When Henan Xinlianxin Fertilizers Ltd (HNXLX)’s initiated its IPO in Singapore in June, Sinofert subscribed to 4.99% of total issued shares, with a lock-out period of 3 months. Both sides also signed an agreement for further business cooperation.

HNXLX has an annual production capability of 650,000 tons of urea, 300,000 tons of NPK, and 100,000 tons of methanol. The company is Central China’s largest chemical fertilizer production base, and a coal-based urea manufacturer that has one of the lowest production costs nationwide. After HNXLX’s IPO, it continuously demonstrated excellent performance in the capital market, closing at 1.2 SGD on the first day of trading, which represents an increase of 56% over the issuing price. HNXLX is also China’s first fertilizer business to be publicly traded on the Singapore Exchange.

According to the business cooperation agreement signed by both sides, starting October 2007, HNXLX will provide Sinofert 300,000 tons of urea annually for five years; this represents 50% of the former’s annual sales volume. Meanwhile, Sinofert will provide HNXLX with a stable supply of potassium fertilizers.

This strategic investment into HNXLX coincides with the 2006 alliances with Luxi Chemicals and Hualu Hengsheng Group as yet another important investment in the capital market, and it is greatly beneficial towards Sinofert’s expansion and enhancement of its supply chain oriented strategic alliances.