Specialty Chemical Company China XD Plastics Announces Second Quarter 2018 Financial Results

- Revenue of $317.3 million -
- Net Income of $27.2 million -
- Reiterating Fiscal 2018 Guidance of $1.2-$1.4 Billion in Revenue, $90-$110 Million in Net Income -

HARBIN, China, Aug. 9, 2018 /PRNewswire/ -- China XD Plastics Company Limited (NASDAQ: CXDC) ("China XD Plastics" or the "Company"), one of China's leading specialty chemical companies engaged in the development, manufacture and sale of polymer composite materials primarily for automotive applications, today announced its financial results for the second quarter ended June 30, 2018.

Second Quarter 2018 Financial Summary

    --  Revenue was $317.3 million, an increase of 1.2% YoY
    --  Gross profit was $56.2 million, a decrease of 10.9% YoY
    --  Gross margin of 17.7%, a decrease of 240 basis points YoY
    --  Net income was $27.2 million, an decrease of 3.2% YoY
    --  EBITDA was $55.3 million, an increase of 1.1% YoY
    --  Total volume shipped was 103,678 metric tons, a decrease of 0.9% YoY

"We are pleased with our quarterly results with continuing top line growth." said Jie Han, Chairman of the Board of Directors and Chief Executive Officer. "An improved macroeconomic environment has improved business conditions and we are well positioned to execute our strategic plan."

"We are particularly pleased to see major revenue contributions from major new growth frontiers, fostered in large part by the gradual ramp up of our Sichuan manufacturing facility. It is expected that the construction of Sichuan facility with 300,000 metric tons of annual production will be completed by the end of September, 2018, a key milestone in our corporate development. The new facility also further extends our geographical reach and accelerates our market penetration beyond our established Northeast base, evidenced by our strong and consistent growth from Southwest, Central, North and South China."

"Our new facility in Dubai also extends our specialized high-end products into an important new market. We are planning to complete installing 45 production lines with 12,000 metric tons of annual production capacity by the end of August 2018, and an additional 50 production lines with 13,000 metric tons of annual production capacity by the end of 2018. This will bring the total installed production capacity in our Dubai facility to 25,000 metric tons. The Dubai facility will target high-end products for the overseas market and will ultimately enable more active inroads into the markets of Europe, the Middle East, Russia and other international regions with several global top customers in automotive sector."

"We take pride of our achievement in the past and remain confident in the long term prospect of our business. The recent nationwide deleveraging efforts in China, however, has significant impact on activities of many companies in China, including merger and acquisition as well as privatization. To ensure the success of the Company's expansion strategy in multiple regions and sectors, we will be more fiscally vigilant and responsible and improving our capital structure by swapping more short term debts with longer term instruments among other means in order to maintain a stable and sound balance sheet and weather potential and unexpected turbulence in the future."

Second Quarter 2018 Results

Revenues were $317.3 million for the second quarter of 2018, compared to $313.6 million for the same period of 2017, representing an increase of $3.7 million, or 1.2%. The year-over-year increase was primarily due to i) a depreciation of USD against RMB by 7.0%; partially offset by: ii) a decrease of 5.0% in the average RMB selling price of our products; and iii) a decrease of 0.9% in sales volume, as compared with those of last year.

PRC domestic revenues increased by $37 million in the second quarter of 2018, compared to the same period of 2017, as a result of i) an increase of 2.2% in sales volume; ii) a depreciation of USD against RMB by 7.0%; and iii) an increase of 2.8% in the average RMB selling price of our products, as compared with those of last year. According to the China Association of Automobile Manufacturers, automobile production and sales in China increased by 4.15% and 5.57%, respectively, for the first half year of 2018 as compared to the same period of 2017. An improvement in macroeconomic conditions since 2017 has improved business conditions and ease pricing pressures. Driven by accelerating growth of 1.5% in Northeast China, 120.8% in Central China, 111.0% in South China, 52.1% in Southwest China, 1.0% in North China, and 1.7% in East China, our domestic sales during the three month ended June 30, 2018 increased by 13.0%, as compared to the same period of the prior year. As for the RMB selling price, the increase was mainly due to more sales of higher end product of modified PA66, PLA and PPO in China.

For the three months ended June 30, 2018, revenues from overseas market was US$53,353 as compared to US$33.0 million of that in 2017. The Company has tried to develop new customers overseas besides the existing oversea customer. The sales with this customer was suspended due to account receivable balance overdue situation. As of June 30, 2018, the customer has an outstanding balance of US$46.6 million, among which balance of US$10.2 million was less than 3 months, US$32.4 million was 3-6 month past due, US$4.0 million was overdue for 7-12 month past due. The customer expected to pay off the outstanding balance by September 2018. As the account receivable balance was overdue, the Company suspended sales to this oversea customer in 2018.

