Jilin Chemical Fiber intends to purchase 31% of the equity of Jilin Baojing to increase the carbon fiber industry

Jilin Chemical Fiber (000420) announced on the evening of September 29 that after the company and Guoxing Materials reached an agreement through friendly consultation, Guoxing Materials transferred 31% of the equity of Jilin Baojing held by Guoxing Materials to the Company (hereinafter referred to as the "Transaction"), and on September 29, the two parties signed the Share Transfer Agreement, with the transaction amount of 137 million yuan.

It is understood that the original name of Jilin Baojing was "Jilin Jinggong Carbon Fiber Co., Ltd.", and on August 12, 2021, the industry and commerce changed its name to "Jilin Baojing Carbon Material Co., Ltd."

Jilin Baojing is mainly engaged in 25K ~ 50K large tow, low-cost carbon fiber research and development, production, sales, currently has an annual output of 8,000 tons of carbon fiber capacity, downstream applications are widespread, customer stability, plans to form an annual output of 12,000 tons of carbon fiber production capacity by the end of 2025 to meet the application needs of wind power, cylinder winding, vehicle lightweight, rail transit, marine equipment and other industrial fields.

The Appraisal Report issued by Beijing Zhongkehua Asset Appraisal Co., Ltd. evaluates all the shareholders' equity of Jilin Baojing on July 31, 2021 as the valuation reference date, and the income method appraisal conclusion is 444 million yuan, the appraisal appreciation is 115 million yuan, and the appraisal appreciation rate is 34.92%.

Before the transaction, the shareholding structure of Jilin Baojing was 18% held by Jilin Chemical Fiber, 31% held by Guoxing Materials, and 51% held by Zhejiang Baojing; after this transaction, the shareholding ratio of Jilin Chemical Fiber will increase to 49%, Zhejiang Baojing will still hold 51%, and Guoxing Materials will no longer hold Jilin Baojing shares.

Zhejiang Baojing has waived its right of pre-emptive subscription; there are no other provisions restricting the rights of shareholders other than laws and regulations in the articles of association or other documents of Jilin Baojing.

Carbon fiber is known as "black gold", is a new type of fiber material with high strength and high modulus content of more than 90%. Carbon fiber "outer soft inner rigidity", its specific gravity is lighter than aluminum, less than 1/4 of steel, specific strength is 20 times that of iron, and has the characteristics of corrosion resistance and high modulus. Carbon fiber as a new composite materials are widely used in aerospace, automotive lightweight, industrial intelligence, nuclear energy utilization, marine engineering, military industry, medical equipment, etc., the market prospect is broad, and the global demand for carbon fiber continues to grow rapidly.

Jilin City, where Jilin Chemical Fiber is located, is a national carbon fiber high-tech industrial base, which is located in Jilin Economic and Technological Development Zone, which gathers a large number of upstream and downstream enterprises of carbon fiber precursor, carbon fiber and carbon fiber products, and is the main carbon fiber industry gathering area in China. Jilin Chemical Fiber Group, the controlling shareholder of Jilin Chemical Fiber, has been laying out in the field of carbon fiber several years ago.

As the counterparty of this transaction, Guoxing Materials is a wholly-owned holding enterprise of Jilin State-owned Assets Supervision and Administration Commission, which has invested in a number of upstream and downstream enterprises in the carbon fiber industry, and is an investment platform for the carbon fiber industry in Jilin City.

As early as December 7, 2017, Jilin Chemical Fiber signed the Carbon Fiber Industry Cooperation Framework Agreement with Guoxing Materials, and Guoxing Materials transferred its 18% equity interest in Jilin Jinggong Carbon Fiber Co., Ltd. (now Jilin Baojing) to Jilin Chemical Fiber. According to the announcement at that time, Guoxing Materials will transfer some of its shares in carbon fiber industry enterprises to Jilin Chemical Fiber depending on the development of the carbon fiber industry in Jilin City and the extension of carbon fiber in the Chemical Fiber industry in Jilin City, so as to realize the securitization of state-owned assets.

On April 17, 2018, Jilin Chemical Fiber once again signed the Carbon Fiber Industry Cooperation Framework Agreement with Guoxing Materials, and Guoxing Materials transferred its 25% equity in Jilin Carbon Valley Carbon Fiber Co., Ltd. to Jilin Chemical Fiber.

According to the announcement at that time, Jilin Chemical Fiber, as the only holding listed company in Jilin City, extended to the carbon fiber industry in line with the company's development strategy, and is the only way for the company to build a world-class supplier of fiber and related extension products. By extending to the carbon fiber industry, Jilin Chemical Fiber will form an integrated whole industry chain layout, and become a whole industry chain enterprise with the research and development, production and sales of carbon fiber and its products.

Jilin Chemical Fiber announced on the evening of February 5 this year that kemerk, a holding subsidiary, decided to introduce international and domestic advanced equipment after research to produce carbon fibers for special applications in 1K and 3K small tows, forming a product scale with an annual output of 600 tons of carbon fiber, with a total investment estimated at 198 million yuan. At the same time, Kemerk will continue to retain the production of sodium bisulfite.

Jilin Chemical Fiber said on the investor interactive platform on September 1 that its subsidiary Kemerk is fully promoting the progress of project construction and striving to have carbon fiber product sales and output value this year. The 1K and 3K small tow carbon fibers produced by the subsidiary are mainly based on high-tech or special application fields such as aerospace, national defense and military industry.

Jilin Chemical Fiber said in the latest disclosed announcement that the purchase of 31% of the equity of Jilin Baojing is the company to make good use of its own industrial advantages, while giving full play to the role of the platform for the integration of state-owned assets, and improve the efficiency of resource allocation and utilization, and firmly move towards the field of carbon fiber industry. The company will seize the opportunity to "seek growth" goal of steady and orderly progress, and strive to become the world's most influential fiber product manufacturers and new material suppliers. This transaction is conducive to the improvement of the company's core competitiveness, has a positive impact on the company's future operating performance, and effectively enhances the company's sustained profitability.