Securities code: Shenzhen Kingdom Sci-Tech.Ltd(600446) securities abbreviation: Shenzhen Kingdom Sci-Tech.Ltd(600446) Announcement No.: 2022018 bond Code: 143367 bond abbreviation: 17 Jinzheng 01
Shenzhen Kingdom Sci-Tech.Ltd(600446)
Supplementary announcement on changing the purpose of raised funds
The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and bear individual and joint liabilities for the authenticity, accuracy and completeness of its contents Shenzhen Kingdom Sci-Tech.Ltd(600446) (hereinafter referred to as “the company”) disclosed the announcement of Shenzhen Kingdom Sci-Tech.Ltd(600446) on changing the purpose of raised funds (Announcement No.: 2022012) on March 26, 2022. The relevant information of the changed items is supplemented as follows:
1、 Explanation on the change of the raised funds
In June 2020, after project planning, the company proposed to invest the funds raised from non-public offering of shares in projects such as “overall solution project for asset liability management of securities companies”, “integrated solution project for heavy capital business of securities companies”, “integrated solution project for large asset management business”, “financial cloud platform project” and “construction project of distributed Trading Technology Laboratory” (hereinafter collectively referred to as “original raised investment project”). In March 2021, the company completed the non-public offering of shares, raising a total of 1.001 billion yuan.
After the raised funds were in place, the project team of the company found that the market environment and customer demand of the original raised funds investment project had changed to some extent compared with the planning stage. In order to avoid the investment risk of raised funds, the company slowed down the investment in the original raised funds investment project. It plans to keep studying and observing the market for a period of time, make research and judgment according to the situation, and submit it to the board of directors for decision-making. It coincides with the disclosure of the mid-term report of 2021. The time from the arrival of the raised funds in March is short, and the data collected during this period is not enough to judge that the relevant situation has changed significantly. The company believes that it should take a complete year to make an accurate judgment. According to the market conditions at that time, the company believes that the feasibility of the original raised investment project has not changed significantly, Whether the company has selected “major changes in the actual use of the raised funds” in the “feasibility report of the company in 2026” (hereinafter referred to as “whether there are significant changes in the actual use of the raised funds”). (due to the operational errors of the staff, whether there is a significant change in the project feasibility of the “overall solution project for asset liability management of securities companies” in the special report is checked “yes”; the company will disclose the 2021 annual report and relevant documents on April 15, 2022, and the Shenzhen Kingdom Sci-Tech.Ltd(600446) special report on the deposit and actual use of the company’s raised funds in 2021) (major changes in the feasibility of the original raised investment project will be disclosed in detail.)
Since the second half of 2021, the market environment has further changed, which is reflected in: ① the stock market continues to fluctuate, the business of securities companies, especially the capital driven innovation business, has been greatly affected, and the technical needs and business performance of customers are related to each other. Since the company provides technical products and services for customers of financial institutions such as securities companies and fund companies, Therefore, the company’s original raised investment projects also need to be adjusted accordingly with the market fluctuations; ② At the same time, the repeated epidemic in China has affected the IT project planning of securities companies, and some demands have been postponed or cancelled, which also affects the corresponding adjustment of the company’s original raised investment projects. For each project, the company adopts one or more of the following methods for feasibility analysis: ① visit customers and investigate the market demand at that time; ② Collect market data for the whole year of 2021 through open and authoritative channels; ③ Module test of basic R & D projects to verify whether the technology meets the standard. After comprehensive research, judgment and demonstration, the company finally believes that the market environment, construction background and customer demand of the original raised investment project have changed greatly. The third meeting of the seventh board of directors in 2022 was held on March 25, 2022. The proposal on changing the purpose of raised funds was reviewed and approved, and it was decided to adjust the original raised investment project: the “overall solution project of asset liability management of securities companies” “Securities firm heavy capital business integration solution project”, “large asset management business integration solution project”, “financial cloud platform project” and “distributed trading technology laboratory construction project” are changed to “securities information innovation project”, “Open Cloud native micro service platform project”, “low code development platform project”, “industrial chain digital service platform project” “Blockchain innovation platform project” and “bank financial management service integration project”. For details, please refer to China Securities Journal, securities times, Shanghai Securities News and the website of Shanghai Stock Exchange (www.sse. Com. CN.) Announcement of Shenzhen Kingdom Sci-Tech.Ltd(600446) on changing the purpose of raised funds (Announcement No.: 2022012).
