The actual controller subscribed to the full amount of this round of fixed increase financing

This time, shares were issued to specific targets for the company's actual controllers Wang Zhiqin and Song Yanjun; raised no more than RMB 0.2 billion (including principal amount); used to supplement working capital and repay bank loans.

The issue price was 5.41 yuan/share (the company's closing price was 8 yuan on October 8), and the number of shares issued was no more than 0.037 billion shares, which was approximately 10.7% of the company's total share capital before the current offering.

The actual controllers of the company, Mr. Wang Zhiqin and Ms. Song Yanjun held 18.06% and 15.23% of the company's shares respectively; in total, they held 33.29%, based on the maximum number of issues issued. After the issuance was completed, Mr. Wang Zhiqin and Ms. Song Yanjun held a total of 39.71% of the company and are still actual controllers.

Optimizing capital structures to reduce financial expenses

The company uses part of the capital raised to repay bank loans, which is conducive to reducing the balance ratio and optimizing the balance and liability structure; at the same time, it can drastically reduce the loan size and interest expenses, which helps reduce the company's financial expenses and enhance the company's profitability.

2021-24H1's financial expenses were 0.22 billion, 0.16 billion, 0.09 billion, and 0.03 billion, respectively; net profit due to mother for the same period was 0.22, 0.07, 0.3 billion, and 0.15 billion yuan, respectively; financial expenses had a significant impact on the company's performance, and optimizing the capital structure was conducive to increasing the scale of performance.

It shows confidence in the company's future development, and the policy encourages the majority shareholders to increase their stock holdings. This issue targets the controlling shareholders and actual controllers of the company; it shows their determination to support the company and their confidence in future development. With the injection of funds raised in this offering, the company's working capital has been added, which is conducive to the implementation of the development strategy and the continuous operation of subsequent operations.

Maintain profit forecasts and maintain “buy” ratings

The company's three major brands work together, and brand competitiveness continues to increase. With various measures introduced in various parts of the country to promote the recovery of consumption, the clothing consumer market ushered in a steady rebound, and the domestic sales market continued to recover.

The company adheres to market-oriented, innovation-driven, gathering brand potential, enriching the product matrix, improving channels, operational quality and efficiency, and achieving continuous and steady development.

The company's existing three major brands, “Yuanxian”, VGRASS, and TEENIE WEENIE, each have a different style and position, coordinate and share, and complement each other's strengths, forming a pyramidal three-dimensional brand matrix and continuously improving the brand's market competitiveness. In recent years, through a multi-brand strategy, the company has continuously enhanced product and brand power, and deployed omni-channels to jointly promote revenue growth.

Without considering this fixed increase, we expect the company's 24-26 EPS to be 0.98 yuan, 1.12 yuan, and 1.3 yuan, respectively, and PE 9X, 8X, and 7X, respectively.

Risk warning: core executives have been lost, fixed growth has failed, consumer sentiment falls short of expectations, and industry competition has intensified.