Zhejiang Fulai New Materials Co., Ltd. (stock code: 605488.SH), which was listed in May, 2021, launched a foreign investment in September, shortly after listing, to acquire Yantai Fuli and enter the upper reaches of the industrial chain. Recently, the company announced that it will provide a guarantee for its 300 million yuan bank credit in order to support the development of Yantai Fuli. For the company, there is an opportunity to support Yantai Fuli, or to realize "1x 1 > 2".

140 million yuan invested in Yantai Fuli

In September 2021, Fulai New Materials announcement announced that it would invest in Yantai Fuli New material Technology Co., Ltd. (hereinafter referred to as "Yantai Fuli").

It is reported that the company signed the "Investment Agreement on Yantai Fuli New material Technology Co., Ltd." with Yantai Fuli shareholders Chi Fuli and Chen Xin on September 8, 2021. Fulai invested a total of 140 million yuan in Yantai Fuli by way of capital increase and transfer of shares, of which the registered capital was increased by 100 million yuan to Yantai Fuli at the price of 1 yuan per share.

At the same time, Fulai Xincai transferred a total of 20% of Yantai Fuli's outstanding shares held by Chen Xin and Chi Fuyi at zero yuan through equity transfer, corresponding to a registered capital of 40 million yuan, and bear the corresponding paid capital obligations. After the completion of this investment, Fulai Xincai holds a 70% stake in Yantai Fuli.

Chi Fuyi, general manager of Yantai Fuli, has many years of experience in film production, R & D and sales, has rich customer resources and production technology advantages, and has a good reputation in the industry. At the same time, Yantai Fuli has a complete, excellent production and management team with many years of industry experience.

It is reported that Chi Fuyi operates five original film production lines through light assets, with annual sales of more than 1 billion yuan, and has high-quality customer resources, such as NONGFU SPRING CO., LTD., Master Kang, Wa, Yuanqi Forest, Coca-Cola Company, and so on. These advantages have laid a good foundation for Yantai Fuli to carry out business smoothly.

It is worth noting that since November 2021, Yantai Fuli has asked Luoyang Sonny to carry out OEM contract manufacturing for it, and the business has achieved better development. Yantai Fuli's future performance may be expected.

Prior to this investment, the company has worked with Chi Fuyi and her team for many years, and the company has hired a professional audit and legal team to conduct full due diligence on Yantai Fuli, and the two sides have established a solid foundation of cooperation and mutual trust.

Enter the upper reaches of the industrial chain to realize the linkage between upstream and downstream

Yantai Fuli engaged in the original film R & D and production business belongs to the direct upstream supply chain of the main business of Fulai New Materials. Considering that the downstream customers continue to pay more attention to the development and utilization of the original membrane performance, in order to meet the current market demand and continue to expand the company's competitive advantage in the industry, the company decided to carry out the original membrane research and development and production.

According to public information, the company's main business is the R & D, production and sales of functionally coated composites. Functional coating composite material refers to the use of coating and other composite technology, ink-absorbing materials, pressure-sensitive adhesive, conductive materials and polymer films are compounded. The material has specific functions such as ink absorption, bonding, protection, thermal conductivity, electrical conductivity, insulation and so on. It is widely used in the fields of advertising materials printing, product label marking, consumer electronics and automotive electronics.

The company's main products are divided into three categories: advertising inkjet printing materials, label logo printing materials and electronic-grade functional materials. Among them, advertising inkjet printing materials are mainly used for printing indoor and outdoor physical advertising materials, while label marking printing materials are mainly used for label printing of daily chemical products, food and beverages and electronic products. Electronic-grade functional materials are mainly used in consumer electronics (including mobile phones, notebooks, tablets, wearable devices, etc.) and automotive electronics to bond and fix various components or modules. and play the role of protection, heat conduction, electrical conductivity, insulation, antistatic, marking and so on.

The upstream supply of raw materials has a great impact on the economic benefits of the industry, which is an important factor to determine product quality. Therefore, this investment will help the company to effectively control the cost, quality and supply reliability of key raw materials, ensure steady production and operation activities, and further enhance the company's comprehensive competitiveness in the printing and packaging industry chain.

According to Fulai new materials, Yantai Fuli plant is under construction, the first BOPP production line is expected to be put into production in the fourth quarter of 2022, a BOPP production capacity of 50, 000 tons, BOPP production line can guarantee the quality and quantity of the company's product supply.

It is worth mentioning that not long ago, the company carried out equity incentives, but there was no arrangement for the relevant management of Yantai Fuli at that time. It is reported that the incentive plan of Yantai Fuli will be planned separately after it is officially put into production. It shows that the company attaches great importance to it.

Fulai New Materials previously raised funds in addition to supplementary liquidity, including functional coated composite production base and R & D center headquarters complex construction projects, only for the expansion of the company's main business, and did not carry out vertical expansion on the industrial chain. The acquisition of Yantai Fuli will be an important step in the expansion of the company's industrial chain.

For Fulai New Materials, the foreign investment further meets the needs of the company's business development, helps the company to deepen the field of functional coated composites, and lays a good foundation for the future development of the company. In the long run, it plays a positive role in the development of the company, which meets the interests of all shareholders and the needs of the company's long-term development strategy.

At the same time, the new functional film project involved in Yantai Fuli is an important development direction of the company and an important support for the expansion and implementation of other application fields in the future. In the future, the company will make efforts in the field of new functional films, such as BOPP film, PETG and heat-shrinkable film, BOPS film used in the field of high-end cosmetics.

According to the company's development strategy, the company's development goal in the next few years is to update and supplement the existing coating production line, slitting production line and warehousing equipment to achieve production capacity expansion. and continue to optimize and improve the quality of advertising inkjet printing materials, labels and printing materials, and continue to upgrade the production process to provide customers with more competitive products.

Industry insiders point out that while the original main business is expanding, the relevant demand for the upstream will also rise, which is bound to increase costs. From the perspective of listed companies, properly moving the company's industry upward is not only to control the upstream raw materials and reduce costs, but also to achieve the linkage of the industrial chain, better resist risks, and achieve the effect of "1 # 1 > 2".