2、 Specific reasons for the change of the original raised investment project
Considering that the market environment of the original raised investment project fluctuated greatly in the second half of 2021 compared with the planning stage, the market development and demand were less than expected, and the construction background of some raised investment projects was uncertain, which no longer met the implementation conditions and promotion value, the company considered that the feasibility of the original raised investment project had changed significantly, and decided to adjust the original raised investment project. The specific reasons are as follows:
(I) overall solution project for asset liability management of securities companies
The original plan of the overall solution project of asset liability management of securities companies was based on the needs of asset liability management to provide whole process and standardized solutions for asset liability management of securities companies, so as to prevent excessive business risk exposure and liquidity problems of some financial institutions.
1. The original raised investment project has undergone mature demonstration
Before June 2020, the company considered establishing the “overall solution project for asset liability management of securities companies” in the project planning stage, which was mainly based on the following factors: the rapid growth of bond issuance scale of securities companies gave birth to the need of asset liability management, and no mature competitive products were found in the market, which provided a market basis for the project.
According to the data of choice, in 2019, the total amount of bonds issued by securities companies was 883.43 billion yuan, a significant year-on-year increase of 41.71%, and the total amount of short-term financing bonds issued by securities companies was 449.1 billion yuan (accounting for 50.84% of the total amount of bonds issued), a significant year-on-year increase of 215.16%; And the beginning of 2020 will continue to maintain the momentum of rapid growth.
On the asset side, securities companies need to continue to pay attention to key indicators such as margin trading, stock pledge business and collateral liquidity; On the liability side, while securities companies export funds for capital intermediary business, the liquidity pressure increases significantly, resulting in the need for asset liability management. The survey found that no mature competitive products were found in the market. The construction of the project is conducive to the company’s rapid occupation of the market and the expansion of new product lines and tracks.
2. The change of the original raised investment project is mainly due to the significant changes in customer demand and competition pattern
After the project entered the project preparation stage, the company found through continuous follow-up research that after August 2021, the year-on-year growth rate of bond issuance scale of securities companies slowed significantly, and other software service providers have taken the lead in seizing market opportunities.
(1) According to the data of choice, the total scale of bond issuance by securities companies in 2020 increased by 91.20% over that in 2019. The total scale of bond issuance by securities companies in 2021 was 1697438 billion yuan, a slight increase of 0.49% year-on-year, and the year-on-year growth rate slowed down significantly; The total amount of short-term financing bonds issued by securities companies was 593.7 billion yuan (accounting for 34.98% of the total bond issuance), a year-on-year decrease of 25.63%. Compared with 2020, the financing scale of securities companies decreased by 45.62% year-on-year, and the number of implementers and fund-raising scale of fixed growth, allotment and convertible bonds decreased to a certain extent.
(2) Based on the market advantages of their financial products, some software service providers in the field of financial software began to expand products and services according to the needs of asset liability management of securities companies, giving priority to seizing the market share of medium and large securities companies.
On the one hand, due to the fluctuation of the capital market, the business development of securities companies is less than expected, the willingness of bond financing is not strong, the scale expansion of the asset liability side is limited, and the demand for non policy driven products such as asset liability management is insufficient; On the other hand, some software service providers have taken the lead in launching competitive products with similar functions to the project, and there are industry cases, seizing the market opportunity; These manufacturers have rich R & D experience in the field of financial software and have more advantages in developing similar products than the company.
In view of the slowdown in the financing growth of securities companies, the market development and demand are less than expected, coupled with other software service providers seizing the market opportunity, the market space of the project is limited and no longer has implementation value. After careful research, the company believes that the feasibility of the project has changed significantly and decides to terminate the R & D work of the project in order to fully protect the interests of all shareholders.
(II) integrated solution project for heavy capital business of securities companies
The original plan of the integrated solution project of heavy capital business of securities companies was to build an integrated platform suitable for the development of heavy capital business of securities companies based on the development trend of heavy capital in the securities industry and in combination with the actual demands of customers and business scenarios. The heavy capital business of securities companies includes margin trading, stock pledge, income swap, option trading and other OTC derivatives business.
1. The original raised investment project has undergone mature demonstration
Before June 2020, in the project planning stage, the company considered establishing the “integrated solution project for securities companies’ heavy capital business” mainly based on the following factors: the market is developing well, the businesses such as margin trading, stock pledge and income swap are developing rapidly, and the securities companies are willing to promote the development of heavy capital business.
