BPSTC: Conducts Solid Reformation for Further Development

Conduct reformation and accumulate forces

Bluestar Petrochemical Science & Technology Co., Ltd. (BPSTC,
SZ: 000838) got listed in Shenzhen Stock Exchange Center in June
1997. It was originally named Southwest Chemical Machinery Co.,
Ltd. China National Bluestar (Group) Corporation purchased
24.59886 million state-owned shares from Deyang State-Owned
Assets Management Company in 2001 and became the biggest
shareholder of BPSTC with an equity ratio of 37.77%. The company
completed business reformation in May 2003. The main business
was shifted from the manufacturing of chemical pressure vessels
and petroleum, pharmaceutical and rubber machinery and the
processing of large machinery components to the research,
production and sales of polymeric materials and fine chemicals.
The company changed its name to Bluestar Petrochemical Science
& Technology Co., Ltd. in August 2004. It has 3 branch companies
in Chengdu of Sichuan province, Guangzhou of Guangdong province
and Beijing. Its leading products include fluorosilicon
materials, engineering plastics, antioxidants and diluting
agents.
    The total asset value of China National Bluestar (Group)
Corporation is more than RMB30 billion and the annual sales
revenue is over RMB20 billion today. The group helped BPSTC
complete the business reformation at the end of May 2003, which
helped the company develop greatly in 2004. Remarkable results
have been achieved in the reform to operation and management.
Complete management systems have been established.
   First of all, in the reformation China National Bluestar
(Group) Corporation has incorporated a core asset value of over
RMB80 million in its subordinate Chenguang Research Institute
of Chemical Industry and Guangzhou Research Institute of
Chemical Industry into BPSTC. The company therefore shifted from
a purely machinery manufacturer to a fine chemical producer
today. The company has gained the features of "three highs": high
product gross profit, high technical level and high reputation.
The main-business profit-earning capacity has made drastic
enhancement and the production and operation is greatly improved.
The main-business revenue in the company increased from RMB60
million in 2001 to RMB130 million in 2005 and the per-share net
asset value increased from RMB0.53 at the end of 2001 to RMB1.35
at the end of 2005.
   In the reformation China National Bluestar (Group)
Corporation has also made a huge capital input in the development
of BPSTC. According to estimates, the actual input made by China
National Bluestar (Group) Corporation since the reformation has
already exceeded RMB100 million.

Base on "three highs" and highlight four aspects

In spite of the sustained fierce market competition and the raw
material price fluctuation, the total profit accomplished by
BPSTC in 2005 reached RMB9.44 million, an increase of 54% over
the total profit of RMB6.12 million in the previous year. Due
to some factors, however, the net profit in 2005 was somewhat
lower than the previous year.
   Because of factors such as the raw material price fluctuation,
the overall operation of the company in the first quarter of 2006
made a downslide compared with the same period of 2005. It is
expected that the overall operation will be better in the first
half of 2006 but still lower than the level in the same period
of 2005. Readjustments have already been made according to the
present market status. Profit-earning capacity will be enhanced
in the second half of the year through efforts.
   While maintaining the features of great product variety and
small batch output, during the Eleventh Five-year Program period
(2006-2010) BPSTC will further expand capacity and market shares,
base itself on "three highs" and conduct rational readjustments
to product portfolio. Efforts will be made to maintain
relatively high product gross profit and form a group of products
with considerable market needs, high technical level and high
added value.
     (1) Film-grade PC
Film-grade PC (polycarbonate) in the company already conducted
commercial production in 2004. The company will raise the
product technical level and develop new varieties suitable to
the market requirement through constant improvement and product
segmentation. It will also further improve product quality
through quality control.
     (2) Special engineering plastics
The growth of engineering plastics is expected to be 13-15% in
China in the next few years. Special engineering plastics in the
company started large-scale production in recent years. The
company will further intensify market development and technical
development of new products.  
     (3) Red phosphorus flame-retarding masterbatch
RPM red phosphorus flame-retarding masterbatch developed by the
company was put in market in 1995. The company will make an
analysis to high-performance products in the domestic market and
developments in overseas markets, strengthen research on red
phosphorus super fineness and expand product application
sectors.
     (4) Antioxidants and diluting agents
These products are mainly used in electric cable, rosin,
building materials etc. The development of the power industry
will directly promote the stable growth of the electric cable
sector. The company will further expand the production capacity
and application sectors of antioxidants. Besides, diluting
agents will increase according to the market demand.