Shenzhen Stock Exchange:
Beijing KYSIN Assets Appraisal Co., Ltd. (hereinafter referred to as the "Appraisal Institution" or "KYSIN") was engaged by Hunan Hualing Cable Co., Ltd. (hereinafter referred to as the "Listed Company," "Company," or "Hualing Cable") to serve as the appraisal institution for Hualing Cable's issuance of convertible corporate bonds to purchase assets and raise supporting funds, which constitutes a related party transaction (hereinafter referred to as the "Transaction"). In accordance with the requirements of the "Audit Inquiry Letter Regarding Hunan Hualing Cable Co., Ltd.'s Application for Issuing Convertible Corporate Bonds to Purchase Assets and Raise Supporting Funds" (Audit Letter [2026] No. 130004) (hereinafter referred to as the "Audit Inquiry Letter") issued by your exchange, we have conducted a thorough discussion and analysis with the Listed Company and relevant intermediary agencies regarding the questions raised in the Audit Inquiry Letter, and hereby express our verification opinions (hereinafter referred to as the "Verification Opinion"). We now submit this to your exchange for review.
Unless otherwise specified, the abbreviations or definitions of terms in this Verification Opinion have the same meanings as those defined in the Restructuring Report. In this Verification Opinion, any discrepancies between the sum of the figures and the total are due to rounding. The financial data and financial indicators cited in this Verification Opinion refer to the financial data under the consolidated statement caliber and the financial indicators calculated based on such financial data, unless otherwise specified.
Question 6: Regarding the Valuation of the Transaction
The application documents show: (1) With July 31, 2025, as the appraisal base date, the target assets were appraised using both the asset-based approach and the income approach, with the income approach ultimately selected as the appraisal conclusion. The income approach results show the appraised value of all shareholders' equity of the target assets is 263.20 million RMB, with an appreciation rate of 190.52%; the asset-based approach results show the appraised value of all shareholders' equity of the target assets is 123.2914 million RMB, with an appreciation rate of 36.09%. (2) During the reporting period, the operating income of the target assets was 204.5274 million RMB, 208.6294 million RMB, and 169.8848 million RMB, respectively, with a year-on-year growth of 2.01% in 2024. In the income approach, the detailed forecast period for future earnings is from August-December 2025 to 2030, with forecasted operating income of 106.7847 million RMB, 301.5697 million RMB, 328.7110 million RMB, 355.0079 million RMB, 379.8585 million RMB, and 402.6500 million RMB, respectively, with year-on-year growth rates of 32.61%, 9%, 9%, 8%, 7%, and 6%. (3) The key to connector manufacturing lies in precision manufacturing capabilities. Beyond product design, the target assets also focus on process R&D. By overcoming technical difficulties in stamping, injection molding, and die-casting, the target assets have improved precision and stability in the manufacturing process, converting theoretical technology into mass production feasibility. At the end of each reporting period, the book value of fixed assets of the target assets was 17.7289 million RMB, 18.4868 million RMB, and 19.9450 million RMB, respectively, accounting for 76.12%, 78.36%, and 72.53% of non-current assets, primarily consisting of machinery, equipment, and tools. As of the end of the reporting period, the target assets do not own any real estate or land use rights, and the production plant uses leased land and buildings.