“Science and Technology Innovation Board Daily”, June 7 (Reporter Huang Xiumei) According to the official website of the Shanghai Stock Exchange, the 15th Listing Review Committee meeting in 2024 held by the Listing Review Committee today (June 7) reviewed and approved the refinancing project for the public offering of convertible bonds by Guizhou Aerospace Technology Development Co., Ltd. (hereinafter: Hangyu Technology). The project was accepted by the Shanghai Stock Exchange on August 18, 2023. Since then, it has gone through two rounds of review inquiries and responses, and is sponsored by CITIC Securities.

On August 27, 2023, the Securities Regulatory Commission issued the “Securities Regulatory Commission Coordinates the Primary and Secondary Market Balance and Optimization of IPO and Refinancing Supervision Arrangements”; on November 8 of the same year, the Shanghai and Shenzhen Stock Exchange announced specific measures to optimize refinancing. On April 12, 2024, the State Council issued “Certain Opinions on Strengthening Supervision and Risk Prevention and Promoting High-Quality Development of the Capital Market”, which the market called the new “Nine National Rules”; just over ten days later, on April 30, the Shanghai and Shenzhen Exchange officially issued revised business rules such as the “Stock Listing Rules” and “Stock Issuance and Listing Review Rules”.

This aerospace technology refinancing project is also the first refinancing project on the Science and Technology Innovation Board that has been reviewed and approved by the Shanghai Stock Exchange Listing Committee after the publication of a series of new capital market regulations mentioned above. Previously, on May 31, Lianyun Technology successfully applied for an IPO on the Science and Technology Innovation Board, becoming the first Shanghai company to go through an IPO since the new “Nine Rules of the State”.

The Shanghai Stock Exchange is concerned about the benefits of IPO fund-raising projects

According to the application materials, Aerospace Technology is engaged in R&D, production and sales of annular forgings made of metal materials that are difficult to deform in aviation. With this public offering of convertible bonds, Aerospace Technology plans to raise 667 million yuan. Of this, 467 million yuan was used for the construction project of a large-scale precision manufacturing industrial park for aerospace rings and forgings, and 200 million yuan was used to supplement working capital.

The “Science and Technology Innovation Board Daily” reporter noticed that after the new refinancing regulations in August 2023, the Shanghai and Shenzhen Stock Exchange strengthened inquiries on fund-raising project investment, efficiency estimation, and the status of previous fund-raising projects.

An industry consultant involved in the investment and financing projects of listed companies told the “Science and Technology Innovation Board Daily” reporter that for refinancing projects, there must be clear synergy with the original business after implementation, and many details such as the implementation status of the previous fund-raising project, progress in the use of previous fund-raising funds, and whether the efficiency estimates of the previous fund-raising project meet expectations will directly affect whether the refinancing review can be carried out smoothly.

Judging from the application process for Aerospace Technology's current refinancing project, the Shanghai Stock Exchange noticed the efficiency estimation issue of Aerospace Technology's previous fund-raising project, that is, the IPO fund-raising project during both rounds of review and inquiry.

According to application materials, in 2022 and January to May 2023, Delan Aerospace, the implementing entity of Aerospace Technology's IPO fundraising project, achieved benefits of -17.1541 million yuan and -4.582 million yuan respectively. As a result, the Shanghai Stock Exchange inquired whether the IPO fundraising project had the expected effects and the rationality of this refinancing project.

Aerospace Technology replied that although Deland Aerospace's net profit report was low from January to May 2023, from a consolidated perspective, after the IPO fundraising project was fully completed and put into operation, the company's overall manufacturing capacity, asset quality, operating capacity and profit level improved significantly. Based on the estimated contribution of the IPO fundraising project from January to September 2023 to the merger level, the profit contribution of the IPO fundraising project was 82.0426 million yuan, which has achieved the predicted benefits of the IPO fundraising project feasibility study report.

