INTCO Recycling Resources Co., Ltd.
Corporate Value and Return Enhancement Action Plan 2024
To adhere to the principle of "investors first" and uphold the interests
of all shareholders, INTCO Recycling Resources Co., Ltd. (hereinafter
referred to as "INTCO Recycling" or "the company") has formulated the
"Corporate Value and Return Enhancement Action Plan 2024", which was
approved by the 10th meeting of the 4th board of directors.
Since listing on the Shanghai Stock Exchange's STAR Market in 2021,
the company has continuously improved its governance structure, internal
control system, and information disclosure system. The company deeply
realized that improving the quality of listed companies, enhancing
investors' returns, and enhancing investors' sense of gain is the proper
meaning of the development of listed companies and their responsibility to
investors to form a long-term sustainable benefit sharing mechanism for
investors, employees, and stakeholders.
Ⅰ Focus on the main business and has a significant position in the
industry
INTCO Recycling is a high-tech manufacturer of recycled products.
Utilizing recycled resources has created a full supply chain with
recirculated plastics. INTCO Recycling has established a unique business
model by processing recycled plastics into fashionable consumer products.
The company has six production bases worldwide, located in
Shandong, Shanghai, Anhui, Jiangsu, Malaysia, and Vietnam. Our products
have been exported to more than 120 countries and regions in America,
Europe, Asia, Africa, and Oceania, providing quality products and services
to more than 12,000 customers worldwide. As an A-share company with a
unique business model in the field of energy conservation and
environmental protection on the Shanghai Stock Exchange's STAR Market,
it has maintained steady growth in its main business in the past three years
(2021-2023), with an accumulated operating income of 6.501 billion yuan,
a net profit attributable to the listed company of 666 million yuan and a net
profit margin of over 10%.
(1) Main business products
With over 20 years of deep cultivation in the field of renewable
plastics, the company has built a global channel advantage, mainly engaged
in PS and PET. The company has divided into three business segments:
recycling, reuse, and utilization, forming four main product patterns:
"frame product, decorative mouldings, PET products, and recycled
particles". Among them, high-value products represented by frames and
decorative mouldings account for more than 70% of the company's main
product revenue share, and their gross profit margins are more than 30%.
The company's self-developed and designed plastic volume-reducing
and density-increasing recycling equipment has helped more than 1,000
recycling sites in more than 80 countries at home and abroad to improve
recycling efficiency and reduce operating costs significantly. The company
has the utilization capacity of treating about 100,000 tons of PS foam and
50,000 tons of PET bottles every year and further processing them into
exquisite frames (such as picture frames, decorative building materials, and
so on.), to finally realize the high-value journey of renewable plastics in
becoming great treasure! The process of "replacing wood with plastic,
replacing stone with plastic and replacing metal with plastic" has broken
the bottleneck of traditional frame production, changed the original
complicated production process, significantly improved the production
efficiency, not only greatly saved global natural resources, but also realized
the repeated recycling of recycled plastic products.
Figure-recycled frame products
(2) Production capacity under construction increases
The under-construction project sites include Shandong, Anhui, and
two overseas bases in Vietnam and Malaysia. The 6-hectare project of
Vietnam INTCO Thanh Hoa (Phase I), which began in June 2022, has been
a steady source of growth. Its capacity utilization rate has improved
quarterly, and the project’s operational effectiveness has gradually
emerged. In 2023, this base achieved an operating income of 142,026,100
yuan, a year-to-year increase of 411.25%.
In 2024, we are excited to announce the start of the construction of
the second phase of the project. For more details, please refer to the
"Announcement of INTCO Recycling Resources Co., Ltd. on Investing in
the Construction of INTCO Recycling (Phase II) Project in Vietnam
(Announcement No.: 2024-009) " disclosed on the website of Shanghai
Stock Exchange (www.sse.com.cn).
The company's "50,000 tons/year PET recycling project" in Malaysia
has formed three product lines of food-grade recycled particles, sheets, and
high-end fiber-grade recycled particles. During the reporting period, the
company's management team focused on promoting the building of a
recycling system for bottles and bricks, lean improvement of
manufacturing technology, laying of global marketing channels, and so on.
The related products were mainly sold in North America and Europe,
achieving a revenue of 260,705,700 yuan, an increase of 227.48% over the
same period of last year, and the gross profit margin of products improved
quarterly.