Premium products (PA66, PA6, Plastic Alloy, PLA, POM and PPO) in total accounted for 82.5% of revenues in the second quarter of 2018, compared to 81.5% for the same period of 2017. During the second quarter of 2018, the Company continued to shift production mix from traditional lower-end products to higher-end products such as PA66,PA6, Plastic Alloy, and PLA, primarily due to (i) greater growth potential of advanced modified plastics in luxury automobile models in China, (ii) the stronger demand as a result of promotion by the Chinese government for clean energy vehicles and (iii) better quality demand from end consumer recognition of higher-end cars made by automotive manufacturers from Chinese and Germany joint ventures, Sino-U.S. and Sino-Japanese joint ventures, which manufacturers tend to use more and higher-end modified plastics in quantity per vehicle in China.

Gross profit was $56.2 million in the second quarter ended June 30, 2018, compared to $63.1 million in the same period of 2017, representing a decrease of $6.9 million, or 10.9%. Our gross margin decreased to 17.7% during the second quarter ended June 30, 2018 from 20.1% during the same quarter of 2017 primarily because there were no overseas sales in the second quarter ended June 30, 2018 which usually contains high profits products sales.

General and administrative (G&A) expenses were US$ 11.3 million for the quarter ended June 30, 2018 compared to US$8.8 million in the same period in 2017, representing an increase of 28.4%, or US$2.5 million. The increase was primarily due to the increase of (i) US$2.4 million in stock based compensation and (ii) US$0.1 million in salary and welfare resulting from the increase in the number of management and general staff from supporting departments.

Research and development (R&D) expenses were US$5.3 million for the second quarter of 2018, compared to US$9.5 million for the same period of 2017, representing a decrease of $4.2 million, or 44.2%. The decrease was primarily due to the decrease of raw materials used. As of June 30, 2018, the number of ongoing research and development projects was 401.

Operating income was $36.0 million for the second quarter of 2018, compared to $44.0 million for the same period of 2017, representing a decrease of $8.0 million, or 18.2%. This decrease is primarily due to lower gross profit, higher selling expenses and G&A expenses, partially offset by lower R&D expenses.

Net interest expense was $10.3 million for the second quarter of 2018, compared to net interest expense of $11.0 million for the same period of 2017, representing a decrease of $0.7 million, or 6.4%. This decrease is primarily due to (i) the decrease of interest expense resulting from the weighted average loan interest rate decreased to 4.6% for the three-month period ended June 30, 2018 as compared to 4.9% of the same period of 2017; and partially offset by (ii) the increase of average short-term and long-term loan balance in the amount of US$925.0 million for the three-month period ended June 30, 2018 compared to US$849.0 million for the same period in 2017.

Income tax expense was $5.5 million for the second quarter of 2018, representing an effective income tax rate of 16.8%, compared to income tax expense of $4.1 million in the same period of 2017, representing an effective income tax rate of 12.8%. The increase of effective income tax rate was primarily due to increase of continuous operating losses occurred in overseas subsidiaries such as Dubai Xinda and Xinda Holding (HK), the decrease of 50% additional deduction of R&D expense and partially offset by the increase of Sichuan Xinda's PBT percentage within the consolidating entities. The effective income tax rate for the three-month ended June 30, 2018 differs from the PRC statutory income tax rate of 25% primarily due to Sichuan Xinda's preferential income tax rate, the reversal of the unrecognized tax benefits in year 2012 and 50% additional deduction of R&D expenses of the major PRC operating entities.

Net income was $27.2 million for the second quarter of 2018, compared to $28.1 million for the same period of 2017, representing a decrease of $0.9 million, or 3.2%. Basic and diluted earnings per share for the three-month period ended June 30, 2018 were $0.41, compared to $0.43 per basic and diluted share for the same period of 2017. The average number of shares used in the computation of basic and diluted earnings per share in the current quarter was 50.3 million compared to 49.5 million shares for basic and diluted earnings per share in the prior year period.

Earnings before interest, tax, depreciation and amortization (EBITDA) was $55.3 million for the second quarter of 2018, compared to $54.7 million for the same period of 2017, representing an increase of $0.6 million, or 1.1%. For a detailed reconciliation of EBITDA, a non-GAAP measure, to its nearest GAAP equivalent, please see the financial tables at the end of this release.

