Shenzhen Stock Exchange:
Zhejiang Songyuan Automotive Safety System Co., Ltd. (hereinafter referred to as the "Company," "Issuer," or "Songyuan Automotive") received the "Inquiry Letter on the Application Documents for the Issuance of Convertible Corporate Bonds by Zhejiang Songyuan Automotive Safety System Co., Ltd. to Unspecified Targets" (Inquiry Letter [2026] 020054) (hereinafter referred to as the "Inquiry Letter") issued by your esteemed exchange on July 2, 2026. The Company, together with Huatai United Securities Co., Ltd. (hereinafter referred to as "Huatai United Securities" or the "Sponsor"), and relevant securities service institutions, has conducted thorough research and implementation. In accordance with the requirements of the Inquiry Letter, we have supplemented information and responded to the questions raised. We hereby submit this response for your review.
Unless otherwise indicated, the abbreviations used in this Inquiry Letter Reply have the same meaning as defined in the "Prospectus (Application Draft) for the Issuance of Convertible Corporate Bonds by Zhejiang Songyuan Automotive Safety System Co., Ltd. to Unspecified Targets and Listing on the Main Board" (hereinafter referred to as the "Prospectus").
The font specifications for this Inquiry Letter Reply are as follows:
Inquiry Letter Question: Bold
Reply to Inquiry Letter Question: Songti
Supplementary Disclosure/Revision to Prospectus: KaiTi, Bold
Minor discrepancies may exist between the sum of individual figures and the total in some tables within this Inquiry Letter Reply, which are due to rounding during the calculation process.
Question 1
The application materials show that the total amount of capital to be raised by this issuance is no more than RMB 105,500,000,000, of which RMB 73,850,000,000 will be used for the construction of a "Full Industry Chain Supporting Project for Core Components of Automotive Safety Systems with an Annual Production Capacity of 15.2 million Sets" (Phase II of Shanshan Reservoir, Ling Mountain Town), and RMB 31,650,000,000 will be used to supplement working capital.
The safety system project has a construction period of 3 years. Upon completion, it is planned to add an annual production capacity of 11.2 million sets of automotive seatbelts, 2 million sets of automotive airbags, and 2 million automotive steering wheels. Upon reaching full production, it is expected to achieve an operating revenue of RMB 133,200,000,000, with a return on equity of 13.49%. In the first quarter of 2026, the utilization rates of the Company's seatbelt, airbag, and steering wheel production capacity were 54.33%, 76.12%, and 52.91%, respectively, which are significantly lower than the capacity utilization rate in 2025.
The Company's previous fundraising project, "Project for the Production of 13.3 million Sets of Automotive Safety Systems and Supporting Components (Phase I)," is scheduled to reach its predetermined usable state in August 2025. The annual profitability forecast period has not yet been reached for 2025 and January-March 2026, thus it is not applicable for profitability assessment. The production workshop originally planned for steering wheel production has been repurposed for the production of airbag products, with a total of RMB 4,051.14 million in raised funds reallocated for this change. As of March 31, 2026, the capacity utilization rate was 76.59%.