Stock Code: Hunan Fangsheng Pharmaceutical Co.Ltd(603998) stock abbreviation: Hunan Fangsheng Pharmaceutical Co.Ltd(603998)
Hunan Fangsheng Pharmaceutical Co.Ltd(603998)
Non public offering of shares in 2022
Feasibility analysis report on the use of raised funds
March, 2002
Hunan Fangsheng Pharmaceutical Co.Ltd(603998) (hereinafter referred to as "the company") intends to raise funds through non-public offering of shares in order to enhance its core competitiveness, improve its capital structure and stabilize its control. The feasibility analysis of the company's board of directors on the use of funds raised by this non-public offering of shares is as follows:
1、 Plan for the use of funds raised by this non-public offering
The total amount of funds raised by this non-public offering of shares does not exceed 270 million yuan (including this amount), after deducting 1377908 million yuan of financial investment newly invested and proposed to be invested from six months before the resolution of the fourth interim meeting of the Fifth Board of directors in 2022 to this offering. After deducting the issuance expenses, all the raised funds will be used to supplement working capital and repay bank loans.
2、 Necessity and feasibility of using the raised funds
(I) the necessity of using the raised funds to supplement working capital and repay bank loans
1. Optimize the capital structure and enhance the ability to resist risks
At the end of 2018, 2019, 2020 and September 2021, the company
The balance of short-term loans is 180 million yuan, 2756903 million yuan, 4084879 million yuan and 573 million yuan respectively. The balance of short-term loans is high and showing an upward trend. The company has certain debt repayment pressure and financing cost.
At the end of 2018, 2019, 2020 and September 2021, the company
The asset liability ratios were 32.25%, 39.73%, 43.56% and 49.12% respectively. The comparison with the relevant listed companies classified as traditional Chinese Medicine III (Shenwan) and pharmaceutical manufacturing industry (industry classification of CSRC) in the same period is as follows:
Asset liability ratio
Industry / company
2021.9.30 202012.31 201912.31 201812.31
Traditional Chinese Medicine III (Shenwan) 33.21%, 33.22%, 31.38%, 30.86%
Pharmaceutical manufacturing 28.94%, 29.83%, 31.44%, 32.26%
(industry classification of CSRC)
Hunan Fangsheng Pharmaceutical Co.Ltd(603998) 49.12% 43.56% 39.73% 32.25%
Note: the above data comes from wind; The industry asset liability ratio is the arithmetic average of the asset liability ratio of relevant listed companies.
As shown in the above table, the company's asset liability ratio in the same period is higher than the average value of Listed Companies in the same industry. This issuance will reduce the debt repayment pressure to a certain extent, enrich the company's cash flow, improve the asset structure and financial situation, optimize the company's capital structure, and enhance the company's follow-up financing ability.
2. Supplement working capital to support business development
As a health industry group with innovative traditional Chinese medicine as the core, the company has built a perfect R & D system and established a professional R & D team. With the continuous expansion and development of the company's products and business, and the continuous increase of R & D and marketing efforts, the company's demand for working capital increases simultaneously.
In terms of innovative traditional Chinese medicine R & D, the company attaches great importance to it, continuously increases R & D investment, and forms a large R & D system of "1 + n" mode. It has successfully developed many series of products, such as "xinxuean" brand cardio cerebrovascular department, "Jinbeibei" brand Pediatrics, "meiershu" brand Gynecology, "fangshengtang" brand orthopedics and traumatology department. Based on the existing five product lines of cardio cerebrovascular, orthopedics and traumatology, gynecology, pediatrics and anti infection, the company has further strengthened the research and development of new drugs with urgent market demand and large market space, such as original drugs and high-quality first imitation drugs. In recent years, Xiaoer Jingxing Zhike granule (category 6.1 of traditional Chinese Medicine) and Xuanqi Jiangu tablet (category 1.1 of traditional Chinese Medicine) independently developed by the company have been approved successively.
In terms of marketing, the company focused on building a powerful marketing system covering the whole country, determined the medium and long-term marketing plan of "product, team, mode and terminal", and gradually implemented it according to the plan. The company quickly integrates the marketing terminal team, strengthens team construction, focuses on strengthening the introduction of talents and systematic training, promotes product sales and shapes Fangsheng brand.
