China Xuyang Group (01907): Steady expansion of operation management service business

Zhitong Finance App News, China's Xuyang Group (01907) announced that since its launch in 2019, Xuyang Group has exported professional operation management services to the industry through integration, curing, refining, and replication of the Group's coking and fine chemical industry operation and management advantages and experience, creating Xuyang's characteristic operation management service business, and achieving rapid large-scale expansion in an asset-light manner, thereby speeding up and strengthening the speed and strength of industry integration, creating incremental revenue, and selecting excellent assets for mergers and acquisitions.

In the third quarter of 2024, Xuyang Group signed a cooperation agreement with Wuhai Guangna Coal Coking Co., Ltd. in July to unify its coke sales business, and signed a cooperation agreement with Sichuan Nengtou Wangcang Coking Co., Ltd. in September to provide comprehensive services for the overall production and operation management of coking products, including but not limited to coking product sales, chemical product sales, coking coal procurement, coal blending management, and transportation management. These two new collaborations have raised Xuyang Group's current operation management service business scale to 7.06 million tons/year, including 6.4 million tons of coke and 660,000 tons/year of fine chemicals.

The 300,000 tons/year aniline quality and efficiency improvement comprehensive transformation project provided by Xuyang Group Operation and Management Services to Jilin Cornell Chemical Co., Ltd. was successfully put into operation in one go and produced qualified high-purity hydrogen in October 2024. Through this comprehensive transformation to improve quality and efficiency, the production plant's annual output can be further increased to 360,000 tons/year.

According to the maximum annual production volume of Xuyang Group's production facilities providing operation and management services to various independent third parties (i.e. 6.4 million tons/year of coke, 300,000 tons/year of tar, and 360,000 tons/year of aniline), the total sales revenue of these independent third parties can reach approximately RMB 15 billion.

Xuyang Group's operation management services include various aspects: overall hosting, marketing integration, overall supply chain management, park planning consulting, product line planning, production, technology, logistics, environmental protection, safety, R&D, and digital improvements, etc., covering various upstream and downstream industries such as coking, chemicals, and new energy. Based on Xuyang's unique core competitiveness and operation management system, Xuyang Group's operation management services are gradually forming a new growth pole.

In the future, Xuyang Group will continue to expand the scale of operation management services in various upstream and downstream industries such as coking, chemicals, and new energy. In the process, Xuyang Group will also seek excellent assets suitable for mergers and acquisitions to help the steady development of Xuyang's business nationwide layout and global development. The operation management service business of the Xuyang Group has also become the leading part of the Group's external mergers and acquisitions.

The company's board of directors expects that under the continuous adoption of business development strategies and models such as operation management services and mergers and acquisitions, the Group will continue to expand its production and supply capacity for coke and fine chemical products, maintain strong development, and continuously improve the service level of coke and chemical companies in China and the world.