Special Announcement on Investment Risks for Initial Public Offering of Stocks on the ChiNext Market
Zhejiang XinXing Tools Co., Ltd. (hereinafter referred to as "XinXing Tools" or the "Company") is planning its initial public offering of stocks and listing on the ChiNext market. This announcement is issued to inform investors of the relevant risks.
The initial public offering of shares by Zhejiang XinXing Tools Co., Ltd. (hereinafter referred to as "XinXing Tools" or the "Issuer") and Huatai United Securities Co., Ltd. (hereinafter referred to as "Huatai United Securities" or the "Sponsor/Lead Underwriter") is in progress. The application for the initial public offering of shares by XinXing Tools has been accepted by the China Securities Regulatory Commission, and the Shenzhen Stock Exchange has completed the review of the listing application. The China Securities Regulatory Commission has approved the registration of the issuance (under the "China Securities Regulatory Commission Announcement" (License No. [2026] 953)).
The Issuer and the Sponsor/Lead Underwriter, Huatai United Securities, have agreed that the number of shares to be issued in this offering is 25,000,000 shares. The total share capital of the Company after the issuance will be 100,000,000 shares, accounting for 25.00% of the total share capital after the issuance. This issuance is an offering of new shares, and the Issuer's existing shareholders will not transfer their shares. The shares offered in this issuance will be listed on the ChiNext market.
The issue price of RMB 33.58 per share, after deducting the net profit attributable to the parent company's shareholders of RMB 17.17 for the year ended December 31, 2025, is 17.17 times the price-to-earnings ratio. As of July 14, 2026 (T-4 days), the average static price-to-earnings ratio of the "C33 Metal Products" industry published by the China Securities Index Co., Ltd. was 53.48 times. This is lower than the price-to-earnings ratio of comparable listed companies in the same industry, which was 68.29 times for the year ended December 31, 2025, after deducting non-recurring gains and losses. However, there is still a risk of future stock price declines leading to investor losses. The Issuer and the Sponsor/Lead Underwriter remind investors to pay attention to investment risks, prudently assess the reasonableness of the issuance pricing, and make investment decisions rationally.
The Issuer and the Sponsor/Lead Underwriter have the following opinions on the reasonableness of the issuance pricing:
- The market for China's cutting tools is continuously expanding, the import dependence of cutting tools is continuously decreasing, and the scale of exports is continuously increasing.
The consumption of China's cutting tool market is closely related to the development level and structural adjustment of China's manufacturing industry. Affected by the slowdown in domestic investment growth and demand structure adjustment, the market size of cutting tools was mainly concentrated in the range of RMB 31.2 billion to RMB 34.5 billion from 2011 to 2016. Since the implementation of the "13th Five-Year Plan," with the continuous deepening of supply-side structural reforms in China, according to research reports from Zheshang Securities, the market size of the cutting tool industry reached RMB 42.1 billion in 2018, an increase of 30.95% compared to 2016. In 2019, affected by the Sino-US trade friction and the downturn in the automotive and other downstream industries, the market size of China's cutting tools decreased to RMB 39.3 billion. However, with the gradual stabilization of the global trade situation, driven by the rigid demand for industrial consumables, the market size has gradually recovered. From 2020 to 2024, the market size of China's cutting tools is expected to be RMB 421.19 billion, RMB 477.21 billion, RMB 464.61 billion, RMB 493.31 billion, and RMB 527.45 billion, showing a steady upward trend with a compound annual growth rate of 5.79%. With the continuous development of China's manufacturing industry, the market size of China's cutting tools is expected to continue to grow.