Yinglite: a Frontrunner with Advantages in Integration      

Ningxia Yinglite Chemicals Co., Ltd. (SZ: 000635) is an integrated producer of calcium carbide process PVC (polyvinyl chloride) in the western region of China. It was listed in Shenzhen Securities Exchange in 1996. The company is mainly engaged in PVC, caustic soda, dicyandiamide and lime nitrogen. PVC is the core business. The caustic soda production is conducted to provide chlorine for the PVC business. Power can be fully self-sufficient. The company has a small production scale of lime nitrogen and dicyandiamide, but still it is one of the biggest suppliers of these chemicals in China.

Sound development of main businesses

PVC is the core business and the main profit source of the company. The revenue of the PVC business accounted for more than 57% of the main-business revenue in the first half of 2007. The capacity to make PVC in the company has reached 275 000 t/a today. The operating rate is quite high and the sales status is satisfactory. Around 60% of the PVC is sold to East China and South China, while 40% is supplied to surrounding areas and small amounts are for export. Calcium carbide is the major raw material for PVC production that uses the calcium carbide process and accounts for 60% of production costs. Producing 100 000 tons of PVC requires 150 000 tons of calcium carbide. The company consumed 435 500 tons of calcium carbide in 2006 and had to purchase 75 500 tons of it from outside sources. With the completion of a new 100 000 t/a PVC unit in 2008, the amount of calcium carbide to be purchased from outside sources will increase further.
   Caustic soda production is a business matched to the PVC production. The company's caustic soda capacity is 210 000 t/a today and all of the raw salt needed is purchased from outside sources. The gross profit rate of the caustic soda business reached 26.18% in the first half of 2007, putting the company in a leading position for the entire sector. The company also has a capacity of 90 000 t/a dicyandiamide and 10 000 t/a lime nitrogen, both China's largest. The gross profit rate of the lime nitrogen business is quite high.

Outstanding competitive advantage of PVC

The company's PVC production is large scale and yields a high gross profit rate. It has the following advantages:
   (1) Advantage in integration: Most PVC producers in China only produce caustic soda and PVC. Yinglite has however adhered to the concept of integrated development for many years. Each time the company expands its PVC business, the capacities to produce both power and caustic soda are also enlarged. In this way the main business of the company has formed a complete chain from power and calcium carbide to caustic soda and PVC. With the constant buildup of competition in the domestic PVC market, the advantages of integration have become more and more apparent.
   (2) Advantage in geographical location: The western region of China has rich resources. The price of coal, in particular, is very low. That is the main reason for most calcium carbide-based PVC projects to be constructed in central and western regions.
   (3) Use of clean process: New projects in the company all use clean production processes. Major pollutants generated in production such as waste water/residue undergo treatment and are effectively reused. Saturated calcium carbide slurry is used as an absorbent for flue gas desulfurization in power plants. Calcium carbide residue and coal fly ash are treated and then used as cement raw materials. Such a resource/production chain with typical regional characteristics has promoted sustainable development of the company.

Stage of rapid growth

The company worked to conserve energy and reduce emissions in the first half of 2007 and overall production cost was effectively reduced. The selling price of PVC was considerably higher than the same period of 2006. The economic performance of the company improved drastically. The main-business revenue for the first half of 2007 was RMB748.1167 million, an increase of 56.71% over the same period of 2006. The net profit was RMB50.7384 million, an increase of 151.4%.
   A project for new capacity - 200 000 t/a PVC and 170 000 t/a caustic soda - is near completion. The first production line - around half of the total capacity - was completed and put on stream in October 2007. The company plans to complete the second production line, as well as a 140 000 t/a lime unit and a 180 000 t/a calcium carbide unit, in May 2008. (CCR2007, No. 31)
   The company announced in October 2007 that it plans to purchase through stock allotment 40.76% equity held by its controlling shareholder Ningxia Yinglite Power Group Co., Ltd. in Ningxia West PVC Co., Ltd. (CCR2007, No. 31) The PVC capacity is expected to reach 500 000 t/a in 2010 and the company will enter a stage of rapid development.