At the same time, Hangyu Technology said that before the IPO fundraising project was put into operation, the company's production capacity utilization rate had reached 104.81%. The actual output of the IPO fundraising project from January to September 2023 had already exceeded the predicted production capacity utilization rate, and the actual capacity utilization rate had already exceeded the predicted capacity utilization rate, so this refinancing project is also reasonable.

Unlike the main products of the IPO fund-raising project, which are small and medium-sized ring forgings for aero engines and gas turbines, the products of Hangyu Technology's current refinancing project are large ring forgings for aviation and aerospace. The product diameter is mainly less than 5 meters. After the project is completed and delivered, it can form a production capacity of 3,000 tons/year of special alloy precision ring forgings. There was a big difference between the two fund-raising projects in terms of product size, downstream application areas, and production equipment models.

The urgency and prospects of fund-raising projects were questioned

Wang Jiyue, a senior investment industry expert, said in an interview with the “Science and Technology Innovation Board Daily” reporter, “Many of the requirements of the new refinancing policy are actually targeted. For listed companies that want to refinance, the most important thing is to do a good job in corporate compliance management, and first meet the refinancing review conditions. Also, it is very important to establish a new development concept, pay attention to investor returns, and follow a new development path.”

The industry consultant mentioned above also said that in a situation of strict supervision, for listed companies with refinancing needs, if they want to successfully clear the refinancing review, they must not only actively respond to policy and market changes and strengthen corporate governance and internal control; they must also fully demonstrate the rationality and necessity of project capacity planning, key data, and project implementation in refinancing and fundraising design.

“As the difficulty of review increases, the information disclosure requirements for fund-raising projects are more detailed, so it is necessary to be more careful and reasonable in the planning and design of fund-raising projects.” The industry consultant said.

Statistics from the “Science and Technology Innovation Board Daily” reporter found that from August 2023 to June 7, 2024, a total of 8 refinancing projects of science and technology innovation board companies were terminated. Take Daotong Technology, where the company and sponsor voluntarily withdrew the application materials in November 2023. The Shanghai Stock Exchange focused on why it still plans to refinance when the previous capital raised changed frequently and the proportion of invested funds used was low.

The Shanghai Stock Exchange also paid more attention to the urgency and necessity of fund-raising projects in the current two rounds of review and inquiries by Aerospace Technology. Aerospace Technology, on the other hand, said that the company is a leading domestic manufacturer of special alloy precision ring forgings for aero engines. Special alloy precision ring forgings are basic components for high-end equipment such as aero engines and gas turbines.

The company also stated in an investor interaction on April 30 that for the Leap-1C engine currently used in the C919, Aerospace Technology is one of the main suppliers of ring forgings for this type of engine, and is also the core main development unit for CJ1000/2000 ring forgings for domestic aero engines.

Aerospace Technology said that with the increase in the number of military aircraft and the iterative demand for advanced models during the “14th Five-Year Plan” period, demand for mass production of aero engines will be quickly released, the market for supporting parts in the aviation development industry chain will expand rapidly, and the aviation ring forging market may usher in a golden phase of volumetric growth under this opportunity.

Aerospace Technology quoted estimates of China's military aircraft engine market in the Shenwan Hongyuan Securities Research Report as saying that China's demand for military aircraft of various types in the next ten years will be 4,810, and the market space for military aircraft engine forgings can reach 106.9 billion yuan, with an average annual market size of 10.6 billion yuan. In the civil aircraft sector, the market value of civil aircraft aviation forgings in the next 20 years will be 299.1 billion yuan, an average of about 15 billion yuan per year. According to the above estimates, in the future, China's military and civil aircraft aviation forgings will have an annual market space of about 25.6 billion yuan.

“Today, aero engines have become one of the important indicators for measuring a country's comprehensive scientific and technological level, basic strength of the science and technology industry, and comprehensive national strength.” In response to the industry's potential market space and the urgency of refinancing projects, Aerospace Technology said, “Against the backdrop of strong domestic civil aviation market demand, China's civil aviation manufacturing industry will usher in opportunities for booming development, creating a second growth curve for upstream and downstream industry chain enterprises.”