On December 6, Global New Materials International (06616.HK) disclosed the progress of the latest capital increase agreement. On the day of publication of the announcement, its subsidiary Luzhai Seven Color Pearl Mica Materials Co., Ltd. (hereinafter referred to as “Seven Color Luzhai”) has received an additional capital of RMB 1 billion from investors in cash payments.
Earlier, Global New Materials International announced on November 20 that Qise Luzhai signed a capital increase agreement with investor Tonglu Xincheng Development and Investment Co., Ltd. (hereinafter referred to as “Tonglu New Town”). Tonglu New Town will inject RMB 1 billion into Qise Luzhai in cash, of which 26,231,769 yuan will be used to increase its registered capital, and the remaining 973,768,231 yuan will be used for its capital reserves. Investors are required to complete payment of capital injections in cash by December 5, 2023.
Tonglu New Town is wholly owned by the Tonglu County State-owned Assets Management Committee. The agreement to increase capital to Luzhai in Qise at the cost of 1 billion yuan is mainly an affirmation of the future prospects of Luzhai in Qise. After the capital increase is completed, Tonglu Xincheng will hold 20% of the shares after the capital increase in Qise Luzhai.
According to reports, Qise Luzhai is a core subsidiary of Global New Materials International. It mainly engages in R&D, production, and sales of mica, pearlescent pigments and related products, raw materials, and semi-finished products. It has obtained patented synthetic mica technology and process equipment with intellectual property rights through independent research and development, and has designed and developed exclusive equipment technology on its own based on its rich production experience and process characteristics.
According to data, Global New Materials International is a world-renowned producer of pearlescent materials, synthetic mica materials, and high-end sheet alumina, as well as the undertaker of the Ministry of Industry and Information Technology's key basic new material for strong industrial infrastructure projects - artificial synthetic mica projects. According to financial data, Global New Materials International's operating income in 2022 was 917 million yuan, up 36.89% year on year, with a three-year compound growth rate of 27.67%; in 2022, it achieved net profit of 237 million yuan, with a three-year compound growth rate of 30.13%.
As an important raw material for pearlescent pigment production, synthetic mica has the characteristics of good insulation, high temperature resistance, heat insulation, and luster, and is widely used in cosmetics, automobiles, high temperature smelting and aerospace industries. According to Frost & Sullivan's forecast, the average annual compound growth rate of China's pearlescent pigment market from 2022 to 2025 is 17.6%, and the compound annual growth rate of China's synthetic mica-based market is 27.2%, and the market size of the industry is showing a high growth trend.
The completion of the capital increase is of great significance for Global New Materials International to implement a development strategy that places equal emphasis on “endogenous development and epitaxial expansion”. With the steady progress of joint development plans at home and abroad, the company is expected to enter a new stage of growth, consolidating the company's leading and outstanding position in the synthetic mica industry.