Zhongfu Industry: Construction of electricity-aluminum- deep processing industry chain

It is reported that Zhongfu Industry recently issued an announcement that it plans to invest 3232.2006 million yuan in the capital increase of Henan Zhongfu Electric Power Co., Ltd., and it will hold 45.97% of equity of Zhongfu Electric after the capital increase; the company plans to invest 77.4 million yuan in cash and will wholly-owned subsidiaries. The registered capital of Yinhu Aluminum increased from 22.6 million yuan to 100 million yuan. In addition, Zhongfu Industry will invest 31.5 million yuan in the establishment of Henan Zhongxin Industrial Co., Ltd. together with four companies including Shenhuo. Based on this calculation, in order to build a complete industrial chain integrating coal, electricity and aluminum, Zhongfu Industry has a total investment of over 400 million yuan.

Build 2 Thermal Power Units

Zhongfu Power was established jointly by Zhongfu Industrial and its controlling shareholder Henan Yulian Energy Group Co., Ltd. and Zhongyuan Trust. Its registered capital is 426 million yuan, Zhongfu Industry accounts for 21.24% of the registered capital; Yulian Group accounts for registered capital. 31.81%; Zhongyuan Trust accounted for 46.95% of registered capital.

After Zhongfu Industry agreed with Yulian Group and Zhongyuan Trust, the planned increase of Zhongfu Power's registered capital to 900 million yuan, including Zhongfu Industry's capital increase of 3232.2006 million yuan, and after the capital increase, it will hold 45.97% of Zhongfu Power's equity. Yulian Group increased its capital by 150.7749 million yuan. After the capital increase, it held 31.81% of Zhongfu Power's equity, and Zhongyuan Trust waived its reserve power.

The expansion project of 2 sets of 300,000 kilowatts of cogeneration units declared by Zhongfu Industry has been approved by the National Development and Reform Commission, and the company is approved to build 2 sets of 300,000 kilowatts of cogeneration units. The capital increase of Zhongfu Power is mainly used to build two sets of 300,000 kilowatts of cogeneration units.

Zhongfu Industry stated that after the capital increase, the company will make full use of Zhongfu Power's experience in building and managing power companies, and build 2 sets of 300,000 kilowatts of cogeneration units, which can fully protect the company's power supply and play a role in "Competitive advantage.

Forming a complete electric-aluminum industry chain

Zhongfu Industrial also announced that the company plans to invest 77.4 million yuan in cash and increase the registered capital of the wholly-owned subsidiary Henan Yinhu Aluminum Co., Ltd. from 22.6 million yuan to 100 million yuan.

The company stated that this will help expand the production and sales of Yinhu Aluminum, improve its financial structure, increase the company's aluminum deep processing production capacity and profitability, enhance the company’s core competitiveness and ability to withstand market risks, and form a complete “electricity” - Aluminum - deep processing industry chain.

The capital increase will be used to expand the production and sales of Yinhu Aluminum, which will have a positive impact on the company's aluminum deep processing capacity and profitability.

Yinhu Aluminum is a wholly-owned subsidiary of Zhongfu Industry. As of December 31, 2006, Yinhu Aluminum had total assets of 484.82 million yuan, net assets of 32.72 million yuan and net profit of 4.45 million yuan.

At the same time, Zhongfu Industrial intends to accept a 40% stake in Shenzhen Oukai Industrial Development Co., Ltd. held by Henan Yifeng Investment Co., Ltd. and Henan Jiulong Industrial Co., Ltd. According to the "Audit Report" of Oukai Industrial Co., Ltd. on June 30, 2007, the total amount of the equity transfer was 9.12 million yuan. After the company accepts the entire equity of Oukai Industrial, it will use Oukai Industrial to optimize and integrate the company's procurement and sales channels, reduce procurement costs and sales costs, and improve the company's overall competitiveness.

In addition, on September 29th, Zhongfu Industry signed Shenhuo shares, Henan Nonferrous Metals, and Xinwang Aluminum Co., Ltd. with the “Agreement on Co-financing the Establishment of Henan Zhongxin Industrial Co., Ltd.”. Zhongxin Industrial has a registered capital of 210 million yuan. Henan Nonferrous Metals has invested 73.50 million yuan in cash, accounting for 35% of the registered capital. Zhongfu Industry has invested 31.5 million yuan in cash, which accounts for 15% of the registered capital. Xinwang Aluminum has invested in cash. 73.5 million yuan, accounting for 35% of registered capital.

Zhongfu Industry stated that the introduction of external investors in this external investment will help enhance the company's core competitiveness and ability to withstand market risks, expand new profit growth points, and improve the company's sustainable development capabilities.