After more than three years on the market, Southern Road Machinery plans to change nearly 70% of its IPO fundraising: zero investment in the Hubei Xiantao base project, shifting back to Quanzhou to build a new industrial park.

Ask AI · Why did South Road Machinery’s Xiantao project see zero investment after going public?

EveryDaily News Reporter: Wen Duo    EveryDaily News Editor: Chen Junjie

After more than 3 years of listing, an important IPO (initial public offering) project of South Road Machinery (SH603280, share price 35.10 yuan, market cap 3.805 billion yuan) has seen major adjustments to the planned use of proceeds.

On March 26, South Road Machinery announced that it intends to reallocate all remaining proceeds of approximately 440 million yuan originally planned for the “Xiantao production base expansion and R&D center construction project” and the “smart IoT system platform construction project” to a new project located in Quanzhou, Fujian—“South Road Machinery Intelligent Manufacturing Equipment Industrial Park Project (Phase I).”

It is noteworthy that the funds being changed represent 68.31% of the company’s net IPO proceeds raised in 2022. Among them, the Xiantao production base project, originally planned to invest 350 million yuan, has had zero investment as of the end of February 2026.

Plan to invest approximately 440 million yuan into a new project in Quanzhou

According to the announcement released by South Road Machinery on March 26, the two original proceeds projects—the “Xiantao production base expansion and R&D center construction project” and the “smart IoT system platform construction project”—had a combined remaining balance of proceeds of 440 million yuan as of February 28, 2026, including interest generated from the proceeds and wealth-management investment gains.

The new project is planned to be located in Zhangba Town, Zhangzhou City, Fujian Province, with a total investment amount as high as 70,034.97 million yuan. This means that, in addition to the reallocated proceeds of nearly 440 million yuan, there is still a funding gap of approximately 260 million yuan. The company stated that the gap will be resolved by the project implementation entity using its own or self-raised funds. The implementation entity of the new project is a newly established subsidiary of South Road Machinery—South Road Machinery Intelligent Equipment Manufacturing (Fujian) Co., Ltd.

As disclosed in the announcement, the construction period of the new industrial park is 2 years. It will mainly be used to expand production capacity for products such as original aggregate processing and handling equipment, engineering mixing equipment, and aggregate recycling and reprocessing equipment. South Road Machinery stated in the announcement that this move is intended to meet new construction and existing inventory upgrade demands in the downstream market, further consolidating the company’s market position.

The proposal has already been approved by the company’s board of directors, but it still needs to be submitted to the company’s shareholders’ meeting for consideration. At the same time, the new project also needs to complete filing or approval procedures with relevant government departments.

Why did the original Xiantao base project have zero investment for many years?

Of all the changes, the most attention-grabbing is the old project that was originally planned to be invested in Xiantao, Hubei.

According to available information, the original “Xiantao production base expansion and R&D center construction project” had a total planned investment of 351 million yuan, and the implementation entity was a subsidiary of the company located in Xiantao. However, since the proceeds were received in November 2022, the usage progress of the proceeds for this project has been zero throughout.

Regarding why South Road Machinery “gave up” the Xiantao project and instead built a new base in Quanzhou, the company provided an explanation in the announcement. The company said that when the project was planned before the IPO, due to Quanzhou—where the parent company is located—not obtaining suitable land for the proposed proceeds project, the company chose Xiantao, Hubei as the implementation location.

After the company went public in November 2022, the situation changed. Local governments in Quanzhou actively supported the company’s plans to expand its production base to support the newly listed enterprise. Based on the company’s management’s strategy for future development, it decided to prioritize expanding its production base in Quanzhou, where the parent company is located, and it has already reached an investment cooperation agreement with the local government.

Another proceeds project that was also changed—the “smart IoT system platform construction project”—was originally planned to invest nearly 70 million yuan. As of the end of February 2026, it had cumulatively used proceeds of 78.515 million yuan.

The company explained that in recent years, with the rapid development of new technologies such as 5G and artificial intelligence, customers’ requirements for smart IoT platform solutions have been continuously increasing, which has led to greater complexity in the platform design. Combined with factors such as changes in the market environment, the company slowed the project progress. To improve the efficiency of capital utilization, it decided to change all remaining funds for this project at once. The company said that going forward, it will use its own funds to continue advancing the construction of the smart IoT system platform.

Daily Economic News