[Caihua Social News] Hongcheng Environmental Protection Technology (02265.HK) announced that on January 6, 2022, the buyer (a wholly owned subsidiary of the company) successfully bid for the target assets through public bidding, including (I) the land use rights of three industrial sites covering a total area of about 533300 square meters in Yinhai Chemical Industrial Park, Laizhou City, Shandong Province, China. (ii) property with a gross floor area of about 89300 square metres (including properties and warehouses); and (iii) other infrastructure and machinery at a cost of about RMB 79.5 million. The total costs associated with the transaction mainly refer to the related tax and administrative costs, which are expected to be approximately RMB 6.5 million and RMB 300000 respectively. Therefore, the total contribution of the group is expected to be about 86.3 million yuan. The Group will finance the transaction with net proceeds from the global sale and internal resources.
According to previous disclosure, the company will build new production facilities, including two production areas, at which time it will be eligible to obtain a new hazardous waste management license with an annual treatment capacity of 600000 tons. the Group will diversify its product portfolio for the sale of recycled products. The target assets will be used for the construction of new production facilities and for the future development of the Group.
As disclosed in the prospectus that the target site located in Yinhai Chemical Industrial Park (covering an area of approximately 166500 square meters) will be acquired for the construction of new production facilities, the company has been looking for suitable land in order to make the most efficient and appropriate planning for the construction of new production facilities. Considering that (I) the target assets are also located in the Yinhai Chemical Industrial Park, which will give the group a geographical advantage; (ii) the average price per square metre of the target assets is more favorable than the previous target land; (iii) after the availability of infrastructure (including reliable electricity and water and sewage treatment systems on the land) And (iv) through the renovation, maintenance and reconstruction of the existing buildings on the site, the construction cycle of the new production facility can be shortened and the cost-effectiveness of the construction can be enhanced. The Company considers that the target assets are suitable for the construction of the new production facility and the future development of the Company.