Response to Inquiry Letter
- Regarding the application materials, the total amount of capital raised in this issuance does not exceed RMB 2.5 billion. After deducting issuance expenses, the funds will be used for the "Micro-cavity Electronic Paper Display Device (MED) Project" (hereinafter referred to as the MED Project) and supplementary working capital, and will be implemented through the leasing of factory premises.
The total investment in the MED Project is RMB 9 billion. The planned investment from the proceeds of this issuance is RMB 1.8 billion. As of the date of the relevant board resolution, the MED Project has cumulatively invested RMB 6.481 billion, which has been paid for by the company's own funds or self-raised funds. Upon project completion, the annual revenue is expected to increase by RMB 9.167 billion, while the issuer's operating revenue in the most recent reporting period was RMB 5.987 billion.
During the reporting periods, the capacity utilization rates for the issuer's main products, electronic component display materials, were 79.80%, 49.91%, and 57.57%, respectively. The capacity utilization rates for touch materials were 63.76%, 73.18%, and 77.69%, respectively.
The MED Project is being implemented through its non-wholly-owned subsidiary, Zhejiang Luxvue Display Technology Co., Ltd. (hereinafter referred to as Luxvue Display). The minority shareholders are Huzhou Nanxun Guangxin Equity Investment Partnership (Limited Partnership) (hereinafter referred to as Nanxun Guangxin) and Huzhou Nanxun Guangping Equity Investment Co., Ltd. According to the "Agreement on Jointly Establishing Zhejiang Luxvue Display Technology Co., Ltd.", from the date of establishment of Luxvue Display, unless otherwise agreed, the issuer may at any time request Nanxun Guangxin to transfer all or part of its equity in Luxvue Display, valued at RMB 2 billion, to the issuer or its designated third party. After the Luxvue Display project has been in production for five years, Nanxun Guangxin may request the issuer or its designated third party to acquire all or part of its equity in the target.
In 2023, the company obtained a 20-year exclusive license for the micro-cavity display (MED) patent and technology from Wuxi Weifeng (hereinafter referred to as Wuxi Weifeng), as well as a long-term supply guarantee for plasma materials.
During the reporting period, the company's sales business was primarily export-oriented, with export sales accounting for over 85%, mainly settled in US dollars. Additionally, the imported equipment involved in the production lines for this fundraising is substantial.
As of December 31, 2025, the company's largest shareholder holds 20.84% of the total share capital, and the company has no actual controller. After this issuance, the company will continue to maintain its status of having no actual controller.
As of December 31, 2025, the company's long-term equity investments amounted to RMB 2505.21 million, and other equity investments amounted to RMB 3600.00 million.
Please ask the issuer to further clarify:
(1) Considering the main construction content, application scenarios, and current sales of the products corresponding to the proposed investment project, please explain the differences, connections, and synergies between this project and the existing business, and whether it is an investment in the main business. Considering the large total investment scale of the MED Project, please explain whether the project investment scale is consistent with the issuer's capital strength, financing capacity, operating scale, and market demand. Does the issuer possess the corresponding personnel, technology, patent reserves, sales channels, and customer acquisition capabilities? Please explain whether there are significant uncertainties in the project implementation, considering whether the proposed product has completed pilot testing and customer verification.
(2) Considering the expansion multiples of the proposed product, existing and under-construction production capacity, capacity utilization rate, and existing orders and intended contracts, as well as downstream demand and target customers, market competition, etc., please explain the rationality of the project's necessity and the scale of new production capacity, and the specific measures to digest the new production capacity.