China Zhongji Investment completed a targeted investment in "Dongfang Sheng Hong"
Recently, China Zhongji Investment completed a targeted investment in Jiangsu Eastern Hope Rainbow Co., Ltd. (hereinafter referred to as "Eastern Hope Rainbow", stock code: 000301.SZ), a leading manufacturer in the chemical fiber industry. This targeted increase in financing will be used to promote the construction of the Sheng Hong Petrochemical Integration Project in the company's petrochemical sector.
In 2018, Eastern Hope Rainbow completed a major asset restructuring. Based on its existing thermal power and other businesses, it injected high-quality chemical fiber businesses, changing its main business to focus on the research, development, production, and sales of civilian polyester filament, successfully transforming into a chemical fiber manufacturing enterprise.
In 2019, Eastern Hope Rainbow began implementing vertical integration of the textile industry chain and is currently accelerating the progress of key projects such as the 16 million ton/year petrochemical project and the 2.4 million ton/year PTA expansion project.
After the project is completed, the PX produced by Sheng Hong Petrochemical will be directly supplied to Honggang Petrochemical for PTA production via pipeline. The PTA produced by Honggang Petrochemical and the MEG produced by Sheng Hong Petrochemical will be further supplied to Guowang Gaoko for the production of differentiated chemical fibers (POY, FDY, DTY, etc.). Eastern Hope Rainbow will form a full industrial chain business operation from "a drop of oil" to "a single fiber".
Regarding the reasons for investing in Eastern Hope Rainbow, Liu Bo, Partner and Managing Director of China Zhongji Investment, stated that there are three main reasons:
1. Core Technological Advantages
Eastern Hope Rainbow has always focused on the research, development, production, and sales of civilian polyester filament products, adhering to continuous independent research and technological innovation. It possesses a number of industry-leading core technologies, mastering technologies such as ultra-fine fibers, memory fibers, bio-based synthetic polymer fibers, fully matte melt-blown polyester fibers, and cationic ultra-fine fibers.
Eastern Hope Rainbow has established a globally leading position. Its ultra-fine fiber technology has successfully overcome technical barriers, with an annual output exceeding the combined total of Europe, America, Japan, and South Korea. In the history of PTT process technology in the global textile industry, the company has set numerous new records.
Eastern Hope Rainbow has also further gained international influence, having served as the convener of the International Standards Working Group for Man-made Fibers and the secretariat of the International Standards Subcommittee for Testing of Dyed Textiles and Dyes, becoming a formulator and issuer of international standards in this field.
2. Integrated Industrial Chain Development
The overall design of integrated crude oil refining and chemical industry refining allows products from upstream units to be directly sent to downstream units as raw materials. Under normal operating conditions, intermediate raw material tanks are not needed, which enables the stepwise utilization of energy, saving energy, reducing losses during material transportation, and lowering environmental risks. Integration has also become a development trend for world-class petrochemical bases in recent years.
Eastern Hope Rainbow's business layout spans the oil refining, petrochemical, and chemical fiber industries, and has currently formed a "PTA-polyester fiber" business structure. In the future, with the completion and operation of the Sheng Hong Petrochemical Project, the company will form a complete "crude oil refining-PX/ethylene glycol-PTA-polyester fiber" new high-end textile industry chain, which will not only effectively solve the problem of China's and the company's long-term dependence on imports of PX and MEG, but also lock in substantial profits in the upstream of the industry chain.
3. Good Brand Effect
Eastern Hope Rainbow's polyester filament products have been widely recognized by customers, and its market share has been continuously increasing, forming a good market reputation and brand effect, and is known as the "global expert in ultra-fine fibers".
The company also attaches great importance to meeting the functional and differentiated product needs of downstream customers, creating a new marketing model and establishing long-term and stable relationships with downstream manufacturers.
Liu Bo mentioned that Eastern Hope Rainbow has set a very good example in the upgrading of the traditional chemical fiber industry, first concentrating its scientific and technological strength to create highly competitive products, and then integrating the upstream and downstream of the industry to further enhance the company's core competitiveness, overall profitability, and risk resistance. In addition, the recent decline in international oil prices has had a noticeable positive impact on the chemical fiber industry. It is believed that this investment will bring us relatively secure returns.
