strength in the subdivided industry of copper strip and foil in China, and has formed a more prominent competitive advantage in the industry. The terminal products of this investment project are positioned in China’s international medium and high-end market. The products can effectively meet the booming demand of smart grid, semiconductor integrated circuit, 5g communication in China and the world, as well as the rising demand of new energy vehicles, Cecep Solar Energy Co.Ltd(000591) batteries, super capacitors, lithium battery energy storage and other industries. While consolidating its industrial scale and product advantages, the company further improves the proportion of high value-added products through the construction of new projects, so as to realize the continuous upgrading of product structure.
3. Technology, talent and production process guarantee
The company always adheres to the continuous innovation of products, attaches great importance to product R & D, actively promotes product R & D, quality research and technological innovation, complies with the needs of the market, creates better products and improves the company’s core competitiveness. At the same time, after years of development, the company has gathered a large number of mature employees, formed a stable and experienced core team, and has rich management skills and operation experience in business operation, R & D, technical management and marketing. The company’s profound technical accumulation and excellent R & D team are the important foundation for the smooth implementation of this project.
The company has been deeply engaged in the industry for many years, and the process flow of the existing production line is mature, with obvious advantages in product production cost. At the same time, with the advanced technology level, the company produces products with different specifications and performance to meet the different needs of downstream customers. Rich production and manufacturing experience, production organization experience and mature production technology will provide sufficient support for the company’s future sustainable operation and profitability, which is an important guarantee for the smooth implementation of the project.
4、 Project risk
During the construction and operation of the project, there are mainly the following risks:
(I) macroeconomic and environmental risks
The company is mainly engaged in the R & D, production and sales of red copper strip foil. Based on the non-ferrous metal calendering industry, the company’s products are widely used in transformers, power cables, communication cables, radiators and heat exchangers, electronic appliances, new energy and other fields. In recent years, the market of China’s copper processing industry has warmed up, the production capacity has been cleared and the industry concentration has gradually increased. As one of the major enterprises in the processing of red copper strip and foil in China, the company’s order volume is expanding, the scale effect is more significant, and the profitability is increasing year by year. As the basic industry of industrial development, non-ferrous metal processing industry is still affected by the macroeconomic environment and the fluctuation of downstream industries. There is a risk that the company’s performance will be affected by the macroeconomic environment.
(II) price fluctuation risk of raw materials
The company’s raw materials for production are mainly electrolytic copper, and the fluctuation of copper price has a great impact on the company’s operating costs. The company adopts the pricing mode of “raw material price + processing fee”. The main raw material is electrolytic copper, and its price fluctuates with the market. During the reporting period, the company adopted the method of determining production by sales and ordering by production to effectively deal with the risk of price fluctuation of electrolytic copper. However, if the price of electrolytic copper fluctuates sharply in the future, it may lead to the fluctuation of the company’s operating performance, and the company has the operating risk caused by the sharp fluctuation of the price of raw materials.
(III) project policy and approval process risk
The energy consumption index, land and environmental impact assessment required for the construction of this investment project have not been finally approved, and there is great uncertainty whether they can be successfully approved. If the approval is not passed, there is a risk that the project cannot be started or the commencement time is uncertain, resulting in project delay, change or termination.
(IV) project construction risk
The investment project is implemented by stages and the construction period is long. The investment amount and construction period of the project are planned or estimated. After completion, many factors such as production line reaching production and market development are uncertain. The relevant data do not represent the company’s prediction of future performance or constitute a performance commitment to shareholders. Whether and when the later project will be implemented will be determined according to the economic environment, industrial policies, changes in market demand, operation and management and other factors. There is uncertainty whether the later project can be carried out smoothly.
(V) market risk
The investment project is affected by the macroeconomic environment, industry cycle, market changes and other uncertain factors, which may face the risk that the investment benefit of the project does not meet the expectation.
(VI) talent and technology risks
The production technology of the project is mature, reliable and advanced, and the main production equipment is