Financial Condition

As of June 30, 2018, the Company had $449.4 million in the total amount of cash and cash equivalents, restricted cash and time deposits, a decrease of $158.7 million or 26.1% as compared to $608.1 million as of December 31, 2017. As of the June 30, 2018, working capital was negative $174.3 million (current assets minus current liabilities) and the current ratio (current assets divided by current liabilities) was 0.9, as compared to the current ratio of 1.0 as of December 31, 2017. Stockholders' equity as of June 30, 2018 was $752.1 million, an increase of $39.3 million or 5.5% as compared to $712.8 million as of December 31, 2017.

Inventories increased by 30.4% as compared to the end of fiscal year 2017 as a result of more purchases of the raw materials and the Company's strategy to stock up the finished goods for the upcoming order. Prepaid expenses and other current assets decreased by 41.0% or US$59.1 million as compared to the end of fiscal year 2017 as Sichuan Xinda received the refund of prepayment from equipment supplier in January 2018. Prepayments to equipment supplier and construction suppliers increased by 166.2% or US$316.7 million as compared to the end of fiscal year 2017 because HLJ Xinda Group prepaid to equipment to purchase equipment for the industrial project of upgrading existing equipment for 300,000 metric tons of biological based composite material and 100,000 metric tons of engineering plastics and Sichuan Xinda prepaid to equipment supplier to purchase equipment for the production of 300,000 metric tons of bio-composite materials. The aggregate short-term and long-term bank loans decreased by 13.7% as compared to the end of fiscal year 2017 due to the repayments of the loans. We define the manageable debt level as the sum of aggregate short-term and long-term loans, and notes payable over total assets.

Financial Guidance and Business Outlook

The Company reiterates its financial guidance for fiscal 2018 to range between $1.2 and $1.4 billion in revenue. Gross margin in fiscal 2018 is expected to remain stable as compared to that of fiscal 2017. The Company project net income to range between $90 and $110 million. This is based on the anticipation of a steady recovery throughout the Chinese automotive supply chain and a stabilization of crude oil pricing and its impact on polymer composite materials in 2018. This forecast also assumes contributions from the Sichuan plant and the Dubai second phase project, which will be completed by the end of September of 2018 and the end of August of 2018, respectively. It also assumes the average exchange rate of the US dollar to RMB at 6.8 This financial guidance reflects the Company's preliminary view of its business outlook for fiscal 2018 and is subject to revision based on changing market conditions at any time.

Recent Development

On July 14, 2018, Xinda Holding (HK) entered into a subscription intent agreement with Changmu Investment (Beijing) Company Limited ("Changmu"), a company wholly controlled by Mr. Tiexin Han, the son of Mr. Jie Han, the Registrant's Chief Executive Officer and Chairman of the Company. Pursuant to the terms of the agreement, HLJ Xinda Group received USD75.6 million (RMB500 million) from Changmu on June 29, 2018 which was injected into HLJ Xinda Group in order to subscribe newly authorized registered capital of HLJ Xinda Group (the "Subscription"), subject to further negotiations among the parties of one or more definitive agreements governing the terms of the Subscription, including the valuation of HLJ Xinda Group. An agreement was subsequently entered on August 8, 2018 and the transaction will be reclassified as non-controlling interests and additional paid-in capital from amounts due to a related party. Subject to final independent evaluation, Xinda Holding (HK) Company Limited and Changmu's equity interests in HLJ Xinda Group are estimated to be 75% and 25%, respectively.

Conference Call

China XD Plastics' senior management will host a conference call at 9:00 am Eastern Time on Thursday, August 9th, 2018, to discuss its second quarter 2018 financial results. The conference call can be accessed by dialing +1- 845-675- 0437 (for callers in the U.S.), +86-4006- 208-038 (for Mainland China callers) or +852- 3018-6771 (for Hong Kong callers) and entering passcode 8991228.

A recording of the conference call will be available through August 16th, 2018, by calling +1-855-452-5696 (for callers in the U.S.) and entering pass code 89991228.

A live webcast and replay of the conference call will be available on the investor relations page of the Company's website at http://chinaxd.net/.

