Nine Dragons Establishes Strategic Production Bases in China

Nine Dragons Paper, China, reports that it has established four major national strategic production bases (Dongguan, Taicang, Tianjin, and Chongqing), four supplemental regional production bases (Shenyang, Quanzhou, Leshan, and Hebei Yongxin), and a foreign base in Vietnam. For the financial year ending June 30, the annual design production capacity of the Group has reached 12.55 million metric tons.

Following startup of two linerboard production lines at the Quanzhou base (total of 0.65 million metric tons) and a corrugating medium production line (0.3 million metric tons) at the Leshan base by the end of December, it is expected that the total annual design production capacity of the Group will reach 13.50 million metric tons.

The company's board is of the unanimous view that the Group's leading position in the industry will be further strengthened and become irreplaceable given that the strategic production layout in China and overseas has basically been completed. Having considered the leading position of the Group and the current market conditions, the board determined that it is necessary to make temporary adjustments to the strategic development target in the coming three years. The Group's focus on strategic development will shift from rapid development in the past to a prudent and sustainable development stage with further control of capital expenditure, reduction of net debt to equity ratio, and enhancement of profitability.

The board has formulated the following plans in respect of the capital expenditure and net debt to equity ratio for the three financial years ending June 30 based on adjustment of the strategic development focuses of the Group:

A new 0.35 million metric tpy testliner production line installed in Shenyang is expected to commence production by the end of December 2015; a new 0.35 million metric tpy kraft linerboard production line is expected to commence production at the Vietnam base by the end of 2016.
After startup of the two new production lines in Shenyang and Vietnam, the total annual design production capacity of the Shenyang base and Vietnam base with two linerboard production lines each will reach 0.7 million metric tons and 0.45 million metric tons, respectively.

Currently, a 0.35 million metric tpy kraft linerboard production line is being constructed at the Shenyang base. The production line is expected to commence production by the end of February 2014. An existing 0.1 million metric tpy kraft linerboard production line in Vietnam is already in operation.

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