"Raise $850M via Share Issue to Major Shareholder for Smart Manufacturing Upgrade"

On the evening of October 13th, Xiliumen (603008.SH), a leading sleep technology company in China, announced its preliminary plan for a private placement of A-shares to specific investors for the year 2024. The company intends to raise a total of no more than 850 million yuan, which will be primarily used for the construction of the Smart Home Industrial Park Project (Phase II) and to supplement working capital. This private placement plan has received support from the company's board of directors and the controlling shareholder, marking Xiliumen's continued efforts in the field of intelligent manufacturing, which is expected to further enhance the company's competitiveness and market position in the industry.

The controlling shareholder's increase in holdings demonstrates confidence and maintains a long-term strategic layout for the future.

According to the announcement, the company plans to issue 66.3544 million shares at a price of 12.81 yuan per share to Anhui Xinhong Equity Investment Co., Ltd. (hereinafter referred to as "Xinhong Investment"). Through this private placement, Xiliumen will further consolidate the controlling shareholder's shareholding ratio, increasing from 35.33% before the issuance to 44.97%, ensuring the stability of Xiliumen's control rights and sending a positive signal to the market, showing the controlling shareholder's firm confidence in the company's future development.

Mr. Chen Ayu, the actual controller of the company, has further strengthened the management's control over the company's long-term development direction and strategic layout through this move. Against the backdrop of intensifying competition in the home furnishing industry, Xiliumen's further enhancement of shareholder support through the capital market is conducive to boosting market confidence and promoting the company's continuous and healthy development.

The increase in holdings by the controlling shareholder also sends a positive signal to the market, which is expected to boost investor confidence and drive the company's stock performance.

Smart Industrial Park Project layout aids in the upgrade of the home furnishing industry.

According to the issuance plan, 650 million yuan of the raised funds will be used for the construction of the Xiliumen Smart Home Industrial Park Project (Phase II). The project is located in Anyuan District Industrial Park, Pingxiang City, Jiangxi Province, with a total investment of about 758.6 million yuan, including land purchase fees, construction investment, equipment and software procurement, and working capital allocation.

The project is mainly used to expand the production capacity of mattresses, soft beds, sofas, and other supporting products, aiming to improve manufacturing efficiency through advanced automation and intelligent equipment to meet the company's growing market demand. In recent years, with the trend of consumption upgrading, consumers' attention to sleep quality has gradually increased, and the mattress market has shown a continuous expansion trend. Data from the Forward Research Institute shows that the market size of China's mattress industry in 2022 has reached 75.2 billion yuan, and it is expected to have a compound annual growth rate of 4% in the future, with the market size reaching 84 billion yuan by 2028.

Xiliumen's existing production bases are facing capacity bottlenecks, with the utilization rate of mattress and soft bed products maintaining at more than 80% in recent years, and the sales rate also exceeding 95%, showing the high load operation of the company's production capacity. This expansion project will effectively alleviate the company's current insufficient production capacity and further enhance its scale effect.

Optimize production capacity layout and strengthen regional supply chain.As the market demand for the company continues to rise, a rational production capacity layout has become key for Xilengmen to maintain a competitive edge. Currently, the company has established eight major production bases across the country, covering all regions from southeast to northwest and central areas, relying on a robust supply chain management system to accelerate order response times. The upcoming Smart Home Industrial Park project (Phase II) will further enhance the company's supply chain network efficiency in the South China and Central China markets.

Jiangxi Pingxiang, chosen as the location for the new production base, leverages its superior geographical location and relatively lower production costs to effectively reach multiple provinces and cities, including Hunan, Guizhou, and Guangdong. Once the project is completed, the company will not only further reduce product delivery cycles but also enhance overall production and operational efficiency, laying a solid foundation for the national channel layout.

Foam is one of the important raw materials for mattress and sofa production. Xilengmen's expansion project will also include the construction of a foam production line to achieve self-sufficiency in the raw material supply chain. By producing independently, the enterprise can not only reduce the cost of raw material procurement but also control product quality from the source, thereby ensuring product competitiveness while further increasing profit margins.

Policy incentives and market opportunities drive smart home layout

Xilengmen's non-public offering is not only part of the company's internal strategic adjustment but also benefits from national policy support. In recent years, the government has continuously promoted consumption upgrades and encouraged the development of the smart home industry. The government work report for 2024 clearly proposes to stabilize and expand consumer demand, promoting high-quality development in several fields, including smart homes.

The People's Bank of China and the China Banking and Insurance Regulatory Commission have also introduced a series of policies to support the recovery of housing consumption and the furniture market. With the release of the "Notice on Several Measures to Promote Home Consumption," the home market has been driven by policy incentives. The policy focuses on supporting the innovative research and development, green manufacturing, and full-life-cycle management of smart home products, helping home enterprises to improve product quality and brand influence.

In this context, Xilengmen's smart industrial park project aligns with national policy directions. By technological innovation and intelligent manufacturing, Xilengmen will seize the opportunity for the transformation and upgrading of the home industry, providing more growth momentum for future business development.

Intelligent manufacturing and innovation drive, creating a benchmark in the home industry

Through this non-public offering, Xilengmen not only strengthens its foundation on the capital level but also provides strong support for future development layout. The use of raised funds will focus on increasing production capacity, improving operational efficiency, and meeting the growing market demand. The implementation of the smart home industrial park project will bring more market opportunities for Xilengmen and further consolidate its leading position in the high-end home market.

In the future, as smart homes and consumption upgrades continue to deepen, competition in the home industry will become increasingly fierce. Xilengmen, through this non-public offering, will not only stand firm in the industry transformation but also continue to lead the industry development through intelligent manufacturing, green home research and development, and application. Intelligent and automated production models will improve product quality, enhance market competitiveness, and provide consumers with higher-quality home solutions.More importantly, this non-public issuance marks the dual advancement of Xilium in smart home and capital operations. By expanding production capacity, optimizing layout, and enhancing working capital, Xilium will further improve the company's operational capabilities and market competitiveness. In the future, as the smart home industry continues to mature and market demand gradually releases, Xilium will achieve leapfrog development with its innovation capabilities and strategic layout, becoming a leading enterprise in the industry.