Securities code: 603327 securities abbreviation: Sichuan Furong Technology Co.Ltd(603327) Announcement No.: 2022-001 Sichuan Furong Technology Co.Ltd(603327)
Announcement on foreign investment and proposed signing of framework investment agreement
The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and bear individual and joint liabilities for the authenticity, accuracy and completeness of its contents. Important content tip: name of investment target: high-end manufacturing base of high-precision consumer electronics and new materials. The investment amount of the project is RMB 5 billion (including working capital, including fixed asset investment of RMB 3 billion). The investment of phase I project is expected to be RMB 1.218 billion, mainly from its own funds and corporate financing. Special risk tips:
1. The investment agreement signed this time is a framework agreement. The company will negotiate with the people’s Government of Luoyuan county and the Management Committee of Fuzhou Taiwan investment zone to determine the formal investment agreement according to the needs of the investment project, and submit the formal investment agreement to the board of directors and the general meeting of shareholders for deliberation.
2. The land use right involved in this foreign investment needs to be obtained through bidding by local governments, and the bidding results are at risk of uncertainty. After the auction, it is still necessary to sign the transfer contract, pay the land transfer fee and handle the real estate property right certificate.
3. The project investment planning involved in this foreign investment shall go through the government filing and approval procedures such as project initiation filing, environmental assessment and construction permit. There may be risks of change, extension, suspension or termination in the subsequent agreement performance and project implementation.
4. The total amount of capital involved in this foreign investment is large, which is much higher than the current book monetary capital level of the company. The investment amount mainly comes from the company’s own funds and the company’s financing. Although the company’s current asset liability ratio is relatively low and has strong financing capacity, due to the influence of policy factors, financial market and other external environment, if the funds cannot be raised in time, there may be risks of change, extension, suspension or termination in the subsequent agreement performance and project implementation.
5. The foreign investment is in line with the company’s strategic development plan, but the construction cycle is long, and the implementation of the investment project may have the risk of failing to achieve the expected objectives due to the fluctuation of raw material price, market demand and market environment. The company will actively promote the progress of registration and approval in accordance with relevant national regulations, and timely perform the obligation of information disclosure according to the progress. Please pay attention to the investment risks.
1、 Overview of foreign investment
(i) Basic information of foreign investment
In order to meet the needs of rationalizing the layout of the company’s production base, it is proposed to sign the framework investment agreement (hereinafter referred to as the “investment agreement”) with the people’s Government of Luoyuan county and the Management Committee of Fuzhou Taiwan investment zone to build a high-precision electronic consumption and high-end manufacturing base of new materials in Luoyuan County, Fuzhou City, Fujian Province. It is planned to purchase 941 mu of land at one time and build it by stages.
（2） Approval status
On the morning of December 31, 2021, the company held the 11th meeting of the second board of directors and deliberated and adopted the proposal on foreign investment and proposed to sign framework investment agreement with 9 affirmative votes, no negative votes and no abstention votes.
The investment agreement signed this time is a framework agreement. The company will negotiate with the people’s Government of Luoyuan county and the Management Committee of Fuzhou Taiwan investment zone to determine the formal investment agreement according to the needs of the investment project, and submit the formal investment agreement to the board of directors and the general meeting of shareholders for deliberation.
（3） Related party transactions or major asset restructuring
The signing of the investment agreement does not constitute a connected transaction, nor does it constitute a major asset reorganization as stipulated in the measures for the administration of major asset reorganization of listed companies.
2、 Basic information of the subject of the investment agreement
(i) Project implementation subject
The implementation subject of the high-end manufacturing base project of high-precision consumer electronics and new materials involved in the investment is Sichuan Furong Technology Co.Ltd(603327) a wholly-owned subsidiary invested and established in Luoyuan county according to law: Fujian furongyuan renewable resources development Co., Ltd. (hereinafter referred to as “renewable resources company”) and Fujian furongyuan new materials high-end manufacturing Co., Ltd. (hereinafter referred to as “high-end manufacturing company”) (tentative name, subject to the contents approved by the market supervision and Administration Bureau), renewable resources company mainly provides round ingots of raw materials for production for high-end manufacturing companies. （2） Basic information of the subject of the investment agreement
1. Luoyuan County People’s Government
Company name: Luoyuan County People’s Government
Nature: local government under Fuzhou City, Fujian Province
Office location: No. 15, Beida Road, Fengshan Town, Luoyuan County, Fuzhou
2. Fuzhou Taiwan Investment Zone Management Committee
Enterprise name: Fuzhou Taiwan Investment Zone Management Committee
Nature: local government organizations under the jurisdiction of Fuzhou City, Fujian Province
Principal: Yu Zhanglong
Date of establishment: January 18, 2013
Registered address: East office area, No. 193, Binxi Avenue, Nanjiang, Gaishan Town, Cangshan District, Fuzhou
Undertake the transfer of advanced manufacturing, high-tech industry, modern agriculture and service industry, and highlight the development of metal processing, equipment and machinery manufacturing, light industry and food processing, new materials, producer services and other industries.
