Summary of Xingfa Group’s non-public issuance plan

1. Basic information of the company

1. Chinese name: Hubei Xingfa Chemical Group Co., Ltd.

2. English name: HUBEI XINGFA CHEMICALS GROUP CO., LTD

3. Registered address: No. 58 Gaoyang Avenue, Gufu Town, Xingshan County

4. Stock abbreviation : Xingfa Group

5. Stock code: 600141

6. Listing exchange: Shanghai Stock Exchange

7. Legal representative: Li Guozhang

8. Business scope: production, sales, import and export of phosphorus chemical products, chemical raw materials and chemical products; mining and sales of phosphate ore; mining, processing and sales of silica ore; production of chemical fertilizers (including compound fertilizers) , sales; undertaking Sino-foreign joint ventures, cooperative production and "three to one supplement" business; hydroelectric power generation and power supply; automobile freight and auto parts sales; mechanical and electrical equipment installation; house leasing; property management services; technical consulting services; food additives (valid until May 5, 2016) and feed additives (valid until December 25, 2018) production and sales (if the business scope involves special national regulations, it is not allowed to operate without a license)

2. This Background and purpose of the issuance

(1) Background of the issuance

The company is currently engaged in the main business of mining and sales of phosphate rock, phosphate, phosphate fertilizer, glycerin Production and sales of phosphorus chemical products such as phosphine and other chemical products. The company has resource and energy advantages in phosphate rock, hydropower and other resources, and currently has 12 series and 184 varieties of products. The industrial chain extends from upstream ore and energy supply to downstream fine product development. It is one of the few leading fine phosphorus chemical companies in China that integrates minerals, electricity and phosphorus.

1. The general trend of internationalization provides opportunities and challenges

Due to the accelerated industrialization process in various countries, the massive consumption of resources and energy, and the increasing pressure on environmental protection, the development trend of the world's phosphorus chemical industry is positive. Profound changes have taken place. Internationalization and large-scale development are new trends in the development of the phosphorus chemical industry, and refinement and specialization are new characteristics of the development of the phosphorus chemical industry. After years of development, my country's phosphorus chemical industry has developed from primary processing of yellow phosphorus to deep processing of fine phosphates, and has basically formed a complete supporting industrial system, industrial layout and products including scientific research, design, equipment manufacturing, production, trade and technical services. Structural adjustment has become more reasonable and market competitiveness has been continuously enhanced. By mastering high-tech, high-value-added high-end industrial chains and adhering to the development direction of "refinement, specialization, high-end and green", leading companies in the industry will have the opportunity to grow into leading companies in the global phosphorus chemical industry.

2. The national macro-control policy puts forward new requirements and injects new impetus for development

As my country's requirements for the comprehensive utilization of phosphate rock resources continue to increase, the "abandonment of poor mining" in resource utilization Phenomenons such as "rich" are strictly prohibited. At the same time, the country has introduced a number of policies and measures to support and encourage enterprises to increase the comprehensive utilization of medium and low-grade phosphate rock resources and associated minerals. On the one hand, through mineral processing, refining and other processes, phosphorus resources can be utilized in different grades and categories. On the other hand, it realizes the recycling of fluorine, silicon, magnesium, calcium, iodine and other resources in phosphate rock resources. Industry development trends and regulatory forms have put forward higher requirements for phosphorus chemicals. In the future, higher and stricter industry entry thresholds will be formed, which has created favorable conditions for a new round of industrial restructuring and integration of phosphorus chemicals.

Since 2015, the National Development and Reform Commission has approved construction project funds in key areas such as the China Agricultural Development Key Construction Fund to provide low-cost, medium- and long-term capital support for key industrial projects. Among them, comprehensive resource utilization projects are clearly Key supported content. At present, the Agricultural Development Fund has invested 9.5 million yuan and 167 million yuan to increase the capital of Yidu Xingfa. The capital increase will be used for the comprehensive utilization project of phosphogypsum in Yidu Park and the 3 million tons/year low-grade colloidal phosphate ore beneficiation and deep processing respectively. project; an additional RMB 35.2 million was invested to support the company in building a "smart chemical industry", focusing on improving the level of phosphorus chemical manufacturing and promoting industrial transformation and upgrading.

3. Relying on the foundation and advantages of industrial development, accelerating the construction of a leading enterprise in the fine chemical industry

After years of development, the company has further improved its resource and energy self-sufficiency rate through acquisitions and reorganizations, and achieved traditional Phosphate improves quality and efficiency, and phosphorus chemical products have the most complete categories and varieties in the country, and continue to maintain the leading position in the industry. Accelerate the completion of the construction of two major parks in Yichang and Yidu, and quickly form a glyphosate production capacity of 130,000 tons through mergers, acquisitions, expansion, etc., ranking first in the country, and the production level is at the forefront of the industry; enter the phosphate fertilizer industry, and build a national low-grade phosphorus industry Ore comprehensive utilization demonstration base. The circular economy industry chain in Yichang and Yidu Parks has obvious advantages and significantly enhanced development potential, which has accumulated energy and laid a good foundation for the company's future development.

During the "Thirteenth Five-Year Plan" period, the company will closely rely on the existing industrial development foundation and advantages, focus on improving development quality and operating efficiency, take green fine chemicals as the basic development direction, and focus on Yichang and Yichang. Focusing on the construction of the metropolitan area, we will promote the construction of strategic production bases in an orderly manner, highlight innovation-driven development, accelerate industrial transformation and upgrading, accelerate the pace of international development, and strive to become a leading enterprise in the domestic fine phosphorus chemical industry, a benchmark enterprise for ecological and environmental protection, and a demonstration enterprise for efficient resource utilization. An enterprise with advantages in industrial technological innovation and a model enterprise in social responsibility care, it has become one of the world-renowned fine chemical enterprises.

(2) The purpose of this issuance

The company relies on the existing phosphate rock and phosphoric acid production capacity and continues to promote product quality improvement and grade upgrading on the basis of regional planning adjustments. , promote the comprehensive utilization of upstream phosphate rock resources, in-depth development of downstream high value-added phosphorus chemical products, steadily improve sustainable profitability, and build the core competitiveness of the enterprise. This non-public issuance is a major measure for the company to strengthen and expand the "integrated mining, electricity and phosphorus" industry chain. The specific performance is as follows:

1. The company plans to increase capital in Yidu Xingfa and build a new 3 million tons/year low-grade colloidal phosphate ore beneficiation and deep processing project. After the project is completed and put into operation, it will effectively digest the company's low-grade phosphate ore. , improve the company's comprehensive utilization level of resources and increase the company's total potential available phosphate rock resources;

2. The company's above-mentioned investment projects include a new 35,000 tons/year potassium dihydrogen phosphate device, which has been completed After being put into production, it will complement the company's existing leading product, sodium phosphate, to further improve the company's product structure, enhance its industry position in the potassium phosphate market, increase product added value, and meet the various needs of customers at different levels at home and abroad;

3. The company has a large demand for funds for production and operation. The high asset-liability ratio restricts the company's bank credit and other debt financing capabilities, and also increases debt financing costs. Using part of the funds raised from this non-public issuance of shares to repay bank loans will help improve continued financing capabilities, reduce financial costs and risks, and enhance the company's overall competitiveness.

If the above projects are successfully completed, the company's phosphate rock resource utilization level, product technology content and added value will be significantly improved; at the same time, this non-public issuance will increase the company's capital scale, optimize its asset structure, and reduce financial risks. , enhance profitability, bring sustained and good investment returns to shareholders, and enhance market image.