Ping An Securities Co., Ltd
About Hangzhou Chinastars Reflective Material Co.Ltd(301077)
Verification opinions on using some over raised funds to invest in construction projects
Ping An Securities Co., Ltd. (hereinafter referred to as “Ping An Securities” or “sponsor”) is a sponsor of Hangzhou Chinastars Reflective Material Co.Ltd(301077) (hereinafter referred to as ” Hangzhou Chinastars Reflective Material Co.Ltd(301077) ” and “company”) for initial public offering and listing on the gem, According to the measures for the administration of securities issuance and listing recommendation business, the guidelines for the supervision of listed companies No. 2 – regulatory requirements for the management and use of raised funds by listed companies, the guidelines for the information disclosure of listed companies of Shenzhen Stock Exchange No. 6 – recommendation business, and the Listing Rules of GEM stocks of Shenzhen Stock Exchange (revised in 2020) The guidelines for the standardized operation of companies listed on the growth enterprise market of Shenzhen Stock Exchange (revised in 2020) and other relevant provisions have carefully verified some of the construction projects invested by Hangzhou Chinastars Reflective Material Co.Ltd(301077) with over raised funds, and issued this verification opinion. The verification is as follows:
1、 Basic information of raised funds
According to the reply on Approving the registration of Hangzhou Chinastars Reflective Material Co.Ltd(301077) initial public offering (zjxk [2021] No. 2823) issued by China Securities Regulatory Commission on August 31, 2021, the company issued 15 million RMB common shares (a) in the initial public offering, with an issue price of 61.46 yuan per share and a total raised capital of 92.19 million yuan; After deducting the issuance expenses, the net amount of funds actually raised was RMB 836336300. All the above raised funds were received on September 27, 2021, and the availability of funds for the company’s initial public offering was verified by Zhonghui Certified Public Accountants (special general partnership), and the capital verification report (Zhonghui kuaiyan [2021] No. 7133) was issued on September 27, 2021. The company has managed the raised funds in a special account and signed a supervision agreement on the raised funds with the deposit bank and the sponsor. All the above raised funds have been deposited in the special account for the management of the raised funds.
2、 Over raised funds
According to the company’s prospectus for initial public offering and listing on GEM, the funds raised from the company’s initial public offering of RMB common shares (A shares) will be invested in the following projects after deducting the issuance expenses:
Unit: 10000 yuan
Project name sub project name total investment amount of raised funds to be used
The annual output of reflective materials is 24 million square meters, 23691.45, 23691.45
Square meters, 3 million pieces of reflective clothing, and a production base has been built
10000 pieces and production R & D Center
project
R & D center construction project 8568.47 8568.47
Total 32259.92 32259.92
The net amount of funds actually raised by the company was RMB 836336300, and the amount of over raised funds was RMB 513737100. As of the disclosure date of this announcement, the over raised funds used by the company were 0 yuan.
3、 Use plan of over raised funds
In order to improve the use efficiency of the company’s raised funds, the company plans to use the over raised funds to invest in the following projects:
No. project name total investment of the project (RMB 10000 yuan)
1. Production item of functional fabrics with an annual output of 150 million square meters 33017.6915000
order
2 adhesive project with an annual output of 50000 tons 22001.1510000
3 functional materials and fabrics production and R & D center project 30333.3015000
Total 85352.1440000
If the raised funds cannot meet the capital needs of the investment project, the company will raise funds by itself.
(i) Project I. production project of functional fabrics with an annual output of 150 million square meters
1. Project overview
In order to promote the implementation of the company’s strategic plan, promote the better development of the company’s business, optimize the company’s industrial structure, improve the industrial layout and further enhance the company’s comprehensive competitiveness, the company plans to use the over raised funds of 150 million yuan raised from the initial public offering to invest in the production project of functional fabrics with an annual output of 150 million square meters. Zhejiang Fuwei Electronic Materials Co., Ltd., a wholly-owned subsidiary of the company, will be the investment and operation subject of the project. According to the Shenzhen Stock Exchange GEM Listing Rules (revised in 2020), the articles of association and other provisions, the use of the raised funds does not involve related party transactions, nor does it constitute a major asset restructuring as stipulated in the administrative measures for major asset restructuring of listed companies.
2. Basic information of the project
Project Name: production project of functional fabrics with an annual output of 150 million square meters
Project implementer: Zhejiang Fuwei Electronic Material Co., Ltd
Project construction site: Chengnan industrial functional zone, Heping Town, Changxing County, Zhejiang Province
Project implementation method: the company increases capital or provides loans to Zhejiang Fuwei Electronic Materials Co., Ltd., which is responsible for construction and implementation.
Project investment funds and sources: the planned investment amount of the project is 330.1769 million yuan, and the proposed over raised funds shall not exceed 150 million yuan.
Project content and scale: the project is used to build production lines of bright reflective cloth, fancy reflective cloth and impregnated base cloth. After the completion of the project, it will improve the company’s product capacity and market scale, expand the company’s product application field, consolidate the company’s competitive position in the downstream application field, and provide guarantee for the continuous growth of the company’s performance.
Project development cycle: the development period of the project is 24 months, and the actual development shall prevail.
