Interview with Chairman of Sichuan Shuka Special Fiber Co., Ltd.

In order to enable investors to have a better understanding of the shareholding reform of Sichuan Shuka Special Fiber Co., Ltd. and the company's business development prospects, the reporter conducted a special interview with Mr. Li Fenglin, Chairman of Sichuan Shuka Special Fiber Co., Ltd. The situation is as follows:
Reporter (recorded below): May I ask how do you know about this reform of share structure? Does it really have positive significance for promoting business operations?
Li Fenglin (hereafter Li): This split share structure reform will help solve the deep-seated institutional problems in my country's stock market. A more reasonable corporate governance structure and equity structure can better protect the interests of all shareholders. Moreover, after the share structure reform is completed, the resource allocation role of the capital market will be more rationally played, which will help the long-term development of listed companies.
The share structure reform has positive significance for all shareholders. Specifically, for shareholders of tradable shares, firstly, the consideration paid by shareholders of non-tradable shares has been obtained; secondly, the solution to the problem of share split makes the interests of shareholders of tradable shares and shareholders of non-tradable shares no longer conflict, and listed companies will Pay more attention to the communication and exchanges with investors, and the corporate governance structure and operation management of listed companies will be further improved; finally, the reform of shareholding structure will also enable the company to implement integration, mergers and acquisitions through innovative financial varieties and innovative capital operation methods in the future. Lay a good foundation.
All of the above will be beneficial to the future development of listed companies and the enhancement of their value, and shareholders of tradable shares will naturally benefit from it.
Note: The company has shifted its main business to the spandex industry through asset replacement and asset acquisition. Will the acquired spandex assets help the company improve its asset quality and profitability?
Li: Our company was a comprehensive listed company in the past, mainly engaged in hotel management, with scattered investment and poor asset quality. Due to internal and external restrictions and fierce market competition, the operating conditions have not been ideal. Through asset restructuring, the controlling shareholder injected spandex assets into the company. Spandex industry is an emerging industryAfter asset reorganizationThe company transformed its main business to spandex industry through asset replacement and asset acquisition. In 2003 and 2004, the economic benefits of the spandex project were good, and the company's main business income And profitability has been greatly improved. From September 2003 to December 2003, the replaced special fiber company achieved sales revenue of 70.68 million yuan, and the company’s consolidated net profit according to the shareholding ratio was 13.5 million yuan; in 2004, the company’s spandex assets realized sales revenue of 211.12 million yuan. According to the shareholding ratio, the consolidated net profit was 16.92 million yuan. Since the beginning of 2005, due to the rise in oil prices, the price of spandex raw materials has risen. At the same time, downstream manufacturers have faced the impact of product export trade barriers, and domestic competition in the same industry has intensified, resulting in a decline in the company's economic benefits. However, with the fall of international crude oil prices and the country's intervention in Europe and the United States to impose restrictions on my country's textile exports, the market for spandex products will gradually improve, and the profitability of the spandex industry, an emerging industry, will once again emerge.
Reporter: Since the spandex industry in 2005 faced the unfavorable situation of rising raw material prices and insufficient production capacity of downstream manufacturers, why did the company bring the major shareholder Hengchuang Special Fiber Company into the company at the end of 2005? How is the operation of Hengchuang Special Fiber?
Li: Spandex assets played a positive role in improving the company's asset quality and profitability in 2003 and 2004, but the changes in the situation since the beginning of 2005 had a negative impact on the company. Considering that the recovery of the spandex industry will take some time, the major shareholder injected the deep-processed product of the spandex industry - the project of fine denier covered yarn with high technical content (namely Hengchuang Special Fiber Company) into the company through asset replacement. Hengchuang Special Fiber Co., Ltd. is currently the largest covered yarn manufacturer in China. It is located in Dujiangyan City. It was established in 2003 and started production in April 2004. It is mainly engaged in the production of fine denier covered yarn with high technical content. It has a large number of world-class advanced equipment and advanced production technology. Its product quality and production scale are in the forefront in China. The added value of the product is high, and the emerging market of fine denier covered yarn will have a better market development trend in the next few years. In 2005, Hengchuang Special Fiber Co., Ltd. produced and sold 800 tons of fine denier covered yarn, and achieved a sales income of 100 million yuan. In 2006, it is expected to produce and sell 1,000 tons of fine-denier covered yarn, and realize a sales income of about 120 million yuan.
Note: The company has connected transactions with the major shareholder Shuangliang Technology and its holding company. Please explain the necessity of this connected transaction, the main products sold, and the pricing principles.
Li: The thermal power branch of Jiangsu Shuangliang Technology Co., Ltd. is specially equipped for the spandex project, providing electricity, steam, and demineralized water for spandex production. Jiangsu Shuangliang Special Fiber Co., Ltd. and Jiangyin Shuka Fiber Co., Ltd., the company's holding subsidiaries, purchase electricity, steam and demineralized water from the thermal power branch nearby, which is a related transaction. The pricing principle of power trading is: the power consumer pays the electricity cost to the power supply party on a monthly basis according to the power supply cost standard and the monthly statistics of electricity consumption �It is an agreement between all kinds of shareholders when a shareholder purchases a stock. Now to change this agreement, shareholders of non-tradable shares must pay a certain price, which is the consideration. Such consideration is not in the nature of compensatory loss. The principle of Shuka's stock reform consideration is to ensure that the interests of shareholders of tradable shares are not damaged, and shareholders of non-tradable shares pay shares to shareholders of tradable shares as a consideration arrangement to obtain circulation rights.
Reporter: What are the arrangements for the company's stock suspension, resumption of trading, shareholding registration date, and relevant shareholder meetings?
Li: The equity registration date of the relevant shareholder meeting: February 6, 2006
The date of the on-site meeting of the relevant shareholder meeting: February 14, 2006
The online voting of the relevant shareholder meeting Time: February 10, 2006 to February 14, 2006.
The specific time for online voting through the trading system of the Shenzhen Stock Exchange is from February 10, 2006 to February 14, 2006 on 9.30-11.30, 13.00-15. 00 The specific time for online voting through the Internet voting system of the Shenzhen Stock Exchange is from 9:30 on February 10, 2006 to 15:00 on February 14, 2006.
The company's board of directors related securities have been suspended since January 9, 2006, and will resume trading on January 19, 2006 at the latest. This period is the communication period for shareholders.
The board of directors of the company will announce the communication and negotiation between shareholders of non-tradable shares and shareholders of tradable shares and the reform plan determined through consultation before January 18, 2006 (including the day), and apply for the company's relevant securities to be traded after the announcement Daily resumption of trading.
If the board of directors of the company fails to announce the negotiated reform plan before January 18, 2006 (including the day), the company will publish an announcement announcing the cancellation of the relevant shareholder meeting, and apply for the company's relevant securities to be issued after the announcement. Trading resumes on one trading day. Unless there are special reasons and the Exchange agrees to extend the time limit.
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