About China XD Plastics Company Limited

China XD Plastics Company Limited, through its wholly-owned subsidiaries, develops, manufactures and sells polymer composites materials, primarily for automotive applications. The Company's products are used in the exterior and interior trim and in the functional components of 31 automobile brands manufactured in China, including without limitation, Audi, Mercedes Benz, BMW, Toyota, Buick, Chevrolet, Mazda, Volvo, Ford, Citroen, Jinbei and VW Passat, Golf, Jetta, etc. The Company's wholly-owned research center is dedicated to the research and development of polymer composites materials and benefits from its cooperation with well-known scientists from prestigious universities in China. As of June 30, 2018, 464 of the Company's products have been certified for use by one or more of the automobile manufacturers in China. For more information, please visit the Company's English website at http://chinaxd.irpass.com/, and the Chinese website at http://www.xdholding.com.

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, the Company's growth potential in international markets; the effectiveness and profitability of the Company's product diversification strategy; the impact of the Company's product mix shift to more advanced products and related pricing policies; the effectiveness, profitability, and the marketability of its the ongoing mix shift to more advanced products; the prospects of the Company's Dubai facility, and the associated expansion into Middle East, Europe and other parts of Asia; the prospects of the Company's Sichuan facility, and its penetration into Southwest China; the prospects of the Company's Harbin facility, and its penetration into Northeast China; the Company's projections of its revenues for performance in fiscal 2018. These forward-looking statements can be identified by terminology such as "will," "expect," "project," "anticipate," "forecast," "plan," "believe," "estimate" and similar statements. Forward-looking statements involve inherent risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the Company and the industry. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, the global economic uncertainty which could further impair the automotive industry and limit demand for our products; fluctuations in automotive sales and production which could have a material adverse effect on our results of operations and liquidity; our financial performance which may be affected by the prospect of our Dubai facility and the associated expansion into Middle East, Europe and other parts of Asia; the withdrawal of preferential government policies, the tightening control over the Chinese automotive industry, automobile purchase restrictions imposed in certain major cities which may limit market demand for our products; the slowing of Chinese automotive industry's growth; the concentration of our distributors, customers and suppliers; and other risks detailed in the Company's filings with the Securities and Exchange Commission and available on its website at http://www.sec.gov. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.

The following table shows a reconciliation of cash, cash equivalents and restricted cash on the condensed consolidated balance sheets to that presented in the above condensed consolidated statements of cash flows.


                                                                                            CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES

                                                                                             UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


                                                                                                                                               June 30,               December 31,
                                                                                                                                               --------               ------------

                                                                                                                                                                 2018                      2017
                                                                                                                                                                 ----                      ----

                                                                                                                                                 US$                      US$

    ASSETS

    Current assets:

    Cash and cash equivalents                                                                                                                              72,721,460               190,392,211

    Restricted cash                                                                                                                                       263,254,352               129,699,454

    Time deposits                                                                                                                                         113,351,268               288,023,017

    Accounts receivable, net of allowance for doubtful accounts                                                                                           308,622,962               298,868,984

    Inventories                                                                                                                                           549,782,095               421,736,682

    Prepaid expenses and other current assets                                                                                                              85,211,205               144,326,151
                                                                                                                                                           ----------               -----------

        Total current assets                                                                                                                            1,392,943,342             1,473,046,499
                                                                                                                                                        -------------             -------------

    Property, plant and equipment, net                                                                                                                    813,775,162               835,561,739

    Land use rights, net                                                                                                                                   31,226,580                31,943,652

    Long-term prepayments to equipment and construction suppliers                                                                                         507,306,748               190,627,514

    Other non-current assets                                                                                                                               16,102,868                12,924,279
                                                                                                                                                           ----------                ----------

        Total assets                                                                                                                                    2,761,354,700             2,544,103,683
                                                                                                                                                        =============             =============


    LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

    Current liabilities:

    Short-term loans, including current portion of long-term bank loans                                                                                   635,504,864               775,396,929

    Bills payable                                                                                                                                         519,466,191               252,768,510

    Accounts payable                                                                                                                                      166,693,789               227,993,140

    Amounts due to a related party                                                                                                                         75,567,512                         -

    Income taxes payable                                                                                                                                   16,612,181                17,710,217

    Accrued expenses and other current liabilities                                                                                                        153,355,737               138,605,509
                                                                                                                                                          -----------               -----------

        Total current liabilities                                                                                                                       1,567,200,274             1,412,474,305
                                                                                                                                                        -------------             -------------

    Long-term bank loans, excluding current portion                                                                                                       132,304,205               114,208,319

    Deferred income                                                                                                                                       105,746,194                99,168,276

    Other non-current liabilities                                                                                                                         106,440,118               107,898,318
                                                                                                                                                          -----------               -----------

