Jindi Holdings Responds to Convertible Bond Inquiry; 970 Million Yuan in Fundraising Allocated to Three Major Projects

Shandong Jindi Precision Machinery Technology Co., Ltd. (hereinafter referred to as “Jindi Co., Ltd.”) recently issued a reply report to the inquiry letter regarding the review of the application documents for the issuance of convertible corporate bonds to unspecified targets. The report provides detailed explanations on core issues such as the fundraising projects and operating conditions. The company plans to raise no more than 970 million yuan, which will be used for high-end equipment key component intelligent manufacturing projects, joint module precision component and semiconductor heat sink intelligent manufacturing projects, and to supplement working capital.

Fundraising Projects Focus on Main Business Expansion with Cautious and Reasonable Benefit Estimates

Among the fundraising projects, the high-end equipment key component intelligent manufacturing project has a total investment of 750 million yuan, with plans to use 646 million yuan of raised funds to build production bases in Chongqing and Hanshan. Once operational, it can produce 2.1 million motor stators, 1.95 million motor rotors, and 60,000 sets of low-altitude aircraft motors annually. The joint module precision component and semiconductor heat sink intelligent manufacturing project has a total investment of 168 million yuan, with plans to use 162 million yuan of raised funds. After reaching full capacity, it will produce 30 million semiconductor heat sinks and 3.5 million harmonic reducer flexible wheels annually. Additionally, the company plans to use 162 million yuan of raised funds to supplement working capital.

Regarding benefit estimates, the high-end equipment key component intelligent manufacturing project is expected to achieve annual sales of 2.2125 billion yuan after reaching full capacity, with a comprehensive gross profit margin of 16.11%, which is consistent with the gross profit margins of industry peers such as Wolong Electric Drive and Inovance Technology. The joint module precision component and semiconductor heat sink project is expected to generate annual sales of 299.5 million yuan with a gross profit margin of 43.90%. The company states that this high gross profit margin is mainly due to replacing traditional forging with precision punching processes to achieve full-chain cost reduction.

Adjustments to Previous Fundraising Projects Are Reasonable; Non-Capital Expenditures Are Compliant

Regarding changes to previous fundraising projects, Jindi Co., Ltd. stated that adjustments were made based on overall strategic layout and operational development needs. Before the change, non-capital expenditures accounted for 27.43% of the previous fundraising, and after the change, non-capital expenditures accounted for 27.88% of the planned investment amount. The actual non-capital expenditure ratio was 23.40%, which complies with relevant regulations.

In response to market concerns about the relatively low utilization of funds in some previous projects (such as the intelligent manufacturing upgrade of high-end equipment precision bearings retainers at 42.11%, and the technical research center and capacity transformation of automotive precision stamping parts at 55.53%), the company explained that these were mainly due to changes in customer demand and capacity layout adjustments. The related assets can still be used in the future, and follow-up investment plans have been formulated.

Operating Performance Meets ROE Requirements; Asset-Liability Structure Is Reasonable

Financial data shows that the company’s weighted average return on net assets (ROE) for the past three years (2023-2025) was 8.72%, 3.90%, and 6.05%, respectively, with an average of 6.22%, meeting the requirement that “the weighted average ROE for the most recent three accounting years is not less than 6%.” In 2025, the company’s operating income, net profit attributable to the parent, and net profit after non-recurring gains and losses increased by 49.07%, 47.86%, and 60.60%, respectively, mainly due to increased delivery of the series of rotor products and wind turbine bearing cages.

Although the company’s asset-liability ratio increased during the reporting period (47.38% at the end of September 2025), and net cash flow from operating activities turned negative, the company stated that the asset-liability ratio remains below the industry peer average. After financing accounts receivable and notes receivable as cash equivalents and adjusting for note endorsements for equipment payments, operating cash flow has turned positive. Even if future basic operating cash flow turns negative, the company has sufficient funds to repay bond principal and interest, with no repayment risk.

Accounts Receivable and Inventory Management Are Steady

During the reporting period, the company’s accounts receivable turnover rate declined, mainly due to a 19.26% increase in operating income and a 65.37% increase in accounts receivable balance, consistent with industry trends. In 2024, the amount of impairment losses on accounts receivable increased mainly because of the expansion of accounts receivable and the provision for bad debts based on aging. As of each period end, the collection rate for receivables after due date was over 90%, with sufficient provisions for bad debts.

The proportion of consignment sales revenue increased year by year, reaching 30.25% from January to September 2025, with major customers including SKF, BYD, and others. The company conducts regular inventory counts of consigned goods, with a counting accuracy rate above 83%, consistent with industry peers. Adequate provisions for inventory obsolescence have been made, with inventory write-downs accounting for 4.11% of inventory at the end of 2024, roughly in line with comparable companies.

Financial Investments Are Compliant; Growth of Fixed Assets Is Reasonable

As of the end of September 2025, the company had no significant financial investments. In the six months prior to the board resolution for this issuance, the company has not engaged in or planned any financial investments. The increase in fixed assets and construction in progress mainly results from business expansion, capacity enhancement, and overseas deployment. Construction in progress is transferred to fixed assets in a timely manner, with no delays. The non-capital expenditure from this fundraising accounts for 19.11%, below the 30% limit, complying with relevant regulations.

The reviewing accounting firm has verified the above matters and believes that the scale of this financing is reasonable, the benefit estimates are prudent, the financial structure is sound, and there are no significant repayment risks.

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