&Nbsp, The Leader Of Synthetic Leather Industry, Will Raise Its Leading Position In Raising Investment Projects.

Zhejiang Wo Xin Industrial Group Limited by Share Ltd (hereinafter referred to as "Xin Xin shares") main business is the development, production, sale and service of PU synthetic leather products, the main products are PU synthetic leather products and the main raw materials for PU synthetic leather production. The company is one of the most complete enterprises supporting the industry chain of PU synthetic leather industry in China.

Insiders pointed out that the project of raising funds invested mainly in high quality PU synthetic leather and microfiber PU synthetic leather, not only can optimize the product structure of the company, but also can further improve the company's market share in high-end products. The new capacity and R & D capabilities will effectively guarantee and enhance the company's leading position in the industry, and further enhance the core competitiveness of the company.

PU synthetic leather industry leader

The company is the first enterprise in the synthetic leather synthetic leather industry in China with both "Chinese famous brand" and "well-known trademark". In September 2005, "Wo Xin brand" PU synthetic leather was appraised as "China famous brand" by the AQSIQ. In February 2007, the "Xin Xin brand" trademark was awarded the "well-known trademark" by the Zhejiang Administration for Industry and commerce. The company's product quality has been recognized by famous brands such as Nike, Adidas, Niu brun, Anta, Hongxing Erke, XTEP and other famous brands at home and abroad. It has become one of the few suppliers of PU synthetic leather products in domestic enterprises, and is also the main supplier of famous sports brands in China.

The company now has 8 wet and 8 dry PU synthetic leather production lines, covering the entire production chain of PU synthetic leather, including PU synthetic leather, microfiber PU synthetic leather, synthetic leather base cloth, PU resin paste, pigment and toner. It has the annual production capacity of 23 million 500 thousand PU synthetic leather, and has complete supporting facilities and finishing equipment.

The company has the industry's leading R & D strength. It is the only enterprise in the industry with state-level enterprise technology center. In 2002, the company was listed in the "five batch" key enterprises in Zhejiang Province, and became one of the 66 high tech enterprises in Zhejiang province. In 2003, the company was appraised by the Ministry of science and technology of China as the key high-tech enterprise of the national torch plan. In 2007, the company's technology center was evaluated by the five ministries and commissions, such as the development and Reform Commission, the Ministry of science and technology, the Ministry of finance, the General Administration of customs and the State Administration of Taxation, and was evaluated as the fourteenth batch of national enterprises (Group) technology centers enjoying preferential policies. In December 2007, the company was recognized by the Zhejiang provincial economic and Trade Commission as the key nurturing enterprise in the "958" technology catching up plan of Zhejiang province. It is the only synthetic leather enterprise in Zhejiang province. In October 2008, the company was identified as the first batch of high-tech enterprises in Zhejiang in 2008. In December 2008, He Xin chemical, a subsidiary of the company, was identified as the fourth batch of high-tech enterprises in Zhejiang in 2008.

The 1998 national new product "was named" national new product "by the State Economic and Trade Commission in 2001, and the" Vega "was appraised by the State Economic and Trade Commission as" the national key new product in 2001 ". The breathable breathable leather was appraised as the" national new product in 2003 "by five ministries such as the Ministry of science and technology, the State Administration of Taxation, the Ministry of Commerce, the State General Administration of quality supervision and quarantine and the State Environmental Protection Administration. The green leather leather was appraised as the" 2004 national new product "by five ministries such as the Ministry of science and technology, the State Administration of Taxation, the Ministry of Commerce, the State General Administration of quality supervision and quarantine and the State Environmental Protection Administration. The nano leather was appraised by the Ministry of science and technology, the State Administration of Taxation, the Ministry of Commerce, the State General Administration of quality supervision and quarantine, the State Environmental Protection Administration and other five ministries and commissions as" 2006 state-level new products ". Several products of the company have been selected as new products of the state. Among them, the non-woven fabric shoe lining is rated" by the State Economic and Trade Commission ".

Increasing market share

The PU synthetic leather products of the company are divided into three parts: ordinary PU synthetic leather, high physical property PU synthetic leather and superfine fiber PU synthetic leather. Among them, the ordinary PU synthetic leather and the high physical property PU synthetic leather belong to the second generation of artificial leather products, and the superfine fiber PU synthetic leather belongs to the third generation of artificial leather products. In the past three years, the PU synthetic leather and microfiber PU synthetic leather increased rapidly, and the proportion of the company's sales revenue increased year by year.

