Stock Code: 000876 stock abbreviation: New Hope Liuhe Co.Ltd(000876)
Bond Code: 127015127049 bond abbreviation: hope to convert bond, hope to convert 2 New Hope Liuhe Co.Ltd(000876)
NEW HOPE LIUHE CO.,LTD.
(address: Mianyang national high tech Industrial Development Zone, Sichuan)
Non public offering of shares
Feasibility analysis report of investment project with raised funds
January 2002
Feasibility analysis report of New Hope Liuhe Co.Ltd(000876) raised funds investment project
1、 Use plan of funds raised in this offering
The total amount of funds raised from this non-public offering of shares shall not exceed 4.5 billion yuan (including 4.5 billion yuan). After deducting the issuance expenses, all funds will be used to repay bank debts.
2、 Necessity and feasibility analysis of the use of the raised funds
(i) Use of raised funds
Based on the needs of the company’s business development for working capital, the company plans to use the funds raised in this issuance to repay bank debts of no more than 4.5 billion yuan. The use of raised funds to repay debts this time can better meet the company’s capital turnover needs and reduce financial and operational risks.
（2） Analysis on the necessity of using raised funds
1. Relieve the pressure of cash flow and ensure the operation and development of the company
The company’s main business has the characteristics of large capital investment scale, so sufficient capital supply is a necessary condition for the company to further expand business scale and improve operation efficiency. With the continuous expansion of the company’s business scope and business scale, the company’s overall demand for working capital is gradually increasing. Since 2021, affected by the superposition of the double factors of African pig plague and the downward trend of pig cycle, it has had a great impact on the whole pig industry and posed a great challenge to the overall liquidity and anti risk ability of enterprises in the pig industry. Financing through this non-public offering of shares and using the raised funds to repay bank debts will help reduce the company’s liquidity risk and provide a strong guarantee for the company’s operation and development.
2. Optimize the capital structure, reduce the asset liability ratio and improve the ability to resist risks
The agriculture and animal husbandry industry of the company is a capital intensive industry, especially the fixed assets and biological assets of pig breeding business have a large amount of investment. In addition to self owned funds, the company’s investment also comes from bank loans, which gradually improves the asset liability ratio of the company. In addition, the pig industry suffered a large loss in 2021, which further made the company’s asset liability ratio at a relatively high level and the short-term risk increased. In order to avoid the high asset liability ratio limiting the company’s business development, the company can optimize the capital structure, reduce the asset liability ratio and improve the anti risk ability through this non-public offering of shares.
3. Reduce the company’s borrowing amount, reduce interest expense and improve profitability
Feasibility analysis report of New Hope Liuhe Co.Ltd(000876) raised funds investment project
With the continuous expansion of the company’s business scale, the scale of liabilities, especially the scale of interest bearing liabilities, presents a gradual upward trend, which increases the company’s financial expenses. The accompanying capital costs and financial expenses will have a certain impact on the company’s operating performance. Through this non-public offering of shares, the use of raised funds to repay debts can reduce the company’s borrowing amount, help the company control financial expenses, improve the company’s profitability, further improve the company’s solvency and reduce the company’s financing cost.
（3） Feasibility analysis on the use of raised funds
1. The use of the funds raised from the non-public offering of A-Shares complies with the provisions of laws and regulations
The company’s non-public offering of A-Shares to raise funds for debt repayment complies with the provisions of relevant policies, laws and regulations, in line with the current actual development of the company, and is feasible. After the funds raised from the non-public offering of A-Shares are in place, the company’s net assets and working capital will increase, which will help alleviate the pressure of cash flow, reduce the company’s financial expenses, optimize the company’s financial structure, improve the company’s anti risk ability and promote the sustainable and healthy development of the company’s business.
2. The use of the funds raised from the non-public offering of A-Shares is an implementation subject with standardized governance and perfect internal control. The company has established a modern enterprise system with the corporate governance structure as the core according to the governance standards of listed companies, and has formed a more standardized corporate governance system and a perfect internal control environment through continuous improvement and improvement. In terms of the management of raised funds, the company has established the management system of raised funds in accordance with the regulatory requirements, and made specific and clear provisions on the storage, use, supervision and management of the company’s raised funds. The company will ensure the reasonable and standardized storage and use of the raised funds and prevent the use risks of the raised funds in strict accordance with the measures for the administration of the raised funds of listed companies of Shenzhen Stock Exchange, the guidelines for the supervision of listed companies No. 2 – regulatory requirements for the management and use of the raised funds of listed companies and other relevant laws, regulations and company systems.
3、 The impact of this non-public offering on the company’s operation, management and financial status
(i) Impact of this issuance on the company’s operation and management
After deducting the issuance expenses, all the funds raised by the company in this issuance will be used to repay the debts, and the capital strength and asset scale of the company will be improved, which can effectively deal with the adverse effects of African pig plague and changes in pig cycle market, and alleviate the capital demand pressure of the company’s daily business activities. At the same time, the availability of raised funds will help consolidate the company’s business development foundation, enhance the company’s core competitiveness and profitability, promote the sustained and rapid growth of the company’s main business, and provide capital guarantee for the company’s further expansion and strength.
Feasibility analysis report of New Hope Liuhe Co.Ltd(000876) raised funds investment project
（2） Impact of this issuance on the company’s financial position
After the completion of this non-public offering of a shares, the company’s total assets and net assets will increase at the same time, the company’s working capital will be further enriched, effectively reduce the company’s asset liability ratio and financial cost, and enhance the company’s ability to resist financial risks.
To sum up, the use plan of the funds raised by the non-public offering of A-Shares complies with relevant policies, laws and regulations. The controlling shareholders provide strong support for the company’s business and development through the non-public offering, reflecting their confidence in the company’s future prospects and recognition of the company’s value. This non-public offering is conducive to improving the company’s overall operating capacity, in line with the company’s actual situation and strategic needs, and is necessary and feasible. The use of the raised funds is conducive to meeting the capital needs of the company’s business development, improving the company’s core competitiveness, optimizing the asset structure, improving the company’s financial situation, improving the profitability and sustainable development ability, which is in line with the interests of all shareholders.
New Hope Liuhe Co.Ltd(000876) board of directors January 6, 2002
