Stock abbreviation: Bear Electric Appliance Co.Ltd(002959) Stock Code: Bear Electric Appliance Co.Ltd(002959) Bear Electric Appliance Co.Ltd(002959)
Issue convertible corporate bonds to unspecified objects
Feasibility analysis report on the use of raised funds
April, 2002
In order to improve the profitability and core competitiveness of the company, Bear Electric Appliance Co.Ltd(002959) (hereinafter referred to as ” Bear Electric Appliance Co.Ltd(002959) “, “listed company”, “the company” and “the company”) plans to issue convertible corporate bonds (hereinafter referred to as “this issuance”) to unspecified objects to raise funds.
The feasibility analysis of the company’s board of directors on the use of the raised funds is as follows:
1、 Use plan of the raised funds in this offering
The total amount of funds raised in this issuance shall not exceed RMB 536 million (including this amount). All the funds raised (after deducting the issuance expenses) will be invested in the following projects:
Unit: 10000 yuan
No. project name total project investment amount of funds to be raised
1. Guangdong Xiaoxiong boutique Electric Appliance Co., Ltd. newly built zhi61011965360000 small household appliance manufacturing base (phase II) project
After the funds raised in this offering are in place, if the actual net amount of funds raised is less than the amount of funds to be invested, the insufficient part of the company will be solved by self financing. Before the funds raised from this issuance of convertible bonds are in place, according to the company’s operating conditions and development plans, if the company invests in the above-mentioned project construction with its own funds first, the part invested first will be replaced with the raised funds after the funds raised from this issuance are in place.
2、 Necessity and feasibility analysis of the use of the raised funds
The name of the investment project of the raised funds is: the new smart small household appliance manufacturing base (phase II) project of Guangdong Xiaoxiong boutique Electric Appliance Co., Ltd. the details are as follows:
(I) project overview
1. Project Name: new intelligent small household appliance manufacturing base (phase II) project of Guangdong Xiaoxiong boutique Electric Appliance Co., Ltd
2. Project investment: the total investment of the project is 610119600 yuan, including 5399218 million yuan of construction investment, including 4217889 million yuan of construction engineering cost, 846223 million yuan of equipment purchase and installation cost, 7.8 million yuan of other engineering construction costs and 257106 million yuan of basic reserve fund; The initial working capital is 701978 million yuan.
3. Project implementation subject: the project is implemented by Guangdong Xiaoxiong boutique Electric Appliance Co., Ltd., a wholly-owned subsidiary of Bear Electric Appliance Co.Ltd(002959) Bear Electric Appliance Co.Ltd(002959) .
4. Project construction period: the construction period of the project is 30 months.
5. Economic benefit prediction of the project: after calculation, the project is expected to achieve an average annual sales revenue of 1120921 million yuan (excluding tax), an average annual net profit of 1130634 million yuan, an after tax internal rate of return of 18.73%, and a after tax static investment payback period (including construction period) of 6.51 years.
(II) necessity of project implementation
1. Expand production scale and increase market share
In recent years, the production and sales scale of the company’s small household appliances is growing rapidly. From 2018 to 2020, the company’s operating revenue was 20410351 million yuan, 2687964 million yuan and 36599484 million yuan respectively, with an average annual compound growth rate of 33.91%. With the continuous improvement of Bear Electric Appliance Co.Ltd(002959) brand awareness, the wide recognition of Bear Electric Appliance Co.Ltd(002959) products by consumers, and the further improvement of Chinese people’s living standards, the penetration rate of small household appliances continues to increase, and the production and sales scale of small household appliances of the company will continue to grow rapidly. In order to better grasp the market development opportunities, the company plans to build new factories and introduce advanced production lines through the project to further expand the company’s production scale, so as to meet the growing needs of customers and improve the market share of the company’s products.
