Securities code: 600237 Securities abbreviation: Tongfeng Electronic Number: Lin 2021-020

Anhui Tongfeng Electronics Co., LTD
Announcement on investment construction project

The board of directors and all the directors of the Company warrant that there is no false record, misleading statement or material omission in the content of this announcement, and bear individual and joint liability for the authenticity, accuracy and completeness of the content.
l Investment targets: Ultra-thin Film Material Project for New Energy, Capacitor Project for New Energy Vehicles, Capacitor Project for DC power Grid Transmission.
l Amount of investment: The total investment of the above three projects is expected to be 469,633,500 yuan, which will be gradually invested in batches as planned. In view of the total amount of the investment project exceeds the approval authority of the board of directors, it needs to be submitted to the company's general meeting of shareholders for deliberation and approval.
l Special risk warning: the products of the above projects will face market risks such as market demand changes and product price fluctuations; There are also technical risks caused by high requirements for safety and reliability of project products. There is also the risk that future changes in market conditions may cause uncertain effects on the realization of economic benefits. In order to cope with the above risks, the company will implement the equipment purchase plan in stages according to the project progress and market development. The Company will also increase the research and development of new products, improve the manufacturing process and product performance, improve product quality, actively explore emerging markets, and gradually expand the customer base.
I. Overview of investment projects
(1) Basic information about the investment project
Due to business development needs, the Company plans to invest in the construction of Ultra-thin Film Material Project for New Energy, Capacitor Project for New Energy Vehicles and Capacitor Project for DC Power Grid transmission. The total investment of the above three projects is expected to be RMB 469,633,500, and the Company will invest in them gradually in stages as planned.
(2) Deliberation by the Board of Directors
On June 29, 2021, the fifth meeting of the ninth Board of Directors of the Company deliberated and passed the "Motion on Investment Construction Projects" item by item, and agreed to invest in the construction of the above projects. According to the relevant provisions of the Articles of Association, the total amount of the investment project exceeds the authority of the board of directors for approval, and shall be submitted to the general meeting of shareholders for deliberation and approval. At the same time, the board of directors of the Company will submit to the general meeting of shareholders to authorize the management to implement the above projects within the scope of investment budget, and adjust the investment schedule, investment quota, construction schedule and other specific matters according to the progress of the project.
This investment does not constitute affiliated transactions or material assets reorganization as stipulated in the Administrative Measures for Material Assets Reorganization of Listed Companies.
Ii. Specific information of investment projects
(1) Ultra-thin film material project for new energy
1. Main contents of the project
The project will build a new polypropylene film production plant in the company's existing plant, introduce two ultra-thin film production lines in two phases and support some domestic equipment and related public auxiliary works. After the project is completed and put into operation, it will have an annual production capacity of 4,100 tons of thin film materials for new energy and 2,100 tons of recycled particles.
The total investment of the project is expected to be 345.5 million yuan (including 35 million US dollars in foreign exchange), including 315.5 million yuan in fixed assets investment and 30 million yuan in working capital, which is self-raised by the company. The construction period of the project is 5.5 years and is planned to be divided into two phases. The project will achieve an annual sales revenue of 319.19 million yuan.
2. Project background
With the rapid development of new energy industry, the market demand for new energy capacitors is increasing. New energy capacitors are mainly used in AC-DC filtering, hybrid electric vehicles, photovoltaic power generation, wind power generation and other new energy fields. Ultra-thin polypropylene film is suitable for the above new energy capacitor manufacturing required for a new generation of organic insulating medium, with superior electrical and mechanical processing properties, the market demand is strong. At present, the ultra-thin polypropylene film used for capacitors in the new energy market basically relies on imports.
3. Possible risks and countermeasures
(1) Market risk. Before deciding to invest in this project, the company has fully demonstrated the project, but the demonstration is based on the current level of technology development, national industrial policies, domestic market environment and other circumstances to make investment decisions. In the actual operation process, the above factors may change over time. Due to the uncertainties of the market itself, there may still be a risk of market demand decline and market capacity reduction in the future.
(2) Cost risk. The main raw material of polypropylene film production line is polypropylene particles. If the supply and demand of polypropylene particles changes or the price has abnormal fluctuations, it will directly affect the production cost and profitability of the company, resulting in the fluctuation of the company's gross profit margin.
(3) Industry competition risk. As the industry develops, existing competitors may increase production capacity or new companies may enter the industry, and peer competition will be inevitable.
Considering the market risk of the project, the project will be constructed in two phases. The company will focus on improving the quality and performance of project products, strengthening the scientific management within the enterprise and improving labor productivity. Take effective measures in raw material procurement, inventory and other links, strengthen cost control, overcome the adverse impact of rising raw material prices, reduce product costs, improve product energy efficiency ratio; The implementation of quality and energy - saving double leading marketing strategy to enhance the competitiveness of the company's products.
4. Influence on the company after the implementation of the project
The implementation of this project can further optimize the company's film product structure, improve the added value of products, enhance the company's profitability, and enhance the company's market position of capacitor film.
(2) Capacitor project for new energy vehicles
1. Main contents of the project
This project plans to rebuild the company's original production plant and support some domestic equipment and related public auxiliary engineering, introduce key equipment for the production line of capacitors for new energy vehicles, and form an annual production capacity of 240,000 capacitors for new energy vehicles.
The total investment of the project is expected to be 41.5 million yuan, including 26.5 million yuan of fixed assets investment and 15 million yuan of working capital, which is self-raised by the company. The construction period of this project is 24 months and it is planned to be implemented in two phases. After the completion of the sales, it is expected to achieve sales invoice of 78.648 million yuan.