Note: the above entities are local governments and local agencies, and cannot obtain the other party’s main financial indicators.
There is no other relationship between the above agreement subjects and the company in terms of property rights, business, assets, creditor’s rights and debts, personnel, etc.
3、 Basic information of investment project
1. Project Name: high-end manufacturing base project of high-precision consumer electronics and new materials
2. Project investment quota: 5 billion yuan (including working capital, including fixed asset investment of 3 billion yuan)
3. Project construction contents: the renewable resources company plans to invest in the construction of “250000 tons of recycled aluminum and round ingot project”, the high-end manufacturing company plans to invest in the construction of “80000 tons of consumer electronics aluminum profiles and deep processing project” and “100000 tons of aluminum alloy new materials and deep processing series projects”, and the project will be constructed by stages. Among them, the first phase of the project is the “100000 t / a recycled aluminum and round ingot project” (the project investment is expected to be RMB 323 million) to be invested and constructed by the renewable resources company and the “60000 T / a consumer electronics aluminum profile and deep processing project” (the project investment is expected to be RMB 896 million). The first phase of the project investment is expected to be RMB 1.218 billion, The funds mainly come from self owned funds and corporate financing.
The overall construction time of the project is expected to start in 2022 and be constructed in three phases. The construction cycle is expected to be six years. The construction of subsequent phases will be promoted in due time according to the market situation.
4、 Main contents of foreign framework investment agreement
Party A: Luoyuan County People’s Government
Party B: Fuzhou Taiwan Investment Zone Management Committee
Party C: Sichuan Furong Technology Co.Ltd(603327)
(i) Basic information of the project
1. The name of the project is high-precision electronic consumption and high-end manufacturing base project of new materials, and the project investor is Sichuan Furong Technology Co.Ltd(603327) .
2. Construction site and investment scale:
(1) Renewable resources company: the 250000 ton / a recycled aluminum and round ingot project is planned to be located in the West plot of high-end wall and floor tiles in Jingang Industrial Park (with an area of about 239 mu), with an output value of about 5 billion yuan / year (calculated according to the current price, the same below).
(2) High end manufacturing company: an annual output of 80000 tons of electronic consumer aluminum profile project, with an output value of about 2.5 billion yuan / year; New materials and intensive processing projects with an annual output of 100000 tons, with an output value of about 9 billion yuan / year. The above projects are planned to land on the thumb plot in area B of Taiwan investment zone (the red line is within the embankment, covering an area of about 702 mu).
(3) Project scale: the above output value is about 16.5 billion yuan / year, and the total investment (including working capital) is 5 billion yuan (in words: 5 billion yuan only). Party C and the specific implementation subject of the above projects can be constructed by stages in combination with the actual situation. Unless otherwise specified, the preferential policies given by Party A and Party B shall still be implemented in accordance with the agreement.
The parcel area, four boundaries and boundary point coordinates of the above agreed plot shall be subject to the survey and identification results of the land and resources department. The land where the plot is located is state-owned industrial construction land, and the term of land use right is 50 years.
Party C and the specific implementation subject of the above projects can be constructed by stages in combination with the actual situation. The cooperation content is an intentional agreement, and the final project content shall be subject to the project investment agreement signed.
（2） Project support elements
1. Project land. Party A and Party B shall provide 941 mu (subject to the actual listing and transfer area) of industrial land for Party C’s project. After Party C’s land is delisted (or competed for), Party A and Party B shall organize special personnel to assist Party C to go through a full set of procedures such as relevant planning, environmental assessment, construction permit, quality supervision and acceptance (if necessary, “vacancy approval” shall be implemented), and implement the whole process “one-stop” service, Acting for all government related affairs in the whole process. The actual land demand and land supply of the project shall be subject to the provisions of the project investment agreement, and the relevant land formalities shall be handled in accordance with the legal procedures.
2. Supporting public works and infrastructure shall be implemented according to the subsequent project investment agreement.
