China XD Plastics Company Limited is one of the leading specialty chemical
companies engaged in the research, development, manufacture and sale of modified
plastics primarily for automotive applications in China and to a lesser extent,
in Dubai, United Arab Emirates ("UAE"). Through our wholly-owned subsidiaries
Heilongjiang Xinda Enterprise Group Company Limited ("HLJ Xinda Group")
and AL Composites Materials FZE ("Dubai Composites"), we manufacture
and sell polymer composite materials (a broader category including modified
plastics), primarily for automotive applications. We develop our products using
our proprietary technology through our wholly-owned research laboratory, Heilongjiang
Xinda Enterprise Group Macromolecule Material Research Center Company Limited
("HLJ Xinda Group Material Research"). HLJ Xinda Group Material Research
is a professional macromolecular material research and development institution
and has 361 certifications from manufacturers in the automobile industry.
Modified plastics are produced by changing the physical and/or chemical characteristics
of ordinary resin materials. In order for plastics to be used to produce automobile
parts and components, they must satisfy certain physical criteria in terms of
mechanical functionality, stability under light and heat, durability, flame
resistance, and environmental friendliness. Our unique proprietary formulas
and processing techniques enable us to produce low-cost high-quality modified
plastic materials, which have been certified by many of the major domestic and
international automobile manufacturers in China. In addition, we also provide
specially engineered plastics and environment-friendly plastics for use in oil-field
equipment, mining equipment, vessel-propulsion systems and power station equipment.
We operate three manufacturing bases in Harbin, Heilongjiang in the Peoples
Republic of China (the "PRC"). In addition, we completed and started
the trial production in the plant in Dubai, UAE with additional 2,500 metric
tons ("Phase 1") targeting high-end products for the overseas markets.
As of December 31, 2015, in domestic market, we had approximately 390,000 metric
tons of production capacity across 84 automatic production lines utilizing German
twin-screw extruding systems, automatic weighing systems and Taiwanese conveyer
systems. Prior to December 2012, we had approximately 255,000 metric tons of
annual production capacity across 58 automatic production lines utilizing German
twin-screw extruding systems, automatic weighing systems and Taiwan conveyer
systems. In December 2012, we further expanded our third production base in
Harbin with additional 135,000 metric tons of annual production capacity, bringing
total installed production capacity in our three production bases to 390,000
metric tons with additional 30 new production lines. In December 2013, we broke
ground on the construction of our fourth production base in Nanchong City, Sichuan
Province, with additional 300,000 metric tons of annual production capacity,
expecting to bring total domestic installed production capacity to 690,000 metric
tons with additional 70 new production lines at the completion of the construction
of our fourth production base. Sichuan Xinda Enterprise Group Co., Ltd. ("Sichuan
Xinda") has supplied to its customers since 2013, backed by production
capacity in our Harbin production base. To streamline the management in Sichuan,
the Company completed a restructuring in July 2015 by merging its subsidiary
in Nanchong City, the entire registered capital (US$99.99 million) of which
was owned by Xinda (Heilongjiang) Investment Co., Ltd, into Sichuan Xinda. The
Company expects Sichuan facility to be completed around the middle of 2016.
In order to meet the increasing demand from our customer in the ROK and to develop
potential overseas markets, on January 25, 2015, AL Composites Materials FZE
obtained a leased property of approximately 10,000 square meters from Jebel
Ali Free Zone Authority ("JAFZA") in Dubai, UAE with constructed building
comprising a warehouse, office and service block with lease term granted 15
years. The Company is planning to complete installing 75 production lines with
additional 14,000 metric tons ("Phase 2") of annual production capacity
in that property at the beginning of 2017, bringing total production capacity
in Dubai to 16,500 metric tons.
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