According to China Plastics Processing Industry Association's synthetic leather synthetic leather Specialized Committee data, in 2008, the national PU synthetic leather production was 1 billion 60 million meters, the company PU synthetic leather output was 24 million 387 thousand and 300 meters, the market share was about 2.30%; the national high property PU synthetic leather and superfine fiber PU synthetic leather output totaled about 68 million 500 thousand meters, the company's high property PU synthetic leather and ultra-fine fiber PU synthetic leather production was 8 million 432 thousand and 300 meters, and the market share was about 12.31%.

The company has the most complete industrial chain of PU synthetic leather industry from slurry, base cloth, toner to the final coverage of various grades of PU leather, and owns the only state-level enterprise technology center in the industry, which is the leading product development platform and production technology service platform in the domestic industry. Judging from the scale of production and operation, according to statistics from Specialized Committee, China Plastics Processing Industry Association, the total sales revenue of the company has ranked first in the PU synthetic leather industry in the past three years.

At present, the company has a high market share in the field of PU synthetic leather, especially in the field of high-end PU synthetic leather. At present, the main constraint on the development of PU synthetic leather is the capacity limit. The four wet four dry PU synthetic leather project invested by the company and the two phase project of Wo Xin Collie will be released. The production capacity of PU synthetic leather will be further improved, which can solve the problem of insufficient production capacity at present, and the market share of the company will continue to increase.

The gross profit margin of main business is increasing year by year.

The prospectus shows that the gross profit margin and the gross profit margin of main business are increasing year by year. During the reporting period, the proportion of high-end PU synthetic leather products such as microfiber PU synthetic leather with high added value of products and high physical properties PU synthetic leather increased, and the cost effect of the scale production of high-end PU synthetic leather products gradually emerged. The synergistic effect of the PU synthetic leather industry chain was gradually reflected, and the gross profit margin and main business gross margin of the company increased year by year. In the first half of 2009, the gross profit margin and gross profit margin of the main business in the first half of 2009 were larger than those in the 2008 year. There were two main reasons: first, the product structure of the company was further optimized, and the proportion of high-end products with higher value-added and bargaining power accounted for the proportion of the total products of the company.

In the company's PU synthetic leather products, the gross profit rate of high-end PU synthetic leather products, such as microfiber PU synthetic leather and high physical properties PU synthetic leather, is significantly higher than that of ordinary PU synthetic leather. During the reporting period, as the company gradually optimized its product structure, the proportion of high-end products in the product structure was continuously improved, and the gross profit margin of the main business of the company increased year by year.

In the PU synthetic leather products, the change trend of gross profit rate of PU resin slurry is basically the same as that of ordinary PU synthetic leather. This is mainly due to the low added value of ordinary PU synthetic leather products, and is greatly influenced by the raw material PU resin size. Influenced by the rising price of raw materials, the gross profit margin of synthetic leather and cotton yarns decreased in 2008 compared with that in 2007. In the first half of 2009, the gross profit rate of PU resin slurry increased considerably compared with that of 2008. The main reason was that the price of raw material DMF, MDI and AA of PU resin slurry decreased greatly, while the price of PU resin slurry decreased less than that of raw materials.

Obvious technical advantages

The company is a national high-tech enterprise. Since its establishment, the company has always focused on product R & D and product innovation. The technology center established by the company in 1998 was the first provincial-level enterprise technology center in Zhejiang province. In September 2007, it was awarded the national enterprise technology center by five ministries, such as the national development and Reform Commission. In recent years, the company has developed more than 140 new products, new processes and new technologies, and has obtained 16 national patents, including 4 invention patents, and 9 other patent applications have been accepted by the State Patent Office, including 7 invention patents, 6 new state-level products and 30 new provincial products, of which 20 have filled the domestic blank, and the Zhejiang science and technology innovation fund has 3 items.

The company is one of the largest PU synthetic leather manufacturers in China. It has independent production capacity of base cloth, sizing agent, non-woven fabric, color paste powder and other products. It has realized the complete industrial chain linkage of "base -PU resin color pigment surface treatment agent synthetic leather", and has become one of the most complete enterprises supporting the industry chain of China's PU synthetic leather industry. The complete industrial chain can control the quality of products in the production of chemical raw materials and the production of base cloth, and ensure the quality stability of the final PU synthetic leather products. The company's product research and development can extend to the formulation of chemical raw materials and the textile technology of base cloth, and enhance the research and innovation ability of the company's products. The centralized production and short distance transportation of base cloth, sizing agent, non-woven fabric, color paste and toner can reduce the purchase cost of raw materials and the transportation cost of intermediate products, and save the cost of the company's products.

