NANJING, CHINA (Oct. 21, 12:30 p.m. ET) -- Chinese wood plastic composite maker Nanjing Jufeng Advanced Materials Co. Ltd. plans to use funds from an initial public offering next year to double its capacity and build factories outside its base in Nanjing.
The IPO by Jufeng’s parent company, planned for the first half of 2011 on Shenzhen’s NASDAQ-style Growth Enterprise Market stock exchange, would boost annual capacity to 40,000 metric tons (88.1 million pounds), said Wu Zheng Yuan, a board member of Jufeng parent Nanjing Julong Science and Technology Co. Ltd.
Jufeng is one of China’s larger WPC makers, and has traditionally exported at least 75 percent of its production, with Europebeing the largest destination, Wu said.
He declined to say how much money the firm hoped to raise in the IPO or wher it hoped to build the additional factories, but said they are needed to help reduce costs. All of its production is now at its East China base in Nanjing, Jiangsu province.
Other IPO proceeds would be used by its parent company, Nanjing Julong, to boost its engineering plastics compounding business, Wu said.
He spoke in an interview at the China Fourth International Forum of Wood Plastic Composites, held Oct. 19-21 in Nanjing. The event was hosted by the Wood Plastic Composite Committee of the China Plastic Processing Industry Association.
Jufeng declined to release sales figures, but is on track to double revenues this year compared with 2009, when the economic crisis hit China, Wu said.
The company’s capacity has expanded rapidly in recent years, from less than 1,000 metric tons in 2006, mirroring an expansion of China’s WPC industry.
The country’s overall WPC production has grown from an estimated 20,000 metric tons in 2006 to about 300,000 this year, with most of that exported, according to figures from the WPC conference organizers.
Jufeng’s sales this year are above pre-crisis levels, in both its domestic and export markets, Wu said.
While WPC markets in Europe and North America have been hit harder by the economic slowdown, China’s small domestic WPC market has started to grow fairly quickly, he said.
Chinese customers are now more aware of WPC materials as an alternative compared to two or three years ago, and are paying more attention to products with lower carbon emissions, a plus for WPC since it is made partly from recycled materials, he said.
As well, government support has helped, he said. Jufeng, for example, has sold WPC decking to the Asian Games, to be held in November in Guangzhou, Wu said.
Still, the domestic Chinese market is likely to be only about 25 percent of Jufeng’s sales this year, he said.
Prior to the IPO, Julong plans to buy out the other shareholder in its Jufeng subsdiary, a local Nanjing milk manufacturer who helped provide some early up funding but has had no day-to-day role in management, Wu said. Jufeng was founded in 2002.
That would leave Jufeng 100 percent-owned by its parent company, Nanjing Julong, before the IPO. Julong is a compounder of engineering plastics that started in 1999, also in Nanjing.
Wu said the firm has targeted new product research in areas such as fire-resistant WPC, injection molded WPC and wood-plastic mobile housing, along with general research to lengthen the life of its WPC. It now guarantees its products for 10 to 15 years, he said.
