I. Plan for the Use of Proceeds
The total amount of proceeds from this issuance of shares to specific targets shall not exceed 698.0994 million RMB (inclusive). After deducting issuance expenses, the proceeds will be used for the following projects:
| No. | Project Name | Total Investment (10k RMB) | Proceeds to be Used (10k RMB) |
|---|---|---|---|
| 1 | Agricultural Machinery Component Expansion Project | 43,059.25 | 43,059.25 |
| 2 | Micro-chain System Hardware/Software R&D and Manufacturing Project | 15,304.20 | 14,750.69 |
| 3 | Supplementing Working Capital | 12,000.00 | 12,000.00 |
| Total | 70,363.45 | 69,809.94 |
Before the proceeds from this issuance are received, the company may invest its own funds based on the actual progress of the projects and replace them once the proceeds are received.
After the proceeds are received, if the actual net proceeds are less than the planned investment amount, the company will adjust the specific investment projects, priority, and investment amounts based on the actual net proceeds and the urgency of the projects. Any shortfall will be covered by the company's own funds.
II. Necessity and Feasibility Analysis of the Investment Projects
(I) Agricultural Machinery Component Expansion Project
1. Project Overview
| Item | Description |
|---|---|
| Project Name | Agricultural Machinery Component Expansion Project |
| Implementation Entity | Qingdao Choho Industrial Co., Ltd. |
| Total Investment | 43,059.25 ten thousand RMB, intended to be fully funded by proceeds |
| Project Content | Mainly produces agricultural machinery chain systems, agricultural machinery blades, soil-engaging parts, and other agricultural machinery components |
| Project Location | East side of Chaozhou Road and south side of Dengzhou Road, Economic Development Zone, Pingdu City, Qingdao, Shandong Province |
| Economic Benefits | The project's estimated post-tax internal rate of return is 14.31%, with a post-tax payback period (including construction period) of 8.66 years, indicating good economic benefits |
2. Necessity of Project Implementation
(1) Responding to market demand growth and ensuring production capacity
With the growth of the global population and increasing demand for food, improving the level of agricultural mechanization has become a key factor in ensuring food security. Domestic policies such as "agricultural machinery purchase subsidies" and "agricultural machinery scrapping subsidies" have stimulated market demand, providing continuous growth momentum for the agricultural machinery components market. The market size of China's agricultural machinery industry is expected to reach 137 billion RMB by 2030. The positive growth trend in the agricultural machinery market provides broad space for the agricultural machinery components industry. The company plans to implement this project to enhance production capacity and meet the continuously expanding market demand.
(2) Supporting company strategy and expanding profit growth space
The company is focused on the new needs and opportunities in agricultural modernization. Based on agricultural machinery chain systems, it is expanding into agricultural machinery cutting systems. The company has established a clear strategic development plan, aiming for "high-end" and "globalized" branding, focusing on high-value products, and striving to surpass foreign leading brands. This project will use advanced production processes to improve the wear resistance, hardness, and precision of products, forming economies of scale and supporting the company's long-term strategic goals.
(3) Promoting high-end product substitution and assisting high-quality industrial development
Agricultural machinery blades are high-end products. Given the lack of dominant brands in this market and the scarcity of high-end domestic products, there is a strong demand for domestic substitution. The company has already delivered multiple products in this field to overseas markets such as Germany, Russia, and India, and has gained recognition in the domestic "aftermarket." This project aims to expand production capacity for agricultural machinery blades to capture substitution opportunities and meet high-end market needs.