Figure-Company's production bases in Vietnam and Malaysia
(3) Raised funds to investment projects
During the reporting period, the company steadily promoted the
construction of investment projects with funds raised from initial public
offering (IPO) and regulated the use of raised funds in strict accordance
with "The Regulation Guidelines for Listed Companies No.2-Regulatory
Requirements for the Management and Use of Funds Raised by Listed
Companies (revised in 2022)" and "Guidelines No. 1 of the Shanghai Stock
Exchange for Self-regulation of Listed Companies — Standardized
Operation". For more details, please refer to "The Special Report of
INTCO Recycling Resources Co., Ltd. on the Deposit and Actual Use of
Raised Funds" (Announcement No.: 2024-013) disclosed on the website of
Shanghai Stock Exchange (www.sse.com.cn).
In June 2024, the "Comprehensive Utilization Project of New Modified
Recycled Plastics with an Annual Output of 30,000 Tons" will reach the
scheduled usable state. As of the disclosure date of this plan, the small-
scale and pilot-scale debugging of the project target products have been
completed.
Ⅱ Adhere to the nature of science and technology and develop
new quality productive forces
Scientific and technological innovation is the core driving force of the
company's development and the foundation of the company as a listed
company in SSE STAR Market. Adhering to the development keynote of
innovation, with the help of its own business advantages, the company
consolidates the innovation foundation and optimizes the R&D mechanism,
and continues to deepen the whole industrial chain, making continuous
breakthroughs in R&D and building an efficient and sustainable innovation
ecology within the company.
Figure-The company's unique business model
In the field of plastic reducing, the company has innovated equipment
structures such as "special crushing", "improving compression and
conveying efficiency" and "surface cooling structure of molding bin", and
the effective compression ratio can be as high as 50 times or more.
In the field of plastic recycling, the company has mastered the key
technology of high-quality recycling of waste polystyrene foam, including
high-efficiency filtration and impurity removal technology, elastomer
toughening synergistic composite technology, preparation technology of
molecular chain regulator and other key technologies, which effectively
improved the mechanical properties and processability of recycled
particles; Mastering the "high-quality recycling technology of food-grade
PET", realizing the high-value application of 100% post-consumer plastic
(PCR) from bottle to bottle, it has become one of the few leading
enterprises in the world and has obtained the certification of US Food and
Drug Administration (FDA), European Food Safety Agency (EFSA),
Global Recycling Standard (GRS), HALAL, Ocean Cycle and OEKO-
TEX Standard100 eco-textile.
In 2023, the company invested 105,015,900 yuan in R&D expenses,
a year-to-year increase of 15.76% ,and obtained 112 patents, including 13
invention patents, 94 utility model patents, 5 design patents, 2,357software
copyrights and others, with a total of 2,469intellectual property rights.
In 2024, the company will invest no less than 4% of the annual
revenue for R&D expenses, recruit outstanding talents, and focus on key
technological breakthroughs in the resource recycling industry.
Ⅲ Improve corporate governance and enhance risk control
capabilities
(1) Implementing the reformation of the independent director
system and strengthening the supervision mechanism
During the reporting period, the company actively responded to the
reformation of the independent director system and acted quickly, and
successively completed the establishment of a special meeting for
independent directors and completed the revision of the following systems:
"The Work System for Independent Directors", "The Rules of Procedure of
the Board of Directors", "The Detailed Rules for the Implementation of the
Audit Committee", "The Detailed Rules for the Implementation of the
Remuneration and Assessment Committee”, and "The Detailed Rules for
the Implementation of the Nomination Committee".
In 2024, according to the newly revised "Company Law", "Measures
for the Administration of Independent Directors of Listed Companies" and
other laws and regulations, as well as the latest provisions of "The
Company's Work System for Independent Directors" and "Articles of
Association", the company will continue to improve the corporate
governance structure, improve the standard operation level, give full play
to the role of independent directors in decision-making, supervision and
checks and balances, and professional consultation in the operation of the
board of directors. As a service department communicating with the
independent director, the office of the board of directors of the company
prepares the materials needed for the meeting and the materials requested
by the independent director in time and makes good information feedback.
The management of the company reports the company's operation and
major issues to independent directors in a timely manner through working
groups, so as to give full play to the role of independent directors in
corporate governance, promote the sustainable and standardized
development of the company and protect the legitimate rights and interests
of investors.
As a service department communicating with the independent director,
the office of the board of directors of the company prepares the materials
needed for the meeting and the materials requested by the independent
director in time and provides good information feedback. The management
of the company reports the company's operation and major issues to
independent directors in a timely manner through working groups, so as to
give full play to the role of independent directors in corporate governance,
promote the sustainable and standardized development of the company and
protect the legitimate rights and interests of investors.
