On October 28, 2024, - PRNewswire - On October 23, mainland steel curtain manufacturing leading enterprise Shougang Cent (103.HK) announced the completion of the 'Five Supply One' rights issue plan, issuing a total of 0.392 billion shares at a subscription price of HK$0.33 per share, raising a net total of HK$0.128 billion. The company's rights issue this time received an oversubscription of 108.49%, exceeding expectations, fully demonstrating the market's high recognition of the company's business prospects.

After the rights issue, the total share capital of the company will increase from the original 1.96 billion to 2.35 billion, calculated at the closing price of HK$0.335 on October 25, reaching a total market cap of HK$0.79 billion.

The company's announcement indicates that the main purpose of this rights issue is to optimize the capital structure and support the development of the company's business, enhancing the company's strength. Adequate funds during the rapid development phase can provide ample ammunition for future strategic development, supporting the accelerated achievement of various planning goals, thereby improving overall performance and ultimately bringing substantial returns to shareholders.

Firstly, in terms of changes in the share structure, the major shareholder Shougang Group retains an unchanged 44.91% shareholding ratio, still being the largest shareholder of the company. The new strategic shareholder, Redamancy.Z Holdings Limited, continues to subscribe through the rights issue, further increasing its share ratio after the rights issue, further reflecting confidence in the company's development. It also demonstrates its determination to further deepen the company's overseas business development and achieve maximum value integration.

Furthermore, this fundraising has further strengthened the company's financial strength, supporting the company's future strategic development plan. On the one hand, it helps the company seize the opportunity in the rapidly developing domestic steel cord market, increase production capacity, enhance industry influence, while also assisting in the rapid implementation of an international expansion strategy, boosting international market share. On the other hand, it helps the company further invest in R&D to continuously enhance its technological capabilities and create new quality production-enabled enterprises for rapid development.

Currently, under the global 'carbon neutrality' common goal, the rapid development of new energy vehicles has significantly driven the market's increasing demand for supporting tires, thereby promoting the continuous expansion of the domestic radial tire steel cord market. According to a market research report by Bezahl's, the size of China's steel cord market will reach 13.284 billion yuan in 2023, and the global market will reach 41.97 billion yuan. It is predicted that by 2029, the global steel cord market size will reach 54.99 billion yuan, with an annual compound growth rate of 4.39%. Facing the continued market demand growth, the company is steadily advancing its production capacity expansion plan to fully grasp the opportunities brought by market demand growth, with ample financial strength expected to accelerate the realization of the production capacity expansion plan.

In addition, compared to the saturated domestic market, the broader overseas market brings enormous development opportunities to enterprises. Market data shows that in 2024, China's automotive overseas expansion continues its strong momentum. From January to September this year, the total export volume of automobiles was 4.312 million vehicles, a year-on-year increase of 27.3%. The substantial increase in overseas automotive production capacity and sales volume is driving rapid growth in the radial tire steel cord market for exports. Overseas sales business usually have higher profit margins than domestic sales business. Abundant cash will help the company rapidly expand into the huge business opportunities in the overseas market, assist in continuously increasing the future overseas revenue in the company's business proportion, while establishing a comprehensive global sales, logistics, and service network, which is expected to significantly improve the company's overall performance and provide the company with a stronger competitive advantage.

At the same time, the company actively responds to the government's call for new quality production-enabled enterprises, insists on technological innovation, and over the past several years has continually overcome various challenges in R&D verification of new specifications, winning multiple technology awards, thereby continuously enhancing product competitiveness. In the future, the company will continue to invest more resources in the R&D field, continuously improve its technological capabilities, create high-quality products, further enhance the vitality and influence of its 'Dongfang' steel cord line brand.

From the company's stock price performance, since the end of April, the company's stock price has continued to rise significantly by 48.9%, outperforming the market during the same period, indicating market recognition of its strategic development and business prospects. The company's management stated that the company will continue to enhance its competitive advantage and profitability through R&D and product innovation, while gradually increasing production capacity and implementing overseas expansion strategies. in order to firmly seize the opportunities in the domestic and international markets to expand market share, steadily progressing towards the goal of becoming a leading enterprise in the infrastructure industry with an annual output of over 0.3 million tons of high-quality steel cord.