Dongbao Bio plans to invest an additional 57.75 million yuan of its own funds to expand production, focusing on increasing plant capsule capacity, with the project postponed until March 2027.

On March 29, Tobao Biotech (300239.SZ) issued an announcement stating that the company decided to make an additional investment of RMB 57.7487 million in the “New Type of Hollow Capsule Intelligent Industrialization Expansion Project,” to use all funds from its own account, and to adjust the internal investment structure of the project. At the same time, the date when the project is expected to reach its planned usable condition was deferred from December 2026 to March 2027.

The announcement shows that the project’s original total investment plan was RMB 401.2317 million, of which RMB 400.0 million was intended to be funded by raised funds and RMB 1.2317 million by the company’s own funds. After this additional investment, the project’s total investment amount will be adjusted to RMB 458.9804 million; the amount of raised funds to be used will remain unchanged, while the company’s own-funds contribution will increase to RMB 58.9804 million.

Major Adjustment to Production Capacity Structure, Plant Capsule Capacity Increases by 333%

The company made a significant adjustment to the product structure of the project, focusing on increasing the capacity of plant capsules. The specific adjustment details are as follows:

Based on the adjustment data, the capacity of hydroxypropyl methylcellulose hollow capsules increased substantially from 1.5 billion capsules to 8 billion capsules, an increase of 333%; the capacity of gelatin hollow capsules decreased by 4.3 billion capsules; and the pullulan polysaccharide hollow capsules were completely discontinued. After the adjustment, the project’s total production capacity increased from 30 billion capsules to 32 billion capsules, a net increase of 2 billion capsules.

Optimization of Investment Structure, Improvement in Level of Intelligence

In terms of the internal investment structure of the project, the company also made corresponding adjustments:

After the adjustment, construction investment increased by RMB 79.015 million, mainly used for the increase in engineering costs. Among them, turnkey construction and installation engineering costs increased by RMB 42.0461 million, and equipment and installation costs increased by RMB 48.6804 million. The company said that the新增 investment will mainly be used to enhance the line’s level of intelligence and strengthen the flexible supply capability of plant hollow capsules.

Market Demand Drives Adjustment, Enhancing Global Competitiveness

Tobao Biotech stated that the main basis for this adjustment is changes in market demand. With the deepening of the global health consumption concept, demand for plant hollow capsules has been steadily expanding. The company is grounded in a global perspective and adheres to a product strategy of coordinated development of animal hollow capsules and plant hollow capsules. This adjustment aims to steadily ensure the demand of animal hollow capsules, further strengthen the supply capability of plant hollow capsules to match incremental demand, and enhance the company’s overall supply-chain resilience and competitiveness in international markets.

After the project is completed and fully reaches production capacity, it is expected to generate annual sales revenue of RMB 3,600.00 million (excluding tax). The average annual net profit will be RMB 57.2488 million. The project’s total investment internal rate of return before tax is 15.10%, and the payback period for investment before tax is 8.5 years (including the construction period).

Compliant Approval Procedures; Sponsor Has No Objection

This matter has been reviewed and approved by the company’s 15th meeting of the ninth session of the board of directors. The audit committee and the strategic committee of the board of directors have also approved it, and there is no need to submit it to the shareholders’ meeting for approval. The sponsor, China Merchants Securities, issued a review opinion with no objection, stating that the decision-making procedures for this matter are lawful and compliant, and comply with relevant laws and regulations and normative documents. There is no situation of indirectly changing the use direction of raised funds.

The company emphasized that this adjustment does not change the implementation entity, implementation method, or the amount of raised funds intended to be used for the raised-funds projects. It will not have an adverse impact on the company’s normal operations. It is a prudent decision made based on market trends and the actual circumstances of project implementation.

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