(2) Organizing the training of directors, supervisors, and senior
managements
In 2024, the company will organize directors, supervisors and senior
managements to actively participate in relevant training organized by the
CSRC, Shanghai Stock Exchange, learned laws and regulations such as the
"Company Law" and the "Securities Law". They are asked continuously to
strengthen the awareness of self-discipline and compliance, and promote
the company's continuous standardized operation.
(3) Lean management
In 2024, the company will continue to promote lean operations,
enhance employees' ability to innovate and realize the common growth of
enterprises and employees. We continue to carry out lean training camps
and lean improvement week activities to help employees deeply
understand the concept and method of lean production and master
advanced production technology and management experience. Carrying
out the Horse Racing incentive mechanism, the company takes the factory
operation index as the traction, realizes the cross-base horse racing of
employees in the same department and position, and fully stimulates the
organizational vitality.
Ⅳ Improve the quality of information disclosure and strengthen
investor communication
During the reporting period, the company permanently attached great
importance to information disclosure and strictly followed "The Rules
Governing the Listing of SSE STAR Market" and "The Company's
Information Disclosure Management System", earnestly fulfilled its
information disclosure obligations, and truthfully, accurately, completely,
normatively, timely and fully disclosed the company's periodic reports,
temporary announcements, and other important information. The company
has set up a unique email address for investor relations to communicate
with investors. Moreover, we have maintained close communication with
investors through the investor relations column on the official website and
the SSE e-interactive platform. In addition, through new tools such as the
WeChat official account and social media at home and abroad, the
company displays relevant information on corporate culture, product
quality, technological innovation, and social responsibility to investors
from multiple perspectives and dimensions, further improving the
transparency of the company's information, thus protecting the rights and
interests of minority shareholders.
In 2024, the company will hold no less than four performance briefing
sessions/investor reception days, and at least three times to show investors
the company's operation in an all-round way through short videos, a map
reading, and other forms, and continue to strengthen communication with
investors through announcements, investor exchange meetings,
performance briefing sessions, on-site research, e-interactive Q&A,
investor relations hotline and other forms. In addition, the company's
WeChat account, "INTCO Recycling" will continue to deliver the latest
information about the company on the basis of compliance, so as to create
a more interesting company for investors.
Ⅴ Improve investor returns and share the fruits of enterprise
development
The company values sharing the achievements of enterprise
development with shareholders, devotes itself to building a long-term and
stable shareholder relationship, and attaches importance to responding to
investors' demands. In "The Articles of Association", the company clearly
defines the cash dividend conditions and strictly implements them, fully
considers the development stage, profit scale, and cash flow, and deploys
a continuous and stable profit distribution policy based on balancing short-
term interests and long-term development.
In the three years since its listing, the estimated cash dividend amount
is 82,106,400 yuan, of which the profit distribution plan for 2023 is 0.15
yuan per share. As of December 31, 2023, the company's total share capital
is 187,769,250, so the total cash dividend to be distributed is 28,165,387.5
yuan. This plan still needs to be submitted to the company in 2023.
On April 15, 2024, the 10th meeting of the 4th Board of Directors
deliberated and adopted "The Proposal on the Company's Dividend Return
Plan for the Next Three Years (2023 -2025)" and "The Proposal on
Requesting the Shareholders' General Meeting to authorize the Board of
Directors to formulate the Interim Dividend Plan". The company will
maintain the dynamic balance between performance growth and
shareholder returns, provide investors with continuous and stable cash
dividends, bring investors long-term investment returns, and actively
explore schemes such as multiple dividends a year and mid-term dividends
to enhance investors' sense of value acquisition. We constantly cultivate
new growth points, expand new business areas, improve enterprises’
competitiveness and anti-risk ability, and ensure the healthy and
sustainable development of the company.
Ⅵ Strengthen the binding of management and shareholders'
shared interests and the responsibility of the "key minority"
(1) Strengthen equity incentives and related constraints
The company launched the restricted stock incentive plan in 2022,
which fully mobilized the enthusiasm of the company's employees, and
effectively combined the interests of shareholders, the company, and
individuals of the core team so that all parties concerned about the long-
term development of the company and promoted the construction and
stability of the company's core talent team, thus contributing to the
company's long-term growth and safeguarding shareholders' rights and
interests.
