Sinochem International Plans to Fully Acquire Nantong Xingchen for 2.11 Billion Yuan, Securing Its Position in China’s Top Tier With 510,000 Tons of Epoxy Resin Production Capacity

On the evening of June 10, Sinochem International (600500.SH) officially disclosed a draft report on the issuance of shares for asset purchase and related party transactions, planning to issue approximately 600 million shares at a price of 3.51 yuan per share to acquire 100% equity of Nantong Xingchen Synthetic Materials Co., Ltd. held by China BlueStar (Group) Co., Ltd. The transaction price is 2.11 billion yuan, and the issuance price represents a discount of over 46% compared to the closing price on June 10. Due to this news, along with the recent boost from the global polyphenylene ether (PPE) supply chain disruption, Sinochem International's stock price has hit the daily limit for two consecutive trading days, reaching a nearly three-year high as of June 10.

This “sister company” integration deal has been in preparation for nearly a year. In July 2025, Sinochem International first disclosed its preliminary plan to acquire Nantong Xingchen. Subsequently, due to the expiration of the target company’s financial data and the need for additional audits, the process was prolonged, and it was not until June 10 this year that the formal restructuring draft was submitted. The transaction still requires approval by the shareholders’ meeting and authorization from regulatory authorities. Founded in 2000 with registered capital of RMB 800 million, Nantong Xingchen is mainly engaged in the R&D, production, and sales of polyphenylene ether (PPE), polybutylene terephthalate (PBT) and related modified engineering plastics, as well as fine chemical products such as epoxy resin and bisphenol A. As of 2025, it had production capacity of 150,000 tonnes per year of bisphenol A, 160,000 tonnes per year of epoxy resin, 72,000 tonnes per year of PBT engineering plastics, 50,000 tonnes per year of PPE engineering plastics, and 780 tonnes per year of specialty PPE engineering plastics, with total production capacity exceeding 500,000 tonnes.

China’s first PPE manufacturer, with two globally exclusive processes.

The most valuable asset of Nantong Xingchen is its PPE business. PPE is one of the five major engineering plastics, characterized by extremely low dielectric loss, excellent thermal stability, and dimensional stability. It has long been dominated by international chemical giants such as Saudi Basic Industries Corporation (SABIC), Asahi Kasei, and Mitsubishi Gas Chemical, resulting in high industry technical barriers. As early as 2005, China Bluestar established the country's first ten-thousand-ton industrial production facility for polyphenylene ether in Ruicheng County, Shanxi Province, breaking the long-standing reliance on imports for PPE materials.

Nantong Xingchen currently ranks first in China and second globally in PPE production capacity, with an annual capacity of 50,000 tons of general-grade PPE. It is the only manufacturer in the world to have mastered both mainstream PPE synthesis processes, namely the solution method and the precipitation method. Its technical team includes 123 R&D personnel, including 11 PhDs, and it has secured 18 authorized patents in the polyphenylene ether field, forming a systematic intellectual property barrier.

In its strategic layout for PPE products, Nantong Xingchen has adopted a dual-track approach. General-purpose PPE is mainly used in traditional sectors such as automotive parts, home appliances, and industrial equipment, while specialty PPE targets the higher-value AI computing sector. As the core resin substrate for high-frequency, high-speed copper-clad laminates (CCL) used in AI servers and 5G base stations, specialty PPE offers irreplaceable performance advantages in low dielectric loss and thermal stability for signal transmission. Its products also feature high heat resistance, excellent dimensional stability, and outstanding lamination capability, making it a key material for the manufacturing of high-performance PCB for AI data centers.

In the second half of 2024, Nantong Xingchen’s specialty PPE products began trial production, achieving scaled sales in 2025. By the end of the reporting period, the company had reached an annual production capacity of 780 tons. The company’s 1,500 t/y specialty polyphenylene ether (PPE) retrofit project has entered the implementation stage and is expected to be completed and put into operation in April 2026. The Ruicheng branch’s 10,000 t/y polyphenylene ether production line construction project was officially launched in April 2026, with a planned investment of RMB 210 million; the project has been listed as a 2026 Shanxi Province provincial-level key project.

On the demand side of the market, the rapid construction of AI infrastructure is driving explosive growth in demand for specialty PPE. According to the China National Chemical Information Center, domestic demand for electronic-grade specialty PPE is expected to reach 2,600 tons by 2026. Since the beginning of the year, SABIC has announced plans to expand its specialty PPE oligomer capacity in response to rising demand. In addition, rumors in early June that a factory in the Jubail Industrial City of Saudi Arabia had shut down, disrupting about 70% of global PPE resin supply, further amplified concerns over tightening supply chains.

