Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) (Group) Co., Ltd
Feasibility analysis report on the use of funds raised by non-public issuance of A-Shares in 2022
January 2002
Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) (Group) Co., Ltd. (hereinafter referred to as “the company”) plans to raise funds by non-public offering of shares. The feasibility analysis of the company’s board of directors on the use of funds raised by this non-public offering of shares is as follows:
1、 Use plan of raised funds
The total amount of funds raised from this non-public offering of shares does not exceed 973.675 million yuan (including this amount). The net amount after deducting the issuance expenses will be used to supplement the working capital, so as to optimize the company’s asset liability structure, reduce financial risks and improve the financial situation.
2、 Necessity of raising funds this time
(I) relieve the pressure on the company’s working capital and support the healthy and sustainable development of the company’s business
In recent years, the pressure on China’s automobile industry has further increased due to Sino US economic and trade friction, the switching of environmental protection standards, the decline of new energy subsidies and other factors. In order to cope with the adverse impact of the overall decline of the automotive industry, on the one hand, the company takes measures to stabilize the company’s existing customers and continuously develop new customers. On the other hand, due to the supply side reform, the upstream raw material supply tends to be concentrated. In addition, the raw materials purchased by the company are bulk commodities. According to the trading habits of the industry, the upstream suppliers require to pay a deposit equivalent to the purchase volume, Therefore, the company’s demand for working capital has increased significantly.
Affected by the overall decline of the automobile industry, the turnover rate of accounts receivable and inventory of the company have been declining in the past three years, the occupation of working capital has continued to rise, and the working capital gap is large. It is urgent to supplement the working capital required for business activities to meet the needs of the normal development of the company’s business. The implementation of this non-public offering can effectively alleviate the pressure on the company’s working capital, reduce the impact of the decline in operating turnover on cash flow and capacity release, ensure the capital demand and stability of the company’s development, and support the normal development of the company’s business.
(II) improve financial stability and optimize capital structure
The company’s borrowing cost is relatively high, which is mainly supported by the company’s rapid development of short-term borrowings and the company’s financial burden. The former controlling shareholder of the company, namely the shareholder with the largest shareholding ratio at present, Sichuan Shengbang, cooperated with the investigation of the public security organ, and some equity was frozen by the judiciary, which had a certain adverse impact on the company’s debt financing and great pressure on the company’s working capital.
After the completion of this non-public offering, the company’s net asset scale will be improved, the company’s capital structure will be optimized, and the capital strength will be enhanced, which will help to improve the company’s credit rating and enhance the follow-up financing ability. Relying on the capital advantage, the company will further optimize its strategy in terms of business layout, talent introduction and R & D investment, which is conducive to the company’s grasp of industry development opportunities, promote industrial upgrading, healthy and long-term development of the company’s future business, and then help the company achieve leapfrog development.
3、 Feasibility of the raised funds
The use of the funds raised by the company’s non-public offering complies with relevant policies, laws and regulations and is feasible. After the funds raised from this non-public offering are in place, on the one hand, it is conducive to reducing the asset liability ratio, reducing financial risks and improving the capital structure of the company; On the other hand, it will enhance the company’s capital strength, alleviate the pressure on the company’s working capital, and promote the sustainable and healthy development of the company’s business, which is in line with the interests of the company and all shareholders.
4、 The impact of this issuance on the company’s operation and management, financial status, etc
(I) impact of this issuance on the company’s operation and management
All the funds raised in this non-public offering will be used to supplement working capital after deducting relevant issuance expenses. After the funds raised are in place and implemented, it will ease the pressure on the company’s working capital, enhance the company’s capital strength, improve the company’s competitiveness and profitability, and promote the healthy and sustainable development of the company’s businesses in the future.
(II) impact of this issuance on the company’s financial position
After the issuance, the total assets and net assets of the company will increase at the same time, which will help to enhance the company’s ability to resist financial risks, reduce financial expenses, improve the asset liability ratio, further optimize the financial structure, reduce financial risks and enhance the ability of sustainable operation in the future.
5、 Feasibility conclusion of this non-public offering
After careful analysis and demonstration, the board of directors of the company believes that the use plan of the funds raised by the non-public offering complies with relevant policies, laws and regulations and the overall strategic development plan of the company in the future, which is necessary and feasible. The availability and use of the raised funds will help to improve the company’s profitability and overall competitiveness, enhance the company’s sustainable development ability and anti risk ability, so as to provide important support and guarantee for the company’s subsequent development. Therefore, the use of the funds raised in this non-public offering is reasonable and in line with the interests of the company and all shareholders.
Board of directors of Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) (Group) Co., Ltd
January 10, 2022