The above-mentioned appraisal indicators of the company's equity
incentive plan are divided into two levels, performance appraisal at the
company level and the individual level. According to the characteristics of
the industry and its own business, the company selects the growth rate of
net profit as the performance index at the company level. The net profit
index is an effective index that reflects the profitability and growth of
enterprises, which can establish a good image of the capital market. In
addition to the performance appraisal at the company level, the company
has also set up a strict performance appraisal for the motivated individuals,
which can make a more accurate and comprehensive evaluation of the work
performance of the motivators. According to the performance evaluation
results of the incentive object in the previous year, the company will
determine whether the individual of the incentive object meets the
conditions for lifting the sales restriction. For the company, the setting of
performance appraisal indicators takes into account the interests of the
incentive object, the company, and shareholders, which is conducive to
attracting and retaining outstanding talents, improving the company's
market competitiveness and sustainable development ability, thus
achieving the company's phased development goals and medium-and long-
term strategic planning. For the incentive object, the achievement of the
performance appraisal goal is realizable and has a good incentive effect.
In 2024, the company will continue to improve the executive
performance evaluation system linked to business indicators, strengthen
the "key minority" responsibility, and use the OKR evaluation system and
other tools to continuously optimize and implement the executive
performance evaluation plan.
(2) The actual controller increases the company’s shares
Mr. Liu Fangyi, the actual controller and chairman, based on his
confidence in the company’s future development and recognition of the
long-term investment value, increased his holdings of 159,322 shares by
centralized bidding through the trading system of Shanghai Stock
Exchange from March 14, 2024, to March 15, 2024, accounting for 0.085%
of the company's total share capital, with a total increase of 4,000,453.84
yuan.
Ⅶ Implement the business philosophy of sustainable development
and actively practice social responsibility
For INTCO Recycling, the ESG concept has been integrated into the
company's long-term sustainable development strategy. Since its
establishment, the company has always adhered to the "ESG" concept,
actively practiced the values of "love, kindness and truth", and collaborated
with stakeholders to continuously create sustainable social value.
The company has the ability to recycle about 150,000 tons of plastics
every year, helping the world to reduce 300,000 tons of carbon emissions,
save 450,000 tons of crude oil resources, and reduce the felling of about
3.4 million trees every year. Since its establishment, it has accumulated
about 10,000 tons of carbon emissions, saved about 5.1 million tons of
crude oil resources and reduced the felling of about 33 million trees. In
2023, the first "ESG Report was released in Chinese and English version,
which was highly recognized and concerned by investors, customers, and
suppliers at home and abroad.
In 2023, the company successfully obtained a Blue Loan of US$ 70
million or the equivalent of RMB from the International Finance
Corporation (IFC), a member of the World Bank Group, which was
specially used to expand the production capacity of Malaysia's r-PET
production line and supplement the company's working capital. The loans
mentioned above are the largest international development institution
focusing on the private sector in emerging markets in the world, using
green or social value to raise funds or various financial instruments aimed
at sustainability.
Based on the company's outstanding ESG performance, the company
has successively obtained the S&P Global ESG Score, which is above the
score of 91% of enterprises in the chemical industry. We have been selected
as Bloomberg ESG Score, the best and outstanding practice case of ESG
of China Association of Listed Companies. Furthermore, we have been
awarded A Class in Wind ESG Rating, won the "Golden Bull Science and
Technology Award" in China Securities Journal, the global zero-carbon
city practice pioneer award-Gold Award, Bloomberg Green ESG50 annual
attention project, the Zhiyuan Award of Cailian Association-
"Environmentally Friendly Pioneer Enterprise Award" and other
heavyweight awards.
In 2024, the company will continue to publish the ESG report for
investors at home and abroad to enhance investors' understanding of the
company's long-term value and strengthen the company's reputation.
VIII. Other matters
In 2024, INTCO Recycling will take advantage of its full supply chain
integration in plastic recycling to enlarge its "plastic family" by expanding
its business horizontally to PE, PP etc. Driven by proactive innovation,
INTCO Recycling will continue its advancement of plastic recycling
technologies to become a global leader in resource recycling and contribute
to sustainable development in the new global carbon economy!
The company will continue to evaluate the "Corporate Value and
Return Enhancement Action Plan" and promptly fulfill its information
disclosure obligations. The company will continue to focus on its main
business and enhance its core competitiveness, profitability, and risk
management capabilities. Through good management, standardized
corporate governance, and positive investor returns, we can effectively
protect the interests of investors, earnestly fulfill the responsibilities and
obligations of listed companies, repay investors' trust, maintain the
company's good market image, and promote a stable and healthy
development of the capital market. The plans and strategies, such as
company's plans and development strategies mentioned in this report, are
forward-looking statements that have not yet become facts and do not
constitute a substantive commitment from the company to investors.
Investors are advised to pay attention to the relevant risks.
INTCO Recycling Resources Co., Ltd.
Board of Directors
April 16 2024