2. Enrich the product line of small household appliances and optimize the product structure
The company’s creative small household appliances include kitchen small household appliances, living small household appliances and other small household appliances. According to their functions, kitchen small household appliances are further divided into five categories: pot type, electric heating type, pot type, western type and electric type; Other small household appliances include personal care small household appliances and mother and baby small household appliances. The company has a wide range of products, including more than 60 product categories and more than 500 product models. The products are used for children, young people, middle-aged and elderly people and different scenes of their life and work.
In order to further enrich the types of small household appliances and meet the needs of users with different preferences, the project will make full use of the company’s advantages in product R & D and design, manufacturing and marketing channels. While expanding the production of existing products, the project will strengthen the development of small household appliances such as personal care, mother and baby, further enrich the categories of small household appliances and optimize the product structure, Enhance the overall market competitiveness of the company’s products.
3. Comply with the development trend of e-commerce of small household appliances and consolidate the position of the industry
In recent years, China’s sales of small household appliances have remained at a high level. According to the data of the national household appliance industry information center, China’s sales of small household appliances in 2018, 2019 and 2020 were 124.5 billion yuan, 128.9 billion yuan and 128.4 billion yuan respectively. With the vigorous development of China’s Internet e-commerce platform, the proportion of online sales of small household appliances has increased year by year. According to the statistics of Aowei cloud, the proportion of online sales of small household appliances has increased from 24% in 2014 and the advantages of online marketing channels. The sales scale of small household appliances of the company will continue to expand. Therefore, it is necessary to further expand production capacity to meet the market growth demand and consolidate and enhance the industry position.
(III) feasibility of project implementation
1. The market of small household appliances will have broad development space in the future
With the improvement of Chinese people’s living standards, small household appliances, as a powerful assistant for convenient life, are rapidly entering thousands of households. According to the market experience of developed countries, after the per capita GDP exceeds US $3000, the consumption of small household appliances will increase rapidly. China’s per capita GDP has entered this stage as early as 2008. At present, there is still a big gap between China and developed countries in terms of the categories that consumers can choose and the actual ownership of small household appliances. According to Euromonitor International Research, the average household ownership of small household appliances in China is less than 10, which is far lower than the average household ownership of 30-50 in European and American developed countries. At the same time, compared with European and American countries, China’s consumption habits of small household appliances are more inclined to the subdivided category route of Japan and South Korea than the integrated route of Europe and America. There is great potential for the growth of household ownership of small household appliances in the future.
In addition, with the continuous development of China’s market economy and the continuous renewal of science and technology, mechatronics technology, digital technology and smart home appliance technology are being widely used. Small household appliances will usher in another round of good opportunities for development in the new era. According to the data of China Business Industry Research Institute, the scale of China’s small household appliance market will reach 453.6 billion yuan in 2020. It is expected that with the epidemic gradually controlled in 2021, under the condition that policies drive the growth of consumer demand, the scale of China’s small household appliance market will reach 486.8 billion yuan in 2021 and 646 billion yuan in 2023.
2. The company has stable e-commerce channels and experienced marketing team
Since its establishment, the company has been taking online e-commerce channels as the main sales channels. Adhering to the Internet thinking, adhering to the concept of excellent product quality and high-quality after-sales service, the company grasps the development opportunities of the rapid growth of the industry and the huge user flow gathered by the mainstream e-commerce platform, makes full use of the characteristics of high efficiency, low cost and rapid development of warehousing and logistics technology of the Internet, quickly arranges online channels, and has developed into one of the leading enterprises of “creative small household appliances + Internet” after more than ten years of continuous operation.
The company has established good cooperative relations with mainstream e-commerce platforms such as tmall mall, JD mall, pinduoduo and vipshop, and has built an experienced e-commerce operation team. The team has excellent development and innovation, organizational decision-making and execution ability in brand promotion, emerging e-commerce development, marketing planning, warehousing and logistics, after-sales customer service, etc., and can lead the company to constantly adapt to the changes of e-commerce market and consolidate the advantages of online channels.
The company’s stable e-commerce channels and experienced marketing team will provide strong operational guarantee for the smooth implementation of the project.
