Shenzhen Huakong Seg Co.Ltd(000068) : feasibility analysis report on the use of funds raised by non-public offering of A-Shares (Revised Version)

Shenzhen Huakong Seg Co.Ltd(000068)

Shenzhen Huakong Seg Co., Ltd.

Non public offering of a shares

Feasibility analysis report on the use of raised funds (Revised Version) may, 2002

Shenzhen Huakong Seg Co.Ltd(000068) feasibility analysis report on the use of funds raised by non-public offering of A-Shares (Revised Version)

Shenzhen Huakong Seg Co.Ltd(000068) (hereinafter referred to as “the company”, “listed company” and ” Shenzhen Huakong Seg Co.Ltd(000068) “) intends to issue A-share non-public to specific objects, and the total amount of funds to be raised shall not exceed 812383900 yuan (including this amount). The feasibility analysis of the company’s board of directors on the use of the funds raised by the non-public offering of A-Shares is as follows: I. The use plan of the raised funds

The total amount of funds to be raised by the company in this non-public offering of shares shall not exceed 812383900 yuan (including this amount), which will be used to repay interest bearing liabilities and supplement working capital after deducting the issuance expenses. 2、 Necessity and feasibility of raising funds to invest in projects

(I) necessity of using raised funds

1. Improve the capital structure of listed companies and reduce liquidity risk

In recent years, the asset liability ratio of listed companies has increased year by year. By the end of March 2022, the asset liability ratio has reached 84.48%, which is at a high level. Compared with A-share listed companies in the same industry, the asset liability ratio of listed companies is higher than the average level of comparable companies, the capital structure of listed companies is unreasonable and the financial risk is large. The current ratio and quick ratio of the company are lower than those of A-share listed companies in the same industry, and the asset liquidity is insufficient. Through this non-public offering of shares, the listed company has reduced the asset liability ratio, improved the capital structure and further supplemented the working capital, so as to alleviate the lack of liquidity and improve the anti risk ability and sustainable operation ability.

2. Alleviate the cash flow pressure of listed companies and ensure sustainable and stable operation

In the last three years and the first period, Shenzhen Huakong Seg Co.Ltd(000068) operating income and net interest rate decreased significantly, and the net cash flow from operating activities was 252674 million yuan, -156977 million yuan, -203842 million yuan and 154806 million yuan respectively, resulting in tight cash flow Shenzhen Huakong Seg Co.Ltd(000068) the current indirect financing ability and the ability to obtain funds through business activities have been difficult to support the needs of listed companies to repay debts and business development. Therefore, some of the funds raised this time will supplement working capital, which will effectively alleviate the working capital pressure of the company and provide working capital support for the future business development and expansion of listed companies.

3. Reduce financial expenses of listed companies and improve profitability

In the last three years and the first period, the financial expenses of the company were 54.358 million yuan, 795739 million yuan, 781528 million yuan and 149435 million yuan respectively. The higher financial cost had a great impact on the operating performance of listed companies, and the relative shortage of working capital also restricted the development of listed companies to a certain extent. Therefore, some of the funds raised this time will supplement working capital, which will effectively alleviate the working capital pressure faced by Listed Companies in their future development and expansion. adopt

Shenzhen Huakong Seg Co.Ltd(000068) feasibility analysis report on the use of raised capital of A-share shares issued by private offering (Revised Version)

Using the funds raised in this offering to repay interest bearing debts will help reduce the financial expenses of listed companies and improve the profitability of listed companies.

(II) feasibility of using raised funds

1. The use of the funds raised in this non-public offering complies with the provisions of laws and regulations

The use of the funds raised from this non-public offering complies with relevant policies, laws and regulations and is feasible. 2. The company has perfect corporate governance structure and internal control system

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 structure and perfect internal control system through continuous improvement and improvement.

In terms of the management of raised funds, the company has established Shenzhen Huakong Seg Co.Ltd(000068) raised funds management system in accordance with the regulatory requirements, which clearly stipulates the storage, use and management, investment direction change, report supervision and accountability 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, so as to ensure the rational and standardized use of the raised funds and prevent the use risks of the raised funds. 3、 The impact of this non-public offering on the operation, management and financial status of listed companies

The raised funds are used to repay interest bearing loans and supplement working capital, which is conducive to reducing the asset liability ratio of listed companies, improving the financial structure of listed companies, easing the debt repayment pressure of listed companies, reducing financial risks, and providing working capital support for the future business development and expansion of listed companies. 4、 Feasibility conclusion of this non-public offering

In conclusion, the use plan of the funds raised by this 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 profitability and overall competitiveness of the company, enhance the sustainable development ability and anti risk ability of the company, and provide important support and guarantee for the subsequent development of the company. 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.

To sum up, this non-public offering of shares to raise funds for investment projects has good feasibility.

Shenzhen Huakong Seg Co.Ltd(000068) board of directors may 20, 2002