Hengtong Photoelectric (600487) announced on March 2, 2012 that the company signed a letter of intent with Brascopper based in Federative Republic of Brazil, according to which, Hentong Photoelectric would set up a JV in TRES LBGOBS of Mato Grosso do Sul to manufacture optical cables and sell those products to Brazil and other countries and regions of South America.

With a registered capital of USD400, 000, the whole project requires a total investment of USD6 million (Including investment for Infrastructure facilities such as production equipment and plant). Hengtong Photoelectric will hold 51% stake in the JV while Brascopper will hold the rest 49% stake.

The company has formed a whole industry chain production system of optical fiber preform - fiber optic - optical cable to insure the company’s relatively high gross margin in the industry. Cureetly, output of optical fiber preform has not yet reached half of the required，and it is expected to yield about 500 tons in 2013 to further reduce the company's fiber production costs and improve product gross margin.

Gross Margin of Hengtong Potoelectric by Products, 2011

Source: Hengtong Photoelectric’s Annual Report; ReaesrchInChina