Selling 51% Stake in Project for Production of Solar Water Heaters

Opportunity Snapshot

Investment Opportunity

I am seeking a co-investor to start production of solar collectors for water heating in the high-tech zone of Weihai city. The stake offered to the investor is 51%.

Investment project:

We plan to produce solar collectors for water heating in the high technology zone of Weihai city, Shandong province, eastern China. The products will meet the demand of an already existing market. Our product’s technical characteristics are unsurpassed by competitors.
The strategic goal of our company is to achieve production of commercial electricity from sunlight through heat conversion (for large buildings). Thus we aim to offer heating, air conditioning and hot water supply within a single system.

Shareholding structure: Yusupov Ibrahim owns 49% of the project (equivalent to RMB 10-15 million yuan). The investor will have 51% and will be company president. The enterprise’s registered general funds are 20 million yuan.

The immediate target market are construction companies, which are obliged by law to include space for solar collectors in their building design.

Strategy for expanding the facility: via establishment of production bases in different parts of China.

Overall capacity of the plant: 15,000 sets/year.
Plot for the plant: 4,000 m²;
Investment amount: 20 million yuan;
Investment in equipment: 5,000,000 yuan;
Current assets: 5,000,000 yuan;
Cost of production: 2,773 yuan / set;
Selling price: 5,800 RMB / set;
Annual output: 87 million yuan;
Profit after tax: 32,725,000 yuan.

The necessary investment amount is $3 million;

Period of construction of the plant, production of the required machinery and staff training: 6 months;

Payback period: 18 months;

Strategy to maximize profits for shareholders: exit in 3 years via listing on the Shanghai or Hong Kong stock exchanges.

General background:
- a sharp rise in energy prices worldwide;
- energy savings in China;
- reduced coal production, according to the „Law on Alternative Energy”.

The State Development and Reform Commission of China issued a decree in April 2007 on advancing the use of solar energy for heating throughout the country. The decree stated that China will develop a policy of mandatory installation of solar water heaters in all buildings under construction. After that, local governments in various parts of China (in the provinces of Jiangsu and Hebei and the cities of Yantai, Dalian, Shenyang, Beijing, Shanghai, Tianjin, etc.), consistently switched to implementing a policy of mandatory installation of solar water heaters at newly constructed buildings.

By 2020, solar heaters will account for 6.5% of the cost of constructing a new building in China. As a result, total demand for solar water heaters in China will reach up to 300 million square meters of solar panels.

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