According to the data, from January 2019 to may 2020, the balance of margin trading in the whole market continued to rise. At the end of January 2019, the balance of margin trading in Shanghai and Shenzhen stock markets was 0.73 trillion yuan and climbed to 1.08 trillion yuan at the end of May 2020; The survival scale of income swap and option trading business continued to increase, of which the monthly newly added initial nominal principal of income swap increased significantly from 10.169 billion yuan to 125361 billion yuan; The monthly initial nominal principal of option trading was significantly increased from 95.831 billion yuan to 182737 billion yuan.
In addition, according to market research, many securities companies have shown enthusiasm for the development of heavy capital business. China Securities Co.Ltd(601066) securities, Shenwan Hongyuan Group Co.Ltd(000166) securities, Orient Securities Company Limited(600958) , Shanxi Securities Co.Ltd(002500) etc. have expressed their willingness to actively develop OTC derivatives business in their 2019 annual report.
2. The change of the original raised investment project is mainly due to the significant changes in the market environment and customer demand
After the project entered the project preparation stage, the company found through continuous follow-up research that since the second half of 2021, due to the fluctuation of the trend of the capital market, the balance of margin trading and securities lending in Shanghai and Shenzhen markets continued to fall after hitting the top, and the derivatives business of securities companies was mainly concentrated in a few leading securities companies.
According to the data, the balance of margin trading in Shanghai and Shenzhen stock markets continued to decline after reaching a peak of 1.93 trillion yuan in September 2021, and fell to 1.73 trillion yuan at the end of February 2022. In terms of business concentration, according to the data released by the China Securities Association, the securities companies with the top five new scale of income swap business in October 2021 added an initial nominal principal of 312668 billion yuan, accounting for 87.09% of the total; The securities companies with the top five new scale of OTC option business in this period added an initial nominal principal of 160579 billion yuan, accounting for 64.08% of the total.
According to the research and judgment of the company, on the one hand, due to the fluctuation of the capital market, the scale of margin trading business of securities companies has declined, and the future development trend is not very clear; On the other hand, OTC derivatives business is concentrated in a few leading securities companies such as Huatai Securities Co.Ltd(601688) , Citic Securities Company Limited(600030) , China International Capital Corporation Limited(601995) , Guotai Junan Securities Co.Ltd(601211) and has not been fully launched in the industry, resulting in very limited customer demand and market space, affecting the subsequent promotion and application of the project in the securities industry.
In view of the decline in the scale of margin trading, the high concentration of OTC derivatives business, the very limited customer demand and market space, and the project no longer meets the conditions for development and promotion, after careful research, the company believes that the feasibility of the project has changed significantly, and decides to terminate the research and development of the project in order to fully protect the interests of all shareholders.
(III) large asset management business integration solution project
The original plan of the large asset management business integration solution project was to increase the support for ficc and derivatives based on the fixed income and equity investment trading system of asset management of fund companies and securities companies, build a full process, full asset and Global Multi asset management platform, and help asset management institutions and wealth management institutions realize business transformation and upgrading.
1. The original raised investment project has undergone mature demonstration
Before June 2020, in the project planning stage, the company considered establishing the “large asset management business integration solution project” mainly based on the following factors: the rapid development of China’s large asset management industry, the significant increase in the proportion of multi asset allocation such as ficc and derivatives, and the investment demand of asset management institutions in the whole process, all assets and globalization is expected to usher in explosive growth in the short term, thus giving birth to the demand for the construction of integrated solutions.
According to the data released by the prospective industry research institute, by the end of 2018, the total scale of China’s asset management industry was about 124.03 trillion yuan; It is predicted that by 2022, the total scale of China’s asset management business will reach 252 trillion yuan. According to Hithink Royalflush Information Network Co.Ltd(300033) Ifind data, in 2020, the market value of derivatives assets accounted for 0.71% of the total fund value in the second quarter of 2020, up more than 50%, from 0.42% in the fourth quarter of 2018.
2. The change of the original raised investment project is mainly due to the significant changes in the market foundation and customer demand
After the project entered the project preparation stage, the company found through continuous follow-up research that the proportion of derivatives in multi asset allocation was still at a low level, and the market did not develop rapidly as scheduled.
According to Hithink Royalflush Information Network Co.Ltd(300033) Ifind data, among various asset configurations of public funds, the market value of derivatives assets accounted for 0.51% of the total fund value at the end of 2021, down from 0.67% at the end of 2020. In addition, according to the data for the fourth quarter of 2021 released by China Fund Industry Association, among the private asset management products of securities companies and their asset management companies, the number and scale of commodities and financial derivatives accounted for only 0.8% and 0.2% of the total respectively.
On January 10, 2022, the office of China Banking and Insurance Regulatory Commission
