(Yicai) April 18 -- Shares of Chuan Jin Nuo Chemical surged after the Chinese producer of phosphate chemicals, which nearly quadrupled its net profit in the first quarter, announced a CNY1.9 billion (USD265 million) plan to build a factory in Egypt to reduce its raw material and export costs.

KMCJNC, a producer of chemicals used in fertilizers and batteries [SHE: 300505], closed 6.5 percent higher at CNY16.95 (USD2.30) in Shenzhen today, after surging as much as 8.7 percent during intraday trading.

The industrial firm with experience in the Egyptian market will construct facilities in the North African country to produce a range of intermediates and finished products, the Kunming-based company revealed in its first-quarter earnings report yesterday. The plant will have a three-year construction timeline.

The factory will be capable of producing 800,000 tons of sulfuric acid and 300,000 tons of ammonium dihydrogen phosphate per year. Other core products will include phosphoric acid and sodium fluorosilicate.

At full capacity, the plant is expected to generate over CNY2 billion in annual revenue and CNY300 million (USD41 million) in net profit, according to feasibility studies. It is also projected to bring Egypt more than USD300 million in foreign exchange earnings, provide hundreds of jobs, and generate tax revenue.

Egypt's strategic location at the crossroads of three continents, coupled with its position as the world's third-largest holder of phosphate reserves, will optimize the firm’s business operations and significantly reduce raw material and export transportation costs, according to KMCJNC.

The Chinese company has been importing phosphate ore from Egypt since 2022 and has a comprehensive understanding of local supply dynamics, ensuring stable raw material procurement, it added.

First-Quarter Earnings

KMCJNC’s first-quarter report shows that the company earned CNY721 million (USD99 million) in revenue, up 24 percent year-on-year, while its net profit surged nearly fourfold to CNY72 million (USD9.9 million). The firm attributed the growth to flexible production adjustments, a focus on high-margin products, and improved cost control.

KMCJNC operates two production bases: one in Kunming and another in the southern port city of Fangcheng, in the Guangxi Zhuang Autonomous Region. Last year, more than half of the firm's revenue came from exports, mainly to South Asia, Southeast Asia, and South America, per the annual report. 

KMCJNC has no operations in North America, which shields it from the adverse impacts of "reciprocal tariffs" implemented by the Donald Trump administration earlier this month, according to a separate announcement also issued yesterday.

Editor: Emmi Laine