(Yicai) Sept. 29 -- Shares of Shenzhen Hongfuhan Technology climbed after the Chinese supplier of precision components for computers, communication devices, and consumer electronics said it plans to invest CNY1.4 billion (USD198 million) to build a solar power plant in the Democratic Republic of Congo.

Hongfuhan [SHE: 301086] was trading up 9.6 percent at CNY86 (USD12.08) as of 1.40 p.m. in Shenzhen today.

The photovoltaic power plant will have an annual capacity of 200 megawatts and will generate electricity for the Kamoa-Kakula Copper Mine, helping to address the local power shortage and instability issues, the Shenzhen-based company announced late on Sept. 26.

The project, which will also include a microgrid and an energy storage system, is expected to complete construction and installation by May 30, next year, and connect to the grid by July 31.

Hongfuhan's subsidiary in the DRC and Société de Développement du Commerce et de Construction, the local unit of China Sixth Metallurgical Construction, will establish a company responsible for the project's investment, construction, and operation.

Hongfuhan's unit will hold an 80 percent stake in the project company, and SDCC the remaining 20 percent. Their capital contribution will be calculated based on the shareholding ratio.

As the main investor, Hongfuhan will have control over the project, while SDCC and its subsidiary will be responsible for the construction, installation, operation, and maintenance.

The partners will initially split the after-tax net profits from the project based on the above ratio. But once the investment is fully recovered, Hongfuhan's subsidiary will receive 76 percent of the project's after-tax net profits, and SDCC the remaining 24 percent.

During its 15-year operational life span, the project is expected to generate an average annual net profit of CNY212.8 million (USD29.9 million), with an average gross profit margin of 69.3 percent and an average net profit margin of 59.7 percent, Hongfuhan predicted. The project's after-tax investment payback period, including construction, is 5.5 years.

The Kamoa-Kakula Copper Mine, developed by Ivanhoe Mines of Canada, is one of the three core mining projects in Central and Southern Africa and the largest high-grade copper resource project in the continent.

Leveraging the Kamoa-Kakula Copper Mine's mature electricity demand to rapidly implement its PV business in the DRC will help Hongfuhan reduce overseas expansion risks, accelerate the advancement of its overseas business layout, and create new growth opportunities for its operating performance, the firm noted.

Solar power plant development is a new business for Hongfuhan. However, its thermal management solutions and new materials businesses have previously supplied products to PV clients. This project is Hongfuhan's first overseas investment in a PV power plant, as well as its first large-scale PV project.

Editor: Futura Costaglione