Hong Kong -- Prosperity Investment Holdings Ltd said 15 Aug that it is investing HK$26 million ($3.5 million) in privately-owned TDI (toluene diisocyanate) producer Yantai Juli Isocyanic Ester Co. Ltd, which is in the process of raising its capacity to 70 kilotonnes per annum (ktpa).
Hong Kong-based Prosperity Investment has acquired an unspecified interest in China Juli Fine Chemical Co. Ltd, whose only business is Yantai Juli Isocyanic Ester, which currently has a 20-ktpa capacity TDI unit, based in Yantai in Shandong Province.
While Prosperity Investment's main focus used to be securities investment, the company said it has shifted to focus to direct investment, to enhance return for shareholders.
Juli is one of the few producers of TDI in mainland China, according to Prosperity Investment. TDI is a key chemical for the polyurethane industry, used to make flexible foam, high-grade paints and adhesives, high elasticity polyurethane, and more.
Prosperity Investment's press statement says that Juli made 19 kt of TDI in 2008, representing a year-on-year growth of 146 percent, with sales of RMB500 million ($73.5 million), a 119 percent increase compared with 2007.
The RMB1200 million expansion of the plant, currently being built, is expected to start up production in 2011.
Prosperity Investment's partner in the Juli investment is Shenzhen Capital Group Co. Ltd (SCGC), a domestic venture capital institution. In the last 11 years, SCGC has invested in 287 projects, 60 of which have been listed locally and overseas.
Describing the investment in Juli as a "uniquely valuable opportunity," Cheng Hairong, chairman and executive director of Prosperity Investment, said, "This initiative marks a milestone for Prosperity Investment."
Cheng also noted in the company announcement that "current annual demand for TDI in China is about 300 -350 ktpa, with output at less than 200 ktpa. This gap between supply and demand presents bright prospects and huge development potential. We are confident that our investment in Juli will generate satisfactory returns for our shareholders," Cheng concluded.