（3） Supporting policies
Party A and Party B shall actively assist Party C’s project to strive for relevant national, provincial and municipal policy support and apply for relevant support funds, and support the project to enjoy the preferential policies of the jurisdiction.
（4） Service guarantee
After signing the subsequent project investment agreement, Party C shall legally register and establish an economic entity with independent legal personality in Luoyuan county and complete the corresponding tax registration; Party A and Party B shall fully support and coordinate Party C in handling relevant administrative approval procedures and promote the commencement of Party C’s project.
（5） Confidentiality agreement
Party A and Party B shall not disclose, publicize and report all information related to Party C’s project without Party C’s review and consent, otherwise Party A and Party B will compensate Party C for the impact and loss caused to Party C. Party A, Party B and Party C shall separately sign the confidentiality agreement.
（6） Agreement performance
This Agreement shall come into force from the date of signing, and shall be automatically annulled after the formal contract text is signed. This Agreement shall be valid for one year and may be renewed by consensus among the three parties. In case of breach of contract, the breaching party shall bear the economic losses of the observant party.
5、 Impact of foreign investment on the company
1. It helps to expand the scale of production capacity and improve the share of the company’s products
In the future, with the gradual improvement of the epidemic situation, the gradual recovery of the economy, the increasing maturity of 5g technology, the improvement of supporting facilities and the large screen and foldable application of smart phones, the development prospect of smart phones is still promising, and it is expected that the shipment of smart phones will reach a climax again. At the same time, with the continuous improvement of the performance of tablet computers and notebook computers, their application range will be wider and wider. More and more tablet computers are involved in the fields of office, education and so on. With the stimulation of equipment demand brought by stock equipment replacement and innovation, tablet computers and notebook computers still have considerable market development space, thus driving the demand for aluminum structural parts. Secondly, industries related to AR, VR, 3D and other technologies have just sprung up and have broad market prospects in the future, which will bring new and huge growth space to the application of aluminum and other new materials. After the investment project is fully completed, the company will increase the production capacity of consumer electronics aluminum, which will help the company solve the problem of insufficient production capacity in peak season, further improve the market share of products and maintain the company’s leading market position.
2. It helps to better serve customers and improve comprehensive competitiveness
The project is located in Luoyuan County, Fuzhou City, Fujian Province, close to the “Pearl River Delta” and “Yangtze River Delta” where the end customers of consumer electronic aluminum profiles gather, which can significantly reduce the transportation cost; Close to end customers to facilitate communication with customers and order acceptance. Secondly, most of the aluminum new material application enterprises are located in coastal cities. The project takes root in coastal cities in advance, which will help the company expand the aluminum application field in the future and effectively interact with potential customers, so as to form regional advantages. This will help the company solve the single problem of product and industry, and improve the company’s anti risk ability and comprehensive competitiveness.
3. The land use right, project investment planning and construction progress involved in this foreign investment are subject to uncertainty risks, which will not have a significant impact on the company’s financial status and operating results in the current period. The smooth implementation of this foreign investment project will help promote the rational regional layout of the company’s production base, further expand the overall industrial scale and improve the company’s sustainable operation ability, which is in line with the company’s development strategic planning and the interests of all shareholders.
6、 Risk analysis of foreign investment
This foreign investment is the decision made by the company after careful evaluation, demonstration and analysis. At present, there are still the following investment risks:
1. The land use right involved in this foreign investment needs to be obtained through bidding by local governments, and the bidding results are at risk of uncertainty. After the auction, it is still necessary to sign the transfer contract, pay the land transfer fee and handle the real estate property right certificate.
2. The project investment planning involved in this foreign investment shall go through the government filing and approval procedures such as project initiation filing, environmental assessment and construction permit. There may be risks of change, extension, suspension or termination in the subsequent agreement performance and project implementation.
3. The total amount of capital involved in this foreign investment is large, which is much higher than the current book monetary capital level of the company. The investment amount mainly comes from the company’s own funds and the company’s financing. Although the company’s current asset liability ratio is relatively low and has strong financing capacity, due to the influence of policy factors, financial market and other external environment, if the funds cannot be raised in time, there may be risks of change, extension, suspension or termination in the subsequent agreement performance and project implementation.
4. The foreign investment is in line with the company’s strategic development plan, but the construction cycle is long, and the implementation of the investment project may have the risk of failing to achieve the expected objectives due to the fluctuation of raw material price, market demand and market environment.
It is hereby announced
Board of directors January 4, 2002
