Wednesday, January 23, 2013

ST Jiyao to purchase Nanjing Titanium's 100% equities

Jilin Pharmaceutical Limited Company (ST Jiyao) announced its restructuring plan to purchase 100% equities of Nanjing Titanium Dioxide Chemical Co., Ltd. (Nanjing Titanium) with USD155.5 million. If the transaction is completed, ST Jiyao's main business will turn to TiO2 production, which has competitive strength and the company's profitability will be improved. Meanwhile, Nanjing Titanium's financial ability will be largely strengthened and it will be much easier for Nanjing Titanium to raise fund to expand, according to CCM’s December issue of TiO2 China Monthly Report.
It is reported that, in 2011, Nanjing Titanium produced 64,500 tonnes of TiO2 (36,700 tonnes of rutile TiO2 and 27,800 tonnes of anatase TiO2), accounting for 3.4% of the total TiO2 output in China. At the same time, operated by Xuzhou Titanium Dioxide Chemical Co., Ltd. (Xuzhou Titanium), a subsidiary of Nanjing Titanium, an 80,000t/a sulfate process TiO2 project will be put into operation during 2014 and 2015. Nanjing Titanium promises the company's profit will increase by at least 50% in 2015, compared with that in 2013.
Nanjing Titanium's TiO2 output volume ranked No. 8 in China in 2011. As for the cost in sulfate process TiO2 production (per tonne) in Nanjing Titanium during Q1-Q3 2012, main raw materials cost USD1,146, accounting for 55% of the total cost; power costs USD490, accounting for 24% of the total cost; labor costs USD90; manufacturing fee costs USD189; other fee costs USD155. Nanjing Titanium enjoyed a gross profit margin of 20.5% in 2011, which is lower than Henan Billions' 33.3% and Sichuan Lomon's 30.7%, but higher than Annada's 13.0% and CNNC Huayuan Titanium's -0.7%.
Nowadays, TiO2 price has decreased dramatically compared with that in July 2011 and investors start to worry about the prospect of TiO2 industry. However, as a staffer from ST Jiyao's investor relationship department said, "Even though TiO2 price has declined dramatically compared with that in 2011, it keeps stable now. TiO2 is widely used in coating, plastic and paper making industries and it is connected tightly to the whole economy. The national policies will influence TiO2 industry, so people needn't to be pessimistic about TiO2 industry". Besides, if the transaction is completed, ST Jiyao will get listed in H1 2013 at the soonest.

Source: TiO2 China Monthly Report 1212

Content of TiO2 China Monthly Report 1212:
China's TiO2 export and import situation in Oct. 2012
Sichuan Lomon's 100,000t/a sulfate process TiO2 project to completed       
ISK's revenue from inorganic chemical department declines                                                                                  ST Jiyao to purchase Nanjing Titanium's 100% equities                                                                                          
Shandong Dongjia participates in pigment standards drafting                                                                             
Titanium feedstock import situation in China in Oct. 2012                                                                                     Output and price trend of domestic titanium concentrate ore in Oct. 2012                                                        Pangang Group turns to focus on titanium & vanadium business                                                                         
China to adjust tariffs of titanium slag and titanium concentrate ores in 2013                                                
Chinacoat 2012 exhibition held in Guanghzou                                                                                                         
AkzoNobel to sell its North American Decorative Paints business to PPG                                                                                                                                                           
TiO2 price declines slightly in China in Dec. 2012  

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