With the company investing a lot of money in innovative traditional Chinese medicine R & D and marketing, the demand for working capital is increasing. During the reporting period, the company's working capital mainly comes from its own accumulation and bank loans, which has certain capital cost pressure and financial risks. The funds raised through this non-public offering of shares can meet the working capital needs of the company due to business expansion to a certain extent, alleviate the capital pressure caused by rapid development and ensure
The company has long-term sustainable development.
3. Ensure the stability of control and enhance investor confidence
Before this offering, the proportion of control rights owned by Zhang Qinghua, the actual controller of the company, was 39.69%. After this issuance, the proportion of control power of the actual controller has further increased, which is conducive to improving the decision-making efficiency of the company, more effectively promoting the realization of the company's strategic objectives and ensuring the long-term development of the company.
Meanwhile, Hunan Fangsheng Xinyuan Health Industry Investment Co., Ltd. (hereinafter referred to as "Xinyuan Industrial Investment") is an enterprise controlled by Zhang Qinghua, the actual controller of the company. Xinyuan Industrial investment subscribed for the non-public offering in cash, which shows the actual controller's support for the company's business development and confidence in the company's future prospects, which is conducive to enhancing investors' expectations for the company's future development.
(II) feasibility of using the raised funds to supplement working capital and repay bank loans
1. The use of the funds raised in this non-public offering complies with the provisions of laws and regulations
After deducting the issuance expenses, all the funds raised in this non-public offering will be used to supplement working capital and repay bank loans, which is in line with the provisions of relevant policies, laws and regulations and is feasible. After the raised funds are in place, the company's capital structure will be improved, which will help alleviate the pressure of cash flow, reduce financial risks, improve profitability and promote the sustainable and healthy development of the company's business.
2. The use of the raised funds has the implementation subject of standardized governance and perfect internal control
According to the governance standards of listed companies, the company has established a modern enterprise system with the corporate governance structure as the core, and formed a more standardized corporate governance system and a perfect internal control environment through continuous improvement and perfection.
In terms of the management of raised funds, the company has established a strict management system of raised funds in accordance with the regulatory requirements, and has made clear provisions on the storage, use, investment direction change, inspection and supervision of raised funds. After the funds raised from this non-public offering are in place, the board of directors of the company will continue to supervise the company's storage and use of the raised funds to ensure the raised funds
Reasonable and standardized use to prevent the use risk of raised funds.
3、 The impact of this non-public offering on the company's operating and financial conditions
(I) impact of this non-public offering on the company's operating conditions
After deducting the issuance expenses, all the funds raised in this non-public offering will be used to supplement working capital and repay bank loans. Through this issuance, the capital strength and asset scale of the company will be improved, and the anti risk ability will be enhanced, which will help to improve the comprehensive competitiveness and market position of the company and promote the long-term sustainable development of the company.
(II) impact of this non-public offering on the company's financial position
This non-public offering will effectively optimize the company's capital structure, improve the financial situation of listed companies, reduce financial expenses, improve the company's anti risk ability and sustainable operation ability, so as to further enhance the company's ability to continuously repay shareholders, which is in line with the goal of maximizing the interests of shareholders.
4、 The project initiation, environmental protection and other approval matters involved in the raised investment project
After deducting the issuance expenses, all the funds raised in this non-public offering will be used to supplement working capital and repay bank loans, which does not involve the approval of investment projects.
5、 Conclusion of feasibility analysis on the use of the raised funds
To sum up, after deducting the issuance expenses, the funds raised in this non-public offering are used to supplement working capital and repay bank loans, which comply with the provisions of laws, regulations and normative documents, and will effectively reduce the company's asset liability ratio and optimize the capital structure, so as to improve the company's ability to resist risks. At the same time, this issuance will further improve the company's financial strength and help further promote the company's development strategy. Therefore, the use of the funds raised in this issuance is reasonable and feasible, which is in line with the interests of the company and all shareholders.
Hunan Fangsheng Pharmaceutical Co.Ltd(603998) board of directors
March 6, 2022
