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With a total investment of 300 million yuan, Huachang Chemical plans to build projects for neopentyl glycol and polyester resins. Author/Source: Yahuahua Coal Chemicals. Date: April 28, 2020. Clicks: 122. On April 25, Huachang Chemical Co., Ltd. (hereinafter referred to as the “Company”) issued a statement indicating that, in line with its development plan, it intends to expand its industrial chain around its existing core business. The company’s wholly-owned subsidiary, Zhangjiagang Huachang New Materials Technology Co., Ltd. (hereinafter referred to as “Huachang New Materials” or the “subsidiary”), plans to invest in the construction of production facilities capable of manufacturing 30,000 tons of neopentyl glycol and 100,000 tons of polyester resin per year. The total investment for the project is 300 million yuan, of which approximately 263.6 million yuan is allocated to construction costs, 16.4 million yuan to interest during the construction period, and 20 million yuan as working capital. The announcement states that the project construction period is 12 months. Once the project is completed and put into operation, it will, on the one hand, facilitate industrial expansion and enable optimal allocation of resources ； On the other hand, it will enable our company to leverage its strengths and use the industrial chain as a link to promote the development of industrial clusters ； Continuously deepen industrial expansion, optimize the industrial structure, raise the barriers to entry for industries, and increase their added value. The estimated annual sales revenue is 856.2 million yuan, with an annual operating profit of 170 million yuan. This project adopts a new green production process, intending to use condensation hydrogenation to produce neopentyl glycol, which is then used as the main raw material to manufacture polyester resins through esterification and polycondensation. The project is carried out in two steps: first, on the basis of the existing 30,000 tons of neopentyl glycol, a polyester resin production facility will be built as a priority ； Second, consider expanding the production of neopentyl glycol after the aforementioned facilities come online. It is understood that through its industrial expansion in recent years, Huachang New Materials has put two projects into operation, namely a project with an annual production capacity of 250,000 tons of butyl octanol, and a project with an annual production capacity of 30,000 tons of neopentyl glycol. The overall industrial chain relationship is as follows: synthesized gas produced in-house together with purchased propylene is used to manufacture butyl octanol and aldehydes; isobutyraldehyde is then used to produce neopentyl glycol, which is subsequently used to manufacture polyester resins. This project involves expanding production on the basis of the existing industry and extending the industrial chain. Neopentyl glycol is a chemical product whose main raw material is isobutyraldehyde, which accounts for 73% of the cost of producing neopentyl glycol. It is widely used in industries such as automotive, textiles, pharmaceuticals, coatings, pesticides, plastics, and petroleum. Its derivatives can be used as fragrances, drugs, flame retardants, aviation lubricants, plasticizers, inks, and insulating materials. Its primary use at present is in the production of oil-free alkyd resins, particularly saturated polyester resins. In line with its development plan, the company intends to expand into the polyester resin sector. The neopentyl glycol produced by the project is a raw material for polyester resins ； The raw materials required for this project (precursors) are isobutyraldehyde and formaldehyde; isobutyraldehyde is supplied by the company’s wholly-owned subsidiary, Hua Chang New Materials, through its existing butanone-octanol production facility, while formaldehyde is produced from the company’s existing methanol production process. According to the editor’s understanding, on the evening of April 24, Huachang Chemical released its annual report for 2019. The company’s revenue in 2019 was 6.315 billion yuan, representing a year-on-year increase of 8.76% ； The net profit attributable to the shareholders of the listed company was 202 million yuan, a year-on-year increase of 41.91% ； The net profit attributable to the shareholders of the listed company, after deducting non-recurring gains and losses, was 190 million yuan, representing a year-on-year increase of 46.61%. During the reporting period, in terms of business structure, the “fertilizer series” was the main source of the company’s operating revenue. Specifically, the revenue from the “Fertilizers” segment was 2.54 billion, accounting for 40.2% of total revenue, with a gross margin of 13%.