3. The company has rich experience in R & D and manufacturing
Since its establishment, the company has been focusing on the R & D, design, production and sales of creative small household appliances, and has accumulated rich experience in R & D, design, production and manufacturing. Small household electrical appliances have a wide variety, fast renewal and strong trend and variability, which requires enterprises to continuously increase scientific research investment and develop new products to meet the personalized needs of consumers. As one of the most competitive and growing enterprises in the market segment of small household appliances in China, through continuous technological innovation and experience accumulation, the company’s product design innovation strength has been continuously recognized by the industry, and has strong advantages in R & D and design. The company has built a three-level R & D system, with 10 R & D teams and more than 300 R & D personnel. It develops more than 100 new products every year. So far, the company has more than 60 categories and more than 500 models. The company has five production bases. The production base has realized the whole chain coverage from product R & D, engineering transformation, quality control, supply chain to production, and the production response capacity is rapid. The company’s rich R & D and manufacturing experience will provide a solid production guarantee for the project.
3、 The impact of this issuance on the company’s operation, management and financial status
(I) impact of this issuance on the company’s operation and management
The construction of the fund-raising project complies with relevant national industrial policies and industry development trends, meets the needs of the company’s future development strategic planning and business expansion, and has good market prospects and profit space. The investment projects of the raised funds are related to the company’s main business and will not have a significant impact on the company’s business structure. The investment project raised by the company’s issuance will help the company further expand production capacity, enhance the company’s market competitiveness and strengthen the company’s industry position in the subdivided field of small household appliances. Therefore, the fund-raising investment project will help to expand the company’s existing production capacity, improve the company’s image and brand awareness, and lay a solid foundation for the sustainable growth of the company’s performance. At the same time, the company’s asset scale, business scale and personnel scale will be expanded, which will put forward higher requirements for the company’s project implementation and operation and management ability.
(II) impact of this issuance on the company’s financial position
After the completion of this offering, the company’s asset scale and business scale will be further expanded, and its financial strength will be enhanced, providing a strong guarantee for the sustainable development of the company. In the short term, the company’s debt scale will increase and the asset liability ratio will rise, but the low interest rate level of convertible bonds will not have a significant impact on the company’s short-term solvency. As the holders of convertible bonds successively realize the conversion of shares in the future, the asset liability ratio of the company will gradually decrease compared with the previous period, and the scale of net assets will increase, which is conducive to optimizing the capital structure and enhancing the anti risk ability of the company. Through the implementation of investment projects with raised funds, the company’s main business income and profitability will be effectively improved, which is in line with the long-term interests of the company and shareholders.
(III) impact of this offering on the spot return
After the funds raised in this offering are in place, they will be invested in the raised investment projects. As the new project needs a certain process and time to generate benefits, the financial indicators such as earnings per share and weighted average return on net assets may decline to a certain extent in the short term, and the immediate return of shareholders may be diluted. In the medium and long term, with the gradual release of the benefits of the investment projects with raised funds, the overall business scale and profitability of the company will be further improved, which is conducive to the long-term and stable development of the company.
To sum up, this issuance will provide a broader development space for the company and bring good returns to shareholders, which is in line with the long-term interests of the company and all shareholders.
4、 Feasibility conclusion of investment project with raised funds
To sum up, the investment of the funds raised by the company’s issuance of convertible bonds to unspecified objects is in line with relevant national industrial policies and the company’s overall strategic development plan in the future, has good market prospects and good economic benefits, and is in line with the interests of the company and all shareholders. At the same time, the smooth implementation of the fund-raising investment project will help to improve the profitability of the company, further expand the business scale of the company, enhance the competitiveness of the company and provide guarantee for the follow-up business development. It is necessary and feasible for the company to raise funds through this issuance, and the project risk is controllable, which is in line with the interests of the company and all shareholders.
Bear Electric Appliance Co.Ltd(002959)
Board of directors
April 8, 2022
