Shenzhen Magic Design & Decoration Engineering Co.Ltd(002856) (registered address: floors 1-6, building 7, scientific research building, baguasi Road, Futian District, Shenzhen)
Non public offering of shares in 2022
Feasibility analysis report on the use of raised funds
March, 2002
The words or abbreviations mentioned in the company's 2022 non-public offering plan have the same meaning. 1、 Use plan of the raised funds
The total amount of funds to be raised in this non-public offering of shares shall not exceed 200 million yuan (including this amount), which shall be used to supplement working capital after deducting the issuance expenses.
2、 Feasibility analysis of investment projects with raised funds
(I) necessity of the use plan of the raised funds
1. Replenish working capital, ensure the stable growth of the company's business and enhance the company's industrial competitiveness
The architectural decoration industry has the characteristics of "light assets and heavy funds". The operation of architectural decoration enterprises is mainly affected by factors such as financial strength, construction qualification, construction technology, construction experience, construction team and its management ability. Among them, financial strength is an important factor restricting architectural decoration enterprises from carrying out large-scale architectural decoration project construction and developing the national market. It usually has the characteristics of long construction period, large amount of labor, procurement of construction materials, long performance guarantee, long execution time of construction projects, etc. The funds raised by the company's non-public offering are used to supplement working capital, which will provide effective guarantee for the stable growth of the company's business, so as to further enhance the company's industry competitiveness.
2. Further consolidate the control of state-owned assets in the South China Sea and give full play to synergy
Shenzhen Magic Design & Decoration Engineering Co.Ltd(002856) after years of development, it has undertaken a large number of representative engineering projects such as government administrative institutions, cultural and medical venues decoration projects, railway and subway passenger station decoration projects, star hotel decoration projects, and accumulated outstanding advantages in cross field project implementation, design and R & D, technology and construction quality, brand construction, market development, etc, It is one of the enterprises with strong comprehensive market competitiveness in China State Construction Engineering Corporation Limited(601668) decoration industry.
In December 2020, Shenzhen Magic Design & Decoration Engineering Co.Ltd(002856) completed the change of control, and the actual controller was changed to Nanhai state-owned assets. Nanhai District is located in the hinterland of Guangdong Hong Kong Macao Bay district and has a mature building materials industry cluster. In the future, with the gradual implementation of Guangdong Hong Kong Macao Bay district policies, investment in urban upgrading and reconstruction projects such as industrial carrier construction and village level industrial park reconstruction in Nanhai District will be further increased. This issuance will further consolidate the control position of Nanhai state-owned assets over the company, which will help Nanhai state-owned assets further deepen the integration advantages of resource and infrastructure design, construction and management, give full play to synergy and ensure the sustainable and stable development of the company's business.
3. Reduce financial leverage, optimize capital structure and improve anti risk ability
At the end of each reporting period, the company's net accounts receivable were 831 million yuan, 879 million yuan, 1007 million yuan and 834 million yuan respectively, accounting for 57.40%, 56.99%, 56.62% and 49.84% of the company's total assets at the end of each reporting period. The asset liability ratio is 54.27%, 58.25%, 53.40% and 52.76% respectively. The amount of accounts receivable of the company is large, accounting for a high proportion of total assets, and the debt level is relatively high.
Facing the vast market space of the building decoration industry, the net cash flow generated by the company's operating activities is difficult to meet the needs of the stable development of its main business. The capital cost of borrowing through financial institutions is relatively high. The company needs to alleviate the capital pressure in the process of the company's operation by increasing long-term and stable equity financing, and further optimize the company's capital structure, Improve the company's profitability and anti risk ability, and ensure the healthy and stable development of the company's business.
(II) feasibility of the use plan of the raised funds
1. The future development space of the building decoration industry provides guarantee for the sustainable development of the company's main business
China is still in a period of rapid development of urbanization, industrialization and marketization, which is bound to promote the national economic and social development in a stage of stable growth. City's one belt, one road development strategy, the construction of Guangdong, Hongkong and Macau, and the pilot project for the reform of Shenzhen's socialist front zone are also facing the rapid growth of the urban agglomeration, which has led to the rapid development of transportation, commerce and other infrastructure. It will provide broad development space for the market of architectural decoration industry. With the steady increase of national per capita income, people will put forward higher requirements for building quality and promote the steady rise of the average cost of building decoration, which will also improve the market scale of new housing decoration and second-hand housing redecoration, and provide guarantee for the sustainable development of comprehensive building decoration enterprises.
2. The use of the funds raised in this non-public offering complies with the provisions of laws and regulations
All the funds raised in this non-public offering of the company are used to supplement working capital, which meets the provisions of relevant policies, laws and regulations and the current actual business development needs of the company. After the funds raised from this non-public offering are in place, we will further reduce the company's asset liability ratio, optimize the company's capital structure, improve the company's anti risk ability, and promote the healthy and stable development of the company's business.
3. The subject using the funds raised in this non-public offering has a standardized governance mechanism and a perfect internal control environment
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 formulated the measures for the management of raised funds, which clearly stipulates the storage, use, 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 reasonable and standardized use of the raised funds.
3、 The impact of this issuance on the company's operation and management, financial status, etc
(I) impact of this non-public offering on the company's operation and management
After deducting the issuance expenses, all the funds raised in this non-public offering will be used to supplement working capital, effectively alleviate the capital demand pressure of the company's daily business activities and provide capital guarantee for the company's business development. At the same time, after the completion of this non-public offering, the company's capital strength and asset scale will be further improved, and its anti risk ability will be enhanced, which will help to improve the company's project undertaking ability and lay a solid foundation for the company's expansion of business development scale and long-term sustainable development.
(II) impact of this non-public offering on the company's financial position
After the completion of this non-public offering, the company's total assets and total net assets will increase at the same time, further optimizing the company's asset liability structure and improving the company's capital strength. Although this non-public offering may dilute the company's immediate return in the short term, with the effective use of the raised funds, it will improve the company's profit space and sustainable operation ability.
4、 Conclusion
The fund raised by the company through this non-public offering will effectively alleviate the capital demand pressure of the company's daily business activities, ensure the continuous growth of the company's main business, optimize the company's capital structure, improve the company's core competitiveness and enhance the company's anti risk ability. In conclusion, the purpose of the raised funds is reasonable and feasible, which is in line with the interests of the company and all shareholders.
Shenzhen Magic Design & Decoration Engineering Co.Ltd(002856) board of directors March 10, 2022
