China Zhongji Investment completes targeted investment in "Lubohua Chemical"

Recently, China Zhongji Investment completed a targeted investment in Shandong Lubo Chemical Co., Ltd. (stock abbreviation: Lubo Chemical, code: 600727), a leader in the circular economy and ecological industrial model. The funds raised will primarily be used for partial cash payments for the acquisition of Jinhai Titanium Industry and Xianghai Titanium Industry.

Lubo Chemical is located in Binzhou City, Shandong Province, on the southwest coast of the Bohai Sea. After more than 20 years of development, it has become a listed company with over 1,000 employees, assets of 2.072 billion yuan, and production capacity of 300,000 tons of diammonium phosphate, 400,000 tons of sulfuric acid, 600,000 tons of cement, 1 million tons of compound fertilizers, 2,500 tons of bromine, 1 million tons of raw salt, and 300,000 tons of chloromethane (produced by subsidiaries). In 2019, Lubo Chemical achieved operating revenue of 1.291 billion yuan and a net profit of 165 million yuan.

Lubo Chemical's business involves fertilizers, cement, salt, and chloromethane, among other sectors. Applying the concept of a circular economy and systems engineering, it has implemented technological integration and innovation, creating circular economy industrial chains such as the diammonium phosphate by-product phosphogypsum to sulfuric acid and cement co-production and disposal of sulfur-containing waste, and the deep hierarchical utilization of seawater resources industrial chain. After acquiring Jinhai Titanium Industry and Xianghai Titanium Industry, a new titanium dioxide clean production industrial chain was added, further improving Lubo's circular economy and ecological industrial model.

Jinhai Titanium Industry already has a titanium dioxide production line with an annual output exceeding 100,000 tons. In 2019, its output accounted for 3.38% of the total titanium dioxide output in China, ranking among the top in the country's titanium dioxide industry. Xianghai Titanium Industry has mastered the core technical processes involved in the chlorination, oxidation, and post-processing stages of the chloride method for producing titanium dioxide. It is one of the few companies with the production capacity for this process.

Currently, Jinhai Titanium Industry is constructing a sulfuric acid method titanium dioxide production line with an annual output of 100,000 tons, and Xianghai Titanium Industry is constructing a chloride method titanium dioxide production line with an annual output of 60,000 tons, both expected to be completed and put into operation by the end of 2021.

Titanium dioxide is considered the world's best white pigment, used in coatings, plastics, rubber, inks, paper, chemical fibers, ceramics, daily chemicals, medicine, food, and other industries. Its industrial development is closely related to national economic development. In the future, driven by the steady development of the national economy, the future development prospects of China's titanium dioxide industry are promising.

Wu Fushun, Partner and Managing Director of China Zhongji Investment, stated that as China's economy enters a stage of high-quality development, technology and environmental protection will become the core competitiveness of chemical enterprises. On the basis of the stable development of its raw salt and bromine businesses, Lubo Chemical has gradually developed a circular economy and ecological industrial model, with complementary businesses, low environmental pressure, reduced costs, increased profits, and a virtuous cycle. This model will also establish a high industry barrier for Lubo Chemical. The acquisition of Jinhai Titanium Industry and Xianghai Titanium Industry is in line with the company's circular economy concept. The release of the planned production capacity of the target companies will further drive the company's performance growth and improve its industrial position. This investment is expected to yield good returns.