The company mainly uses polyether polyurethane. raw material A high physical property sports shoe leather with high hydrolysis resistance, high peel strength, high tear strength and high strength has been developed. Innovative application of wet coating with permeation method has been applied to develop new products with high physical properties. These new products endow PU synthetic leather with new physical and chemical properties, improve the product structure of the company, improve the technological content and added value of the products.

As a leading enterprise in China's synthetic leather industry, the company has carried out long-term cooperative research on the production technology of microfiber synthetic leather with the leading enterprise of the world's microfiber synthetic leather, and has jointly developed the world class comprehensive synthetic leather product, microfiber PU synthetic leather. The two sides jointly contributed to the establishment of a joint venture - He Xin Cola Li super fiber (Jiaxing) Co., Ltd., and He Xin Cola Li company is controlled by the company, which is also the first overseas investment partner of Cola company.

The establishment of the company, He Xin Li cola, has made the company have advanced technology in the field of microfiber PU synthetic leather. On the other hand, the joint venture company, wo Xin Cola Li, controlled by Wo Xin shares, not only reflects the issuer's status in the field of international synthetic leather, but also enables the company to continue to occupy the high-end position in the field of microfiber PU synthetic leather through research and production of microfiber PU synthetic leather and its technical resources sharing, laying a solid foundation for the company's future development and product upgrading.

Raise investment projects to enhance core competitiveness

The prospectus shows that the company intends to issue 25 million shares publicly and raise funds separately to Fujian Hexin. Leather making project Three projects of capital investment and technical center technical transformation of Wo Xin Cola Li super fiber (Jiaxing) Co., Ltd., with a total investment of about 251 million yuan.

Judging from the company's own production capacity, the production capacity of PU synthetic leather has reached saturation in recent years, especially the production capacity of microfiber PU synthetic leather and high physical property PU synthetic leather. At present, capacity has become the main factor that restricts the growth of sales volume of issuers. Especially in the busy season, a large number of orders have been lost due to the saturation of production. The company is in urgent need of expanding production capacity to meet customer needs and achieve further development.

And the fund-raising project is fully released. It will add 12 million meters per year on the basis of the company's high quality PU synthetic leather and 8 million increase in production capacity. The production capacity will be increased by 150%. It will add 2 million 800 thousand meters per year on the basis of the issuer's Microfiber PU synthetic leather production capacity of 2 million meters / year, and the capacity expansion will be 140%.

According to the forecast, after the construction of Fujian Hsin synthetic leather project has been completed, the average annual sales revenue is 384 million yuan, the average annual after tax profit is 28 million 20 thousand yuan, the investment profit rate is 19.76%, the total investment financial internal rate of return is 16.04%, the total investment recovery period is 6.92 years (after income tax); the Hsin Cola Li super fiber (Jiaxing) Limited company's capital increase project has been built up, the average annual sales income is 240 million yuan, the average annual after tax profit is 16 million 945 thousand yuan, and the investment profit margin is 33.88%. Investment finance The internal rate of return is 25.34%, and the total investment recovery period is 5.44 years (after income tax).

Insiders pointed out that although the technological transformation project of the technology center will not bring direct economic benefits to the company, it will enhance the technological innovation capability of the company and master its core technology through the transformation of the technology center, so as to enhance the capability of the new products, new technologies and new materials in the leading industry of the research and development industry. This will greatly enhance the competitiveness of enterprises, and make the company maintain its dominant position in the fierce market competition, which will have a far-reaching impact on the sustainable development and sustained profits of the company.

All in all, the company has increased the production capacity of the annual production of 12 million meter high physical PU synthetic leather and the annual production of 2 million 800 thousand ultra-fine fiber PU synthetic leather through the issuance of raised funds. On the one hand, the production capacity of the above mentioned products will be greatly improved to solve the current bottleneck restricting the growth of the products mentioned above. On the other hand, with the continuous improvement of the proportion of high-end products in the company's products, the gross margin level and overall profitability of the company will also be greatly improved.