HuaWu Co., Ltd. terminates the 320 million yuan aerospace equipment fundraising project and plans to permanently allocate the remaining funds to supplement working capital.

On March 24, Hua Wu Co., Ltd. (300095) released an announcement stating that the company has decided to terminate the “Aviation Equipment and Aviation Parts Research and Development and Manufacturing Base Project” included in the company’s stock offering to specific targets in 2021, and plans to permanently supplement its working capital with the remaining proceeds from the project. The matter has been considered and approved by the company’s board of directors and still needs to be submitted to the shareholders’ meeting for approval.

The announcement shows that the project originally planned to invest 320 million yuan in fundraising proceeds. As of January 31, 2026, the company had actually invested 31.5054 million yuan, accounting for less than 10% of the planned investment. The company said that the project is mainly being terminated due to major changes in the industry environment for aviation parts, which makes it difficult to realize the project’s expected returns.

Project Termination Background: Industry Environment Undergoes Major Changes, Leading to Ongoing Deterioration in Subsidiary Performance

Hua Wu Co., Ltd. stated that in recent years, the competitive environment in the aviation process equipment and parts manufacturing sector in which its wholly owned subsidiary, Sichuan Ande Technology, operates has undergone significant changes. With the advancement of equipment procurement reform within the armed forces, the aviation segment has fully shifted from a military pricing review model to a price-comparison bidding model. Low-price winning bids have become the norm, and companies in the same industry have fallen into vicious competition in order to secure orders. As a result, product prices have continued to fall. Prices of conventional technical equipment have been compressed to around cost prices, and the industry ecosystem has kept worsening.

Financial data shows that Ande Technology’s performance has continued to decline in recent years:

It is understood that after the project was scheduled to enter a period of stable performance, its gross profit margin was 44.20%, but Ande Technology’s gross profit margin in the first three quarters of 2025 has dropped to 3.19%, far below expectations. The company said that the continued deterioration of the industry’s overall profitability reflects that the aviation manufacturing supporting sector has entered a period of deep adjustment. If the company continues to invest large amounts of fundraising proceeds for fixed-asset construction according to the original plan, it will face the risk that the新增 production capacity cannot be effectively absorbed.

Project Fund Usage and Plan for Remaining Funds

Since the project started in 2021, it has been delayed twice. The company initially planned to complete it on December 31, 2024, but extended it to June 30, 2026. As of January 31, 2026, the project’s fund usage is as follows:

It is worth noting that the above dedicated account balance does not include the 120 million yuan already used for temporary working capital supplementation and the 100 million yuan募集资金 used for cash management. The company said that the amount planned for permanent working capital supplementation this time will include the remaining fundraising proceeds, investment income obtained from cash management, cumulative bank deposit interest received, and the net amount after deducting bank service charges. The actual amount will be based on the balance in the dedicated account for募集资金 on the day the funds are transferred out and the account is closed.

Positive Significance of Terminating the Project

Hua Wu Co., Ltd. stated that terminating the project and permanently supplementing working capital with the remaining fundraising proceeds has multiple positive implications:

First, it can effectively put idle funds to use to repay part of interest-bearing loans. With a permanent working capital supplementation amount of approximately 300 million yuan, based on the current one-year loan benchmark interest rate of 3.0%, the company estimates that it can save about 9 million yuan in financial expenses each year, directly increasing the company’s profit.

Second, as an industrial braking device is a core business of the company with a solid market position, using募集资金 to supplement day-to-day operations can further support the main business in areas such as technical research and development, market expansion, and capacity upgrades, thereby consolidating and enhancing core competitiveness.

In addition, terminating this project can effectively avoid investment risks arising from the continued downturn in the industry, and avoid a passive situation in which fixed assets are left idle and returns are not as expected. Supplementing working capital can also enhance the company’s financial robustness and risk resilience.

Opinions of the Board of Directors and the Sponsoring Institution

The company’s board of directors believes that the termination of the company’s fundraising projects and the permanent supplementation of working capital with the remaining fundraising proceeds is a prudent decision made by the company in light of changes in the industry and market environment, the company’s business development plans, and the actual situation of the projects. It is consistent with the company’s strategic direction of “focusing on the main business,” and is conducive to improving the efficiency of fundraising proceeds usage, with no circumstances harming shareholders’ interests.

The sponsoring institution, Shenwan Hongyuan Securities (Sponsoring) Co., Ltd., has no objection to this matter. It believes that the matter complies with the relevant laws and regulations, has fulfilled the necessary approval procedures, and is in the interests of all shareholders.

According to the announcement, after the matter is approved by the shareholders’ meeting, the company will办理相关募集资金专户销户手续. After the dedicated account is deregistered, the募集资金监管协议 signed by the company with the sponsoring institution and the opening bank will be terminated accordingly.

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Responsible editor: Xiao Lang Express News