SUNSTONE(SH:603612) Shang Hai Zheng Quan Bao·2025-12-18 21:04Core Viewpoint - The company has received a regulatory letter from the Shanghai Stock Exchange regarding the board resolution on overseas investment, which included abstentions from voting. The company is committed to addressing the concerns raised and providing detailed disclosures about the investment project with EGA [1][2]. Investment Project Details - The company plans to establish a joint venture with EGA in the UAE to build a 300kt/a prebaked anode project, with a total estimated investment of approximately $295 million (about 2.084 billion RMB) [3][4]. - The construction period is expected to be two years, starting in Q2/Q3 of 2026, with commercial production anticipated to begin by the end of Q2/Q3 of 2028 [4]. - The funding will be sourced from the company's own funds and bank loans, with the company investing approximately $162.25 million (about 1.146 billion RMB) for a 55% stake in the joint venture [4]. Expected Economic Benefits - Upon reaching full production, the project is expected to generate annual revenues of approximately $224 million, total profits of about $18.8 million, and net profits of around $15.98 million, with an internal rate of return of 11.4% and a payback period of 10-11 years [5][6]. - The project aims to meet the growing demand for anode products in the Middle East, Europe, the Americas, and Africa, driven by the expansion of electrolytic aluminum production [6][10]. Risk and Opportunity Analysis - The project faces potential risks related to obtaining necessary approvals from Chinese and UAE authorities, as well as uncertainties in political, legal, and cultural aspects of operating in a foreign market [9][10]. - The global aluminum industry is experiencing a restructuring phase, with significant opportunities for prebaked anodes as domestic production capacity in China is limited, prompting companies to expand overseas [10][11]. - The UAE's strategic location and stable political environment provide a favorable backdrop for the joint venture, enhancing its market reach [11][12]. Board Meeting and Voting - During the board meeting, one director abstained from voting on the investment proposal due to concerns about the high total investment, long payback period, and various uncontrollable factors associated with the project [13][15]. - The board's decision-making process was conducted in accordance with relevant regulations, and the majority of directors supported the investment, indicating a thorough evaluation of the project's feasibility and strategic significance [19][27].