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SINGAPORE (Mar 13): China Sunsine Chemical Holdings says its subsidiary, Shandong Sunsine, has agreed to invest up to RMB2.5 billion ($505 million) on a piece of land in Shanxian county, Shandong, to further expand its capacities in rubber chemical products.
Out of the total investment sum, Shandong Sunsine intends to commit RMB1.5 billion to property, plant and equipment.
Under its agreement with Shanxian’s government, Shandong Sunsine will pay RMB20,000 per mu as a deposit for the land, which spans approximately 800 mu or some 534,000 sq m.
Meanwhile, Shanxian’s municipal government has agreed to facilitate the initiation of the project as well as its related supply requirements and procedures such as the supply of power and water, business and tax registration, and preparing the land for construction.
In its filing on Tuesday, China Sunsine says it will use its acquired land in Shanxian to build another comprehensive production base to expand its production capabilities.
This will further strengthen the group’s market leadership position in the rubber chemicals industry in the world, it adds.
The unit price of the land will be determined by an open tender, while a land use rights certificate specifying the lease period will be issued in due course.
As the internally-funded investment project will be carried out in phases, the group does not expect the acquisition, nor the project, to have any material impact on its current and the project phases’ respective financial years.
China Sunsine’s latest announcement comes in line with its intention to grab more market share by gradually expanding its production capacity.
With the recent announcement of its 4Q18 results in Feb, its executive chairman, Xu Cheng Qiu, expressed confidence in the group’s profitability in FY19 as it negotiated with the local government to purchase more land for its capacity expansion purposes.
Shares in China Sunsine closed 3 cents higher at $1.14 on Tuesday.