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China Sunsine to buy dangerous-waste treatment firm for 43m yuan
SPECIALITY rubber chemicals producer China Sunsine Chemical Holdings is looking to acquire the entire stake in Heze Yongshun Environmental Protection Technology for 43 million yuan (S$8.5 million).
In a filing on Tuesday night, mainboard-listed China Sunsine said its wholly-owned subsidiary on July 17 entered into an equity transfer agreement with the sellers, Li Pin and Yao Xianfeng, and Heze Yongshun for the proposed deal.
Heze Yongshun treats dangerous waste materials with an annual capacity of 15,000 tonnes, and is based in China’s Shandong province.
China Sunsine said its board believes it is in the best interests of the group to acquire Heze Yongshun so as to better manage its entire production process.
This is because the China Sunsine group - which makes rubber accelerators, antioxidants and insoluble sulphur as a vulcanising agent for rubber - generates dangerous waste materials such as resin and tar during its production process.
China’s environmental protection laws and regulations require these dangerous waste materials to be treated by approved and qualified companies before they can be safely discharged, and Heze Yongshun is the only such firm that is qualified in the Shanxian area with a treatment capacity sufficient to meet China Sunsine’s demands.
China Sunsine said it spends “heavily” to treat and dispose of its dangerous waste materials every year. Last year, the group generated about 5,000 tonnes of such materials and incurred 25 million yuan for their treatment and disposal.
The proposed acquisition will promote the group’s long-term sustainable growth and reduce its overall cost on waste treatment and disposal, said China Sunsine.
The deal will also bring in additional revenue for the group from Heze Yongshun’s excess capacity after serving China Sunsine’s needs.
Heze Yongshun has a paid-up capital of 20 million yuan. It owns a land area spanning some 143,334 square metres (sq m), buildings with a total gross floor area of about 14,350 sq m, auxiliary facilities, machinery and other assets.
The target company’s audited book value of net assets stood at around 36 million yuan as at May 31, 2020, while its net tangible assets amounted to 21 million yuan.
Heze Yongshun made a net profit of about 340,000 yuan from January to May this year.
For the whole of 2019, its net profit totalled 9.1 million yuan, which represented about 2.3 per cent of the China Sunsine group’s consolidated net profit for the same year.
Shares of China Sunsine gained 0.5 Singapore cent or 1.4 per cent to close at 35.5 cents on Tuesday, before the announcement.