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Annual revenue can reach 700 million yuan; the funds raised by Yongdong Shares will be used for projects related to the fine processing of coal tar and the comprehensive utilization of special carbon blacks. Author/Source: Coal Tar Deep Processing and Hydrogenation Technology Collaboration Group. Date: June 18, 2020. Clicks: 11. On June 15, Yongdong Shares issued a announcement stating that the conversion price of its convertible bonds would be adjusted to 12.6 yuan per share, with the change taking effect on June 23. Previously, on the evening of April 28, a plan was announced for the issuance of convertible bonds worth no more than 380 million yuan; the funds raised were intended to be used primarily for projects related to the fine processing of coal tar and the comprehensive utilization of specialty carbon black. The successful implementation of the projects funded by this raise will fully leverage Yongdong Co., Ltd.’s advantages in its circular economy industry chain, enable the development of new types of high-end carbon black, and help the company advance its carbon black products toward higher quality levels. This will lead to more sophisticated, differentiated, and large-scale carbon black products. At the same time, it will further expand the industrial chain for the refined processing of coal tar, increasing the variety of high-value-added chemical products derived from coal tar. All of this is of great significance for the company’s expansion into the field of new materials as well as for the transformation and upgrading of its product structure. It is worth noting that since its establishment, Yongdong Co., Ltd. has been actively engaged in research in the field of new materials for fine chemicals. It has spent many years conducting in-depth studies on new products and materials such as high-end carbon black, refined crude phenol, and impregnated asphalt, accumulating rich experience along the way and obtaining relevant technical patents. At the same time, the company has already reached a cooperation agreement with enterprises that possess experience in carrying out the construction of cresol refining projects, the necessary technical capabilities, and the relevant qualifications. According to the American publication “Rubber World,” market research firm Stratview Research recently released a report stating that there is a significant demand gap in the mid-to-high-end carbon black market – products such as low-rolling-resistance carbon black required for green tires and carbon black used in high-end applications. The market for specialty carbon black is expected to grow at a compound annual growth rate of 8.1% from 2020 to 2025. A report by Research and Markets predicts that the market for green low-rolling-resistance tires will reach $104.23 billion by 2022. The projects funded through this fundraising round by Yongdong Co., Ltd. involve the production of high-performance carbon black with low rolling resistance, carbon black for high-end products, and high-pigment carbon black. It is expected that the annual output of high-quality carbon black will reach 70,000 tons, thereby enabling the company to develop its carbon black products in terms of higher quality, greater differentiation, and more diversity. This will help the company strengthen its leading position in the carbon black industry as well as its relationships with existing customers, while also allowing it to acquire new customers and further increase its market share and profitability. By investing more in high-end carbon black, the company can effectively meet the demands of downstream customers for high-quality carbon black, ensuring the proper utilization of the new production capacity generated by these projects and the smooth sale of the additional output. Furthermore, the impregnated asphalt that Yongdong Shares is introducing into more advanced industrial applications this time represents a logical extension of the needle coke business that the company launched through a private offering in 2019; it can be said that impregnated asphalt is related to needle coke in terms of its origin. The main use of impregnated asphalt is to fill the pores in ultra-high power graphite electrodes. In the field of steel production using ultra-high power electric furnaces, rapid growth in demand for such electric furnaces as a result of supply-side reforms has further driven up the demand for impregnated asphalt. The main product currently offered by this company, modified asphalt, is used as a binder for graphite electrodes; its downstream customers are enterprises that manufacture graphite electrodes, and these customers overlap with those who purchase impregnated asphalt. By leveraging the quality advantages of its products, the company has been able to establish longer-term and more stable partnerships with these graphite electrode manufacturers, and these clients represent potential customers for the company’s new products. According to the announcement, the projects funded by this raise will also add a refining capacity of 15,000 tons per year for crude phenols such as coking phenol and m-p-cresol, as well as 20,000 tons per year for impregnating asphalt. In addition, fine chemical products such as refined phenols including phenol, o-cresol, and m-p-cresol, as well as impregnated asphalt, will be produced. If the projects funded by the proceeds are implemented successfully, on the one hand, the company’s value-added processing chain for coal tar will be further extended; on the other hand, it will enable the company to optimize its industrial chain structure, develop high-value-added products, create new sources of profit growth, and enhance its overall profitability. Among them, the cresol refining and impregnated asphalt projects are particularly noteworthy, as they allow for the full utilization of the waste heat generated in the company’s existing carbon black production process. This not only helps save energy but also reduces the direct emissions of carbon black exhaust gases, enabling the comprehensive utilization of such exhaust gases. At the same time, the raw materials for the impregnated asphalt and crude phenol refining projects are medium-temperature asphalt, a primary product obtained from the company’s existing coal tar processing operations, and crude phenol, a by-product, which enables full utilization of coal tar resources. In addition, the impregnated asphalt project generates a by-product called carbon black oil, which can be used in the production of special carbon black products. It is evident that the implementation of these projects funded through this fundraising will help enhance Yongdong Shares’ advantages in its circular economy industry chain, further optimizing the comprehensive utilization of coal tar resources. According to calculations, once the projects funded by this raise are completed and come online, they will generate for the company an average annual sales revenue of 699.6996 million yuan, an average annual profit of 60.1613 million yuan, an investment profit margin of 18.12%, and a financial internal rate of return of 19.21% (after taxes). The payback period for the investment, after taxes, is 6.77 years; thus, the economic benefits of these projects are exceptionally good.