However, several industry insiders believe that, in the medium to long term, the incident will have limited impact on basic PPE products, while the competitive landscape in the specialty PPE segment is more noteworthy. Shengquan Group’s 2,000-ton-per-year PPO capacity is expected to come onstream in the fourth quarter of 2026, and Silver Age Sci & Tech has also launched an expansion project on top of its original 300-ton-per-year capacity. In the specialty PPE segment, Nantong Xingchen is one of the few domestic companies with the capability for large-scale mass production. As of 2025, Nantong Xingchen’s specialty PPE capacity stood at 780 tons. Industry participants expect supply and demand to gradually move toward balance as new capacity is released in 2026–2027, but current product prices have already risen from RMB 650,000 per ton at the beginning of the year to around RMB 1 million per ton, and the market remains in short supply in the near term.

In 2025, Nantong Xingchen achieved operating revenue of RMB 4.757 billion, up 7.9% year-on-year, and net profit of RMB 256 million, up 560.12% year-on-year. This surge was driven by strong customer demand after the completion and commissioning of new PPE production capacity, which enabled rapid volume ramp-up in 2025. This explosive growth was also reflected in the pro forma consolidated financial statements of Sinochem International — after the transaction is completed, Sinochem International’s operating revenue is expected to increase to RMB 51.55 billion, net profit attributable to shareholders of the parent company is expected to narrow from a loss of RMB 2.223 billion to a loss of RMB 1.968 billion, and basic earnings per share are expected to improve from -RMB 0.62 to -RMB 0.47.

The transaction also includes a three-year performance commitment, requiring Nantong Xingchen’s net profit from 2026 to 2029 to be no less than RMB 345 million, RMB 367 million, RMB 388 million, and RMB 341 million, respectively. If these targets are not met, BlueStar Group will first use the shares obtained from this transaction to make compensation.

The strategic rationale behind the acquisition: filling gaps and seizing opportunities

From the perspective of both parties’ asset structures, this integration carries direct synergy value. Sinochem International currently has an annual capacity of 350,000 tons of epoxy resin, 480,000 tons of bisphenol A, 40,000 tons of nylon 66, 8,000 tons of para-aramid, 24,000 tons of modified plastics, and 170,000 tons of ABS. After acquiring Nantong Xingchen, Sinochem International’s total epoxy resin capacity will rise to 510,000 tons, placing it among the domestic leaders; in the engineering plastics sector, its ABS and nylon 66 product lines can fill the gaps in Nantong Xingchen’s portfolio, while Nantong Xingchen’s PPE and PBT can in turn complement Sinochem International, creating a full-chain layout spanning core intermediates to downstream modified engineering plastics and enabling the company to provide customers with integrated material solutions.

Sinochem International’s core business has been under clear pressure in recent years. In 2025, the company recorded full-year revenue of RMB 47.34 billion, down 10.54% year on year, and attributable net profit of negative RMB 2.223 billion, although losses have narrowed compared with the prior year. Among its businesses, the fine chemicals and new materials segment generated revenue of RMB 21.436 billion, up 3.11% year on year, and is becoming the company’s main growth driver. As a high-quality asset within the Sinochem system that combines strong technological barriers with explosive earnings potential, the proposed injection of Nantong Xingchen will bring three new growth drivers to Sinochem International: first, while traditional chemical businesses remain in a cyclical trough, the injection of supporting materials businesses from emerging sectors such as new energy and AI computing will help optimize the company’s revenue mix and earnings resilience; second, by extending from specialty PPE into electronic-grade new materials, Sinochem International is expected to enter the supply chain for materials used in AI servers and 5G infrastructure, seizing a strategic opportunity in the domestic substitution of materials for high-end manufacturing; third, after asset integration, greater scale effects will help the company gain more initiative in capacity digestion and pricing power.

As of the end of 2025, the key product capacities of Sinochem International are as follows:

For Sinochem International, this acquisition not only carries the short-term task of alleviating historical loss pressure and optimizing asset structure but also embodies the long-term mission of entering the global high-end chemical new materials competition stage. From a macro perspective of China's self-controlled chemical new materials, Nantong Xingchen is not only a high-quality target in financial terms but also a microcosm of the Chinese chemical industry seeking breakthroughs in the high-end materials sector. As PPE, once a "bottleneck" material, approaches the global first tier under domestic technological breakthroughs and capacity expansion, the key variable for China's chemical new materials is shifting from "can we replace" to "how to lead."

Editor: Winnie