This Project, located in mainland China, is actively seeking a financing partner:

USD515m (@ Pulp&Paper PE=40, NAPS = RMB4/share)

Project: 100.000 T/A Chemi-mechanical Wood Pulp Project
Industry: Pulp and Paper (P&P) -> MMC (Microcrystalline Cellulose And Carboxymethylcellulose Sodium
Location: Northern Jiangsu Province, Mainland China
Investment: USD20m (Stage I Chemi-mechanical Wood Pulp)
Investment Structure: Equity (20% project executive/80% investor) and Debt 10%~12% p.a. + fee
IPO Prospect: xcellent (Traditional industrial product, capital intensive, strong cash flow, strong financial structure)
Market Cap. @ IPO:

Project Stage: Early (with company reg, production permit, land permits all in place)

Project Overview:
The Project is a two stage, chemi-mechanical wood pulp turns MCC project. The first stage of the project, wood pulp production, is divided into three production lines that construct and operates independently, therefore stage one of the project will take only six month to deliver products and generate revenue. Chemi-mechanical wood pulp is known as “multipurpose pulp”, used in many different type of paper production. It offers excellent profit margin (27% NPAT) as well as enjoying excellent market environment (nationally, over 60% imported, locally, some major paper producers imports over 90%), making locally produced products extremely competitive compare to imported products.

The second stage of the project, involves the production of MCC from rice and wheat straws, deriving high value products from waste materials. The mainland China govt have always had difficulties dealing with rice and wheat straws,traditional pratice of burning results in severe air pollution thus legally banned for many years, while current solution of energy production is extremely inefficient as far as cost is concerned. The second stage MCC project targets this problem by extracting high worth MCC from waste materials that is difficult to treat, thus enjoys excellent policy treatments.

Overall, the high profit margin and excellent market environment ensures a strong platform for the project to progress into stage two, MCC production. The introduction of MCC into the project will provide excellent IPO advantages, both from policy and market perspective, ensuring excellect IPO potential and excellent returns.

Project Location Analysis:

The Project is located at the northern part of Jiangsu province of mainland China. Northern Jiangsu province is known as the “home of poplar”, one of three major poplar plywood industry group within China. Incidentally, poplar is the perfect wood type to use as raw material for the first stage, wood pulp production, of the project. Apart from local resources, the project is also located within 150km from the northern sea port of Lian’yun’gang, provide cost-effective access to imported wood chips.

Northern Jiangsu province is also one of China “granary”, a major wheat and rice production area, providing abundant raw materials for MCC production. Between 2000 – 2007, northern Jiangsu province grain production accounts for more than 50% of the entire Jiangsu Province. While certain degree of decline can be observed as industrialization took over as priority since 2007, the areas still provides more than adequate raw materials to fulfill the project’s need.

Market Analysis:
Ever since 2004, a series of over 70 major water pollution events caused by industrial pollution, had led to the centralization of environmental assessment to Beijing, provincial govts had no rights granting production permits without the assessment report from the central. Combined with policy shifts, the result is an extremely imbalance in the supply and demand from paper production pulp. Nationally, over 60% of the paper production materials are imported while individual major paper producers near the project imports over 90% of their raw materials. Compare to locally produced materials, nearby paper producers are paying a 30% ~ 40% premium for imported raw materials, creating an extremely favorable market environment for our project. We have already established intention agreement with some of these clients for our product, ensuring excellent sales and cash flow prospect.

Investment Analysis:
The first Stage chemi-mechanical wood pulp production is a combination of three independent production lines. Each production line is constructed and produces independently. The design provides excellent financial flexibility with only a minimum of USD6m to have to be in place for the first production line to complete and delivers product, while the remaining part of the USD20m can be invested at a later stage, after the first production line is complete, minimize investor risk. The construction time is also extremely efficient, taking only 4 month to complete and no more than 2 month to tune, delivering products within 6 month, achieve full production capacity within less than two years.

In order for the project to successful progress, there are certain terms that needs to be met by potential investors, they are as followed:
1. A USD500,000 land deposit & processing fee (Deposited into already established company account, controlled by the investor/financier accountant)
2. Investor/financier proof of funds (Reputable financial institution, subject to confirmation by local govt.)
3. Background info on investor/financier (Subject to confirmation by local govt.)

Deal Contact:
Xcel Corporate Consultancy
Dave Lin
[email protected]