        Total liabilities                                                                                                                               1,911,690,791             1,733,749,218
                                                                                                                                                        -------------             -------------


    Redeemable Series D convertible preferred stock (redemption amount of US$252,601,000                                                                   97,576,465                97,576,465
    and US$244,044,200 as of June 30, 2018 and December 31, 2017, respectively)


    Stockholders' equity:

    Series B preferred stock                                                                                                                                      100                       100

    Common stock, US$0.0001 par value, 500,000,000 shares authorized, 50,308,731 shares and                                                                     5,031                     4,975

        49,748,731 shares issued, 50,287,731 shares and 49,727,731 shares outstanding as of

        June 30, 2018 and December 31, 2017, respectively

    Treasury stock, 21,000 shares at cost                                                                                                                    (92,694)                 (92,694)

    Additional paid-in capital                                                                                                                             85,789,902                83,159,893

    Retained earnings                                                                                                                                     695,114,448               648,790,469

    Accumulated other comprehensive loss                                                                                                                 (28,729,343)             (19,084,743)
                                                                                                                                                          -----------               -----------

        Total stockholders' equity                                                                                                                        752,087,444               712,778,000
                                                                                                                                                          -----------               -----------

    Commitments and contingencies                                                                                                                                   -                        -
                                                                                                                                                                  ---                      ---

        Total liabilities, redeemable convertible preferred stock and stockholders' equity                                                              2,761,354,700             2,544,103,683
                                                                                                                                                        =============             =============


                                                                             CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES

                                                                     UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


                                                                                                                                      Three-Month Period Ended                Six-Month Period Ended
                                                                                                                                              June 30,                               June 30,
                                                                                                                                              --------                               --------

                                                                                                                                              2018                       2017                     2018             2017
                                                                                                                                              ----                       ----                     ----             ----

                                                                                                                                          US$                       US$                     US$             US$


    Revenues                                                                                                                           317,329,520                313,555,663              627,782,553      551,395,860

    Cost of revenues                                                                                                                 (261,175,654)             (250,446,461)           (517,761,231)   (453,514,488)
                                                                                                                                      ------------               ------------             ------------     ------------

        Gross profit                                                                                                                    56,153,866                 63,109,202              110,021,322       97,881,372
                                                                                                                                        ----------                 ----------              -----------       ----------


    Selling expenses                                                                                                                   (3,562,711)                 (705,337)             (4,613,720)     (1,224,150)

    General and administrative expenses                                                                                               (11,348,767)               (8,844,582)            (20,223,776)    (15,898,253)

    Research and development expenses                                                                                                  (5,288,636)               (9,546,922)            (10,338,534)    (15,398,022)
                                                                                                                                        ----------                 ----------              -----------      -----------

        Total operating expenses                                                                                                      (20,200,114)              (19,096,841)            (35,176,030)    (32,520,425)
                                                                                                                                       -----------                -----------              -----------      -----------


        Operating income                                                                                                                35,953,752                 44,012,361               74,845,292       65,360,947
                                                                                                                                        ----------                 ----------               ----------       ----------


    Interest income                                                                                                                      1,029,675                    970,293                3,342,298        2,133,552

    Interest expense                                                                                                                  (11,274,575)              (11,951,851)            (24,168,780)    (21,973,827)

    Foreign currency exchange gains (losses)                                                                                             5,632,970                (1,870,977)               1,677,162      (2,347,062)

    Losses on foreign currency option contracts                                                                                                  -                         -               (520,981)               -

    Government grant                                                                                                                     1,378,484                  1,023,922                2,856,043        2,463,453
                                                                                                                                         ---------                  ---------                ---------        ---------

        Total non-operating expense, net                                                                                               (3,233,446)              (11,828,613)            (16,814,258)    (19,723,884)
                                                                                                                                        ----------                -----------              -----------      -----------


        Income before income taxes                                                                                                      32,720,306                 32,183,748               58,031,034       45,637,063


    Income tax expense                                                                                                                 (5,496,228)               (4,119,756)            (11,707,055)     (7,672,082)
                                                                                                                                        ----------                 ----------              -----------       ----------


        Net income                                                                                                                      27,224,078                 28,063,992               46,323,979       37,964,981
                                                                                                                                        ==========                 ==========               ==========       ==========


    Earnings per common share:

    Basic and diluted                                                                                                                         0.41                       0.43                     0.70             0.58
                                                                                                                                              ====                       ====                     ====             ====


    Net Income                                                                                                                          27,224,078                 28,063,992               46,323,979       37,964,981


