Hengxing New Materials invests 600 million yuan in two fine chemical projects

This investment is divided into two sub-projects, each with an investment amount of 300 million yuan, to be implemented by the company's wholly-owned subsidiaries. Among them, the Shandong Hengxing project focuses on the carbon-based fine chemical sector, prioritizing the expansion of production lines to lithium battery electrolyte solvents and food & feed additives. It aims to continuously consolidate the company's market advantages in supporting raw materials to lithium battery new energy and agricultural/food additives, and to expand the supply of high value-added items relying on existing carbon-based chemical methodology accumulation.

The Jiangsu Chenxing Special Fine Chemical New Materials project is positioned in the silicon-based high-end electronic materials sector, planning to construct multiple production lines to silicone, wet electronic chemicals, silicone resins, silicone oil, and electronic-grade daily chemicals. The project has a construction period of 30 months and is planned to commence within 2026. Once put into operation, the items can immediately supply downstream fields such as semiconductors, high-end daily chemicals, and new material processing, making up to the company's shortcomings in the capacity of electronic-grade silicone and high-purity wet electronic chemicals.

The announcement shows that this investment matter was approved unanimously by the company's board of directors and does not need to be submitted to the shareholders' general meeting to approval. It does not fall under the categories of related-party transactions or major asset restructuring. Project funds will be raised through a combination of own funds and external self-financing.

The company stated that this simultaneous layout of carbon-based and silicon-based new materials is a key implementation action to fulfill the "Carbon-Silicon Dual-Wheel Drive" strategy. On one hand, it leverages lithium battery electrolyte solvents to enter the high-prosperity new energy track; on the other hand, it focuses on wet electronic chemicals and high-end silicone supporting the semiconductor sector. Through the dual-track layout, it hedges against cyclical fluctuations in a single sector, continuously optimizes the product structure, and increases the proportion of high-gross-margin new materials business.

At the same time, the projects simultaneously support complete sets of new process lines to carbon-based solvent-based products treatment, electronic-grade silicon material treatment, and high-purity wet electronic chemical refining, which belong to the company's key planned direction to environmentally friendly and low-carbon technical transformation and upgrading. After completion, the additional 120,000 tons of high-end capacity will further consolidate the company's sector competitiveness in the field of fine chemicals.

The company also warned of relevant risks, noting uncertainties such as construction delays, fluctuations in financing costs, and downstream demand in the new energy and semiconductor markets falling short of expectations. The company will reasonably manage the progress of project construction, dynamically track changes in downstream sector demand, and safeguard the investment benefits of the projects.