Fulai New Materials' Private Placement Approved: Analysis of Impacts on Capital Structure and Business Expansion

I have now collected sufficient information to provide you with a comprehensive analysis of Fulai New Materials’ approved private placement.

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Fulai New Materials (Stock Code: 605488.SH) received a reply from the China Securities Regulatory Commission on January 13, 2026, approving the company’s registration application for issuing shares to specific targets. The approval is valid for 12 months from the date of registration approval [1].

Item	Amount/Quantity
Total Raised Capital	No more than RMB 710,000,000
Number of Shares Issued	No more than 84,062,775 shares (inclusive)
Percentage of Pre-Issuance Total Share Capital	No more than 30%

Serial No.	Project Name	Planned Raised Capital (RMB 10,000)	Percentage
1	Label and Marking Printing Materials Expansion Project	24,320.00	34.25%
2	Electronic-Grade Functional Materials Expansion and Upgrading Project	22,050.00	31.06%
3	R&D Center Upgrading Project	3,630.00	5.11%
4	Supplement Working Capital	21,000.00	29.58%
Total	-	71,000.00	100%

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As of December 31, 2024, the company’s net assets attributable to shareholders of the listed company were RMB 1.425 billion [2]. The net proceeds from this private placement are expected to be approximately RMB 710 million, which will increase the company’s net asset size by about 50% and significantly enhance its capital strength.

Based on the company’s 2024 financial data:

• Total Assets: RMB 3.504 billion
• Net Assets Attributable to Shareholders of the Listed Company: RMB 1.425 billion
• Asset-Liability Ratio: Approximately 59.3%

After the completion of the private placement:

• Net assets will increase by approximately RMB 710 million
• Total assets will increase accordingly
• The asset-liability ratio is expected to drop to around 50%
• Current ratio and quick ratio will be significantly improved

In 2024, the net cash flow generated by the company’s operating activities was -RMB 7.0394 million, showing a net outflow status [2]. RMB 210 million of the raised funds from this private placement will be used to supplement working capital, which will effectively improve the company’s cash flow situation, ease the pressure on working capital, and provide sufficient financial support for daily operations and project investment.

According to the company’s private placement plan estimates, after the completion of this issuance, if the company’s profit does not increase by a corresponding margin, there will be a risk of dilution of immediate returns. The company expects that the basic earnings per share in 2025 will drop from RMB 0.40 to RMB 0.38 (after issuance) [3].

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RMB 289.3277 million (planned raised capital usage: RMB 243.2 million)

• Label and marking printing materials are one of the company’s core businesses, and the operating revenue of this business segment grew steadily in 2024
• The expansion will further consolidate the company’s leading position in this segmented field
• Respond to the national support policy for functional film materials in the Industrial Structure Adjustment Guidance Catalogue (2024 Edition)
• Meet the continuously growing demand for label materials from downstream industries such as food and beverages, and daily chemical products

RMB 277.9399 million (planned raised capital usage: RMB 220.5 million)

• In the first half of 2024, the revenue of electronic-grade functional materials increased by 72.02% year-on-year, showing a significant growth rate [4]
• Aligns with the company’s strategic transformation layout in the smart sensing field
• The company’s independently developed “electronic skin” product has completed multiple iterations and achieved mass supply
• In September 2025, the company established a wholly-owned subsidiary Apex Sensing LLC in California, USA, to expand the North American market
• This project will promote the company’s transformation from a material supplier to a smart sensing solution provider

RMB 63.5723 million (planned raised capital usage: RMB 36.3 million)

• Strengthen the company’s core R&D capabilities and provide continuous innovative impetus for the development of its main business
• Promote product technology upgrading and maintain technological leading advantages
• Strengthen cooperation with authoritative institutions such as Zhejiang Tsinghua Flexible Electronics Research Institute and Tongzhi Artificial Intelligence Technology (Beijing) Co., Ltd.
• Accelerate the integrated innovation of flexible sensing technology and AI algorithms in terminal applications

RMB 210 million

• Support the working capital demand brought by the continuous expansion of the company’s business scale
• Enhance the company’s ability to resist risks from macroeconomic fluctuations and industry cycles
• Provide financial support for the company’s “industrial integration, application diversification” strategy

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The company adheres to the dual-drive strategy of “industrial integration, extension of multiple application fields”, and this private placement will further strengthen this strategy:

Synergy Field	Specific Measures
Industrial Integration	Continue to improve the upstream industrial chain layout and increase the self-sufficiency rate of base films
Application Diversification	Expand to emerging fields such as smart sensing, new energy, and environmental protection packaging

As the first enterprise in China’s inkjet printing composite materials industry to realize the integration of base films, adhesives, and coating, the company will further achieve the following through this private placement:

• Enrich product types
• Increase customer stickiness
• Reduce production costs
• Enhance comprehensive competitiveness

The company’s third-generation tactile sensing system has achieved a leap from “raw data” to “intelligent perception”:

• Spatial resolution reaches <100 microns (hair strand level)
• Realize the leap from “touching” to “understanding through touch” through algorithm upgrading
• The private placement funds will accelerate the productization and commercialization process of this technology

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1. Risk of Dilution of Immediate Returns:
   If the company’s profit growth fails to keep pace, it will lead to a decline in earnings per share
2. Project Construction Cycle Risk:
   The construction of fundraising projects requires a certain period, and there is a possibility of delay or failure to meet expectations
3. Market Competition Risk:
   The functional coating composite materials industry is highly competitive, and price wars continue
4. Raw Material Price Fluctuation Risk:
   The cost of raw materials such as PP synthetic paper and PET films accounts for a relatively high proportion
5. Macroeconomic Cycle Risk:
   Downstream demand is cyclical due to the impact of domestic and international macroeconomics

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The approval of Fulai New Materials’ private placement will have positive and far-reaching impacts on the company:

The company’s net asset size will be significantly increased, the asset-liability ratio will decrease, the liquidity status will be significantly improved, and financial stability will be enhanced.

The raised capital will be accurately invested in three core areas: label and marking printing materials expansion, electronic-grade functional materials upgrading, and R&D center upgrading. This is highly aligned with the company’s “industrial integration, application diversification” strategy and will accelerate the company’s strategic transformation into a smart sensing solution provider.

Through this private placement, the company will further consolidate its leading position in the industry, enhance its core competitiveness, and create sustainable long-term value for shareholders.

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[1] National Business Daily - Fulai New Materials: Private Placement Application Obtains CSRC’s Approval for Registration (https://www.nbd.com.cn/articles/2026-01-13/4218265.html)
[2] Zhejiang Fulai New Materials Co., Ltd. 2024 Annual Report Summary (http://dataclouds.cninfo.com.cn/shgonggao/2025/2025-03-29/d5a42ec40bb011f08f3efa163e957f7a.pdf)
[3] Zhejiang Fulai New Materials Co., Ltd. Plan for Issuing A-Shares to Specific Targets (https://file.finance.qq.com/finance/hs/pdf/2025/09/03/1224634686.PDF)
[4] Zhejiang Fulai New Materials Co., Ltd. 2024 Semi-Annual Report (http://dataclouds.cninfo.com.cn/shgonggao/2024/2024-08-16/ea8a11d05aea11ef8096fa163e26e5de.pdf)
[5] Zhejiang Fulai New Materials Co., Ltd. Investor Relations Activity Record (https://pdf.dfcfw.com/pdf/H22_AN202511271789391951_1.pdf)