    Other comprehensive income (loss)

    Foreign currency translation adjustment, net of nil income taxes                                                                  (39,306,010)                13,751,361              (9,644,600)      17,669,664
                                                                                                                                       -----------                 ----------               ----------       ----------


        Comprehensive income (loss)                                                                                                   (12,081,932)                41,815,353               36,679,379       55,634,645
                                                                                                                                       ===========                 ==========               ==========       ==========


                                                                                              CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES

                                                                                          UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                                                                                    Six-Month Period Ended June 30,
                                                                                                                                                    -------------------------------

                                                                                                                                                               2018                          2017
                                                                                                                                                               ----                          ----

                                                                                                                                                          US$                           US$

    Cash flows from operating activities:

    Net cash provided by operating activities                                                                                                           152,600,917                   166,636,423
                                                                                                                                                        -----------                   -----------


    Cash flows from investing activities:

    Proceeds from maturity of time deposits                                                                                                             388,105,630                   244,825,478

    Purchase of time deposits                                                                                                                         (210,380,884)                (215,714,244)

    Purchase of land use rights                                                                                                                                   -                  (6,214,207)

    Purchase of and deposits for property, plant and equipment                                                                                        (334,739,673)                (281,550,529)

    Refund of deposit from an equipment supplier                                                                                                         60,054,417                    75,197,802

    Deposits for acquisition of equity                                                                                                                  (3,640,688)                            -

    Government grant related to the construction projects                                                                                                10,558,608                     7,136,482
                                                                                                                                                         ----------                     ---------

    Net cash used in investing activities                                                                                                              (90,042,590)                (176,319,218)
                                                                                                                                                        -----------                  ------------


    Cash flows from financing activities:

    Proceeds from bank borrowings                                                                                                                       470,494,396                   441,425,024

    Repayments of bank borrowings                                                                                                                     (587,236,484)                (311,342,509)

    Investment received in advance from a related party                                                                                                  75,567,512                             -

    Net cash (used in) provided by financing activities                                                                                                (41,174,576)                  130,082,515
                                                                                                                                                        -----------                   -----------


    Effect of foreign currency exchange rate changes on cash, cash equivalentsand restricted cash                                                       (5,499,604)                    7,995,135
                                                                                                                                                         ----------                     ---------

    Net increase in cash, cash equivalents and restricted cash                                                                                           15,884,147                   128,394,855
                                                                                                                                                         ----------                   -----------


    Cash, cash equivalents and restricted cash at beginning of period                                                                                   320,091,665                   271,575,847
                                                                                                                                                        -----------                   -----------

    Cash, cash equivalents and restricted cash at end of period                                                                                         335,975,812                   399,970,702
                                                                                                                                                        ===========                   ===========


    Supplemental disclosure of cash flow information:

    Interest paid, net of capitalized interest                                                                                                           23,267,235                    17,323,875

    Income taxes paid                                                                                                                                    12,906,780                     7,353,371

    Non-cash investing and financing activities:

    Accrual for purchase of equipment and construction included in accrued expenses and other                                                             6,057,014                     5,379,730
    current liabilities
    -------------------                                                                                                                                                                      ---


    The following table shows a reconciliation of cash, cash equivalents and restricted cash on the condensed consolidated
    balance sheets to that presented in the above condensed consolidated statements of cash flows.



                                                                                                                                                            June 30,
                                                                                                                                                            --------

                                                                                                                                                               2018                          2017
                                                                                                                                                               ----                          ----

                                                                                                                                                          US$                           US$


    Cash and cash equivalents                                                                                                                            72,721,460                   279,825,075

    Restricted cash                                                                                                                                     263,254,352                   120,145,627
                                                                                                                                                        -----------                   -----------

    Total cash, cash equivalents, and restricted cash shown in the statement of cash flows                                                              335,975,812                   339,970,702
                                                                                                                                                        ===========                   ===========


            CHINA XD PLASTICS COMPANY LIMITED

          Reconcilation of Net Income to EBITDA

      (Amounts expressed in United States Dollars)

                                             Three Months Ended

                                                  June 30,
                                                  --------

                                                2018            2017
                                                ----            ----


    Net income                           $27,224,078     $28,063,992

    Interest expense                      11,274,575      11,951,851

    Provision for income taxes             5,496,228       4,119,756

    Depreciation and amortization
     expense                              11,348,832      10,585,602

    EBITDA                                55,343,713      54,721,201

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SOURCE China XD Plastics Company Limited