2. Project background
According to the New Energy Automobile Industry Development Plan (2021-2035), China will promote the high-quality and sustainable development of the new energy automobile industry in the future, and the new energy automobile sales volume will reach about 20% of the total automobile sales volume by 2025. Thin-film capacitor is a key component in the motor control of new energy vehicles. The rapid growth of new energy vehicles will drive the growth of the demand for thin-film capacitor products.
The company has many years of research and development, design, production of film capacitor experience, products are widely used in rail transit, industrial frequency conversion, power grid transmission, home appliances and other industries, has the research and development of film capacitor manufacturing technology and related products.
3. Possible risks and countermeasures
(1) Influence of the development status of the upstream industry
The development of new energy vehicle industry determines the amount of capacitors used in new energy vehicles. With the maturing of new energy vehicle technology, it has gradually been accepted by the public. However, the development of the new energy vehicle industry is still limited by the breakthrough of key core technologies and the improvement of related supporting facilities. The industry policy support and future industry development status and other factors may have a certain impact on the market expectations of capacitors for new energy vehicles.
(2) Technical risk
Capacitors for new energy vehicles need to take full account of extreme cold, extreme heat, high humidity, vibration and other special conditions, with high safety and reliability requirements, and need to prevent relevant risks from raw materials, design and process, equipment, detection and other links.
(3) Market development is not as expected.
The downstream customers of capacitors for new energy vehicles are auto manufacturers. Industry competitors have maintained a long-term and stable cooperative relationship with customers, occupying certain industry advantages, which will bring adverse effects on the future market development of the company's related products.
(4) The risk of product sales price decline
With the growth of demand in the new energy automobile industry, the competition in the capacitor industry for new energy automobiles will become increasingly fierce. If the company fails to strengthen cost control, improve product quality and strengthen market development, its profitability in the later stage may fall short of expectations.
In view of the above risks, the company will strengthen the investment in new product research and development, improve the market development ability, strengthen cost control, and improve the market competitiveness of products.
4. Influence on the company after the implementation of the project
The implementation of the capacitor production expansion project for new energy vehicles is an important project for the company's capacitor product transformation and upgrading. Through the implementation of this project, the company's capacitor product structure can be further optimized, the company's market position in the capacitor industry can be consolidated, and the company's profitability can be improved.
(3) Capacitor project for DC power grid transmission
1. Main contents of the project
This project plans to build a part of the factory building, support some domestic equipment and related public auxiliary engineering, and introduce main production equipment to form an annual production capacity of 8,000 flexible DC power transmission capacitors and 13,000 damping capacitors for UHV power transmission.
The total investment of the project is expected to be 82.635 million yuan, including 47.635 million yuan of fixed asset investment and 35 million yuan of working capital, which is self-raised by the company. The construction period of this project is 24 months, and it is planned to be implemented in two phases. After the completion of the project, it is expected to achieve sales of 13,099,700 yuan.
2. Project background
Capacitor used in flexible DC transmission engineering is an important core component of converter valve. In the early stage, capacitors used in domestic flexible DC transmission projects are mainly imported foreign capacitors. With the improvement of capacitor main material manufacturing technology level and capacitor manufacturing equipment technology level, the development of domestic DC support capacitors is rapid, and the product performance and other aspects are comparable to foreign products, so as to better meet the valve manufacturers' requirements on capacitor product performance, delivery time and cost In the future, there is a large import substitution space.
The company has many years of experience in research and development, design and production of thin-film capacitors, and has advantages in research and development of thin-film capacitor manufacturing technology and related products. The construction of this project can provide opportunities for the company to enter the field of flexible DC transmission main network engineering in the future.
3. Possible risks and countermeasures
(1) Market development is not as expected
The product of this project is compatible with the converter valve manufacturers, and the end user is the power grid companies of various countries. At present, the capacitors for DC power transmission of the main network project in China basically rely on imports. Although the prospect of domestic substitution in the future is worth looking forward to, customers have high requirements on the safety and reliability of products, long product verification cycle, leading monopoly in the industry and other characteristics, which will exert certain influence on the future market development of the company's related products.
(2) Technical risk
Power grid projects require capacitors to have very long expected service life and high product quality and inspection standards. At the initial stage of the project, the company needs to increase R&D investment, start from the performance and life expectancy of raw materials, strictly control key indicators such as materials and processes, and improve product quality.
(3) The risk of product sales price decline
With the growth of industry demand, industry competition will become increasingly fierce in the future. If the company fails to strengthen cost control, improve product quality and strengthen market development, its profitability in the later stage may fall short of expectations.
In view of the above risks, the company will strengthen the investment in new product research and development, improve the market development ability, strengthen cost control, and improve the market competitiveness of products.
4. Influence on the company after the implementation of the project
The implementation of this project can further optimize the company's capacitor product structure, consolidate the company's market position in the capacitor industry and improve the company's profitability.
Iii. Influence of investment projects on the company
The above projects are in line with national industrial policies, with mature technology, strong market competitiveness, and good economic and social benefits. After the implementation of the above projects, we can further optimize the company's film and capacitor product structure, consolidate the company's market position in the film capacitor industry, and improve the company's profitability.
Iv. Risk analysis of investment projects
The products of the above projects will face market risks such as market demand changes and product price fluctuations. There are also technical risks caused by high requirements for safety and reliability of project products. There is also the risk that future changes in market conditions may cause uncertain effects on the realization of economic benefits. In order to cope with the above risks, the company will implement the equipment purchase plan in stages according to the project progress and market development. The Company will also increase the research and development of new products, improve the manufacturing process and product performance, improve product quality, actively explore emerging markets, and gradually expand the customer base.
This is to announce.