Project investment estimation: the total investment of the project is 330.1769 million yuan. The specific investment estimation is as follows:
No. project investment scale (10000 yuan)
1. Fixed assets construction investment 28850.00
1.1 construction 13000.00
1.2 equipment purchase cost 11000.00
1.3 installation works 3000.00
1.4 other expenses of project construction 1100.00
1.5 reserve fund 750.00
2. Initial working capital 3521.94
3. Interest during construction period 645.75
Total 33017.69
3. Necessity and feasibility analysis of the production project of functional fabrics with an annual output of 150 million square meters (1) necessity of the project
① It is conducive to breaking through the bottleneck of production capacity and meeting the needs of downstream markets
Under the background of the continuous development of multiple downstream markets such as occupational protection products, personal protection products and consumer products, the market demand for various types of reflective materials and reflective cloth is growing steadily. At present, the company’s capacity utilization rate has increased year by year and has reached saturation. The production line of key equipment has been running at full capacity for a long time, and the existing site Equipment and personnel have been unable to support the rapid development of the company. In order to consolidate and improve its leading position in the industry, the company must seize the market opportunities, break through the current capacity constraints, improve the production capacity of products and maintain synchronous growth with the market. Therefore, the construction of the project is an inevitable choice to meet the market demand, which will effectively expand the company’s product capacity, meet the growing market demand, maintain the rapid response ability to the market, and lay the foundation for the further development of the company.
② Improve the profitability of the company through large-scale production
In the reflective material industry, the competitive advantage brought by large-scale production is very obvious. First, large-scale centralized production is conducive to diluting the unit cost of sales, management, R & D, transportation, production, testing and other links; Secondly, large-scale production can reduce the loss of production line capacity caused by switching products, strengthen the stability of production, improve the standardization of products and improve the yield of products. At the same time, large-scale production can reduce unit energy consumption and unnecessary waste of raw and auxiliary materials and energy; In addition, increasing the capacity scale is conducive to improving the bargaining power of the company as a buyer and reducing the cost of raw materials; Finally, increasing the capacity scale will help the company to pass the certification of international major customers and explore new markets. After the completion of the project, the company’s product scale will be further expanded, the unit cost will be reduced, and more high-quality reflective material products will be continuously provided for the market to form a market competitive advantage, so as to improve the profitability of the company.
(2) Feasibility of project implementation
① Policy support and broad development prospects
The reflective material industry has been supported by national industrial policies. Relevant national departments have successively issued relevant regulations and policies, providing a good policy environment for the development of China’s reflective material industry. On September 29, 2017, the newly revised national standard of the people’s Republic of China technical conditions for safety of motor vehicles (gb7258-2017) was officially implemented on January 1, 2018. The standard requires that vehicles (except three wheeled vehicles without cab) shall be equipped with a reflective vest. The growth of automobile sales will drive the market demand for reflective film and reflective vest of automobile license plate.
With the improvement of the material and cultural level of modern society, people’s safety awareness is becoming deeper and deeper, and the safety requirements are becoming higher and higher. The reflective materials originally mainly used in the field of transportation began to expand to the field of personal safety protection. With the advantages of high efficiency, environmental protection and energy saving, reflective materials are widely used in transportation, fire protection, environmental sanitation, mining, advertising and other fields. In recent years, the trend of integrating reflective materials into people’s daily life has become increasingly obvious. There is a trend of using reflective materials to improve the appearance and safety of products in fields such as clothing, footwear, luggage and so on.
Governments all over the world strongly support the civilian promotion of reflective materials, and many countries and regions have successively issued relevant incentive measures to promote the daily use of reflective materials. Therefore, with the continuous improvement of people’s safety awareness, the market space of reflective materials will be further expanded in the future.
② The company’s technology is leading
The company is a high-tech enterprise and innovative pilot enterprise in Zhejiang Province, a high-tech enterprise research and development center in Zhejiang Province and a patent demonstration enterprise in Zhejiang Province. The advanced technology of production technology is one of the important core competitiveness of the company. The company has obvious technological advantages.
The company has a high-quality and experienced R & D team, has formulated R & D plans with company characteristics, actively carries out R & D of new products and process design of new technologies through independent R & D, transformation of scientific and technological achievements, industry university research cooperation, etc., and continues to improve the process and process optimization of the original production line to improve product quality, It has effectively improved the company’s technology research capability and enhanced its core technology competitiveness. The company’s original technology accumulation can be quickly applied to the project to provide strong technical support for project implementation.
③ The company has perfect product sales system and abundant customer resources
The company is a product manufacturer focusing on the safety protection of reflective materials. It is committed to providing global consumers with professional quality, stable quality and fashionable safety protection products. In order to better serve customers, the company has established a perfect sales system according to customer distribution and customer characteristics. The company has internal trade department, foreign trade department, key customer department and network sales department, which aims to provide appropriate sales and after-sales services for different types of customers.
Xinghua fingerprint, a wholly-owned subsidiary of the company, is mainly engaged in international trade business and is a pioneer of the company’s overseas sales business. At present, the company’s products have been exported to the United States, Australia, Italy, Brazil, South Africa, India, Bangladesh and other countries all over the world. Through perfect product sales system and rich accumulation of customer resources, the company can ensure the promotion and sales of products on the basis of existing sales channels and customer resources, so as to ensure the smooth implementation of the project.
4. Correlation analysis between investment projects and existing main businesses
The main products of the project are bright reflective cloth and fancy
