Recently, Songfa Co., Ltd., the listed entity of Hengli Heavy Industries, issued an “Announcement Regarding the Response to the Inquiry Letter on the Review of the Application for a Private Placement,” providing item-by-item responses to the “Inquiry Letter on the Review of the Application Documents for a Private Placement by Guangdong Songfa Ceramics Co., Ltd.” issued by the Shanghai Stock Exchange on April 3, 2026.
Songfa Co., Ltd. previously announced that on March 24, 2026, it received a notice from the Shanghai Stock Exchange stating that the Exchange had decided to accept and review, in accordance with the law, the prospectus and related application documents submitted by Songfa Co., Ltd. regarding the issuance of securities by a company listed on the Shanghai Stock Exchange Main Board.
Based on the Response to the Inquiry Letter Regarding the Review of the Application Documents for the Private Placement of Shares by Guangdong Songfa Ceramics Co., Ltd., as disclosed by Songfa Co., Ltd. on the Shanghai Stock Exchange, this response primarily addresses key issues such as the 7 billion yuan fundraising project and financing scale, as well as the company’s business and operational performance.
Upon review, the underwriter and the reporting accountants concluded that: the scale of the financing for Songfa Co., Ltd.’s investment projects—7 billion yuan (approximately $1.032 billion)—aligns with actual capital requirements and is both necessary and reasonable; the key metrics used in the projected returns on the investment projects are reasonable, and the relevant calculations are prudent; and the high gross profit margin in shipbuilding during the reporting period is reasonable and sustainable.
According to reports, Songfa Co., Ltd. plans to issue A-shares to no more than 35 specific investors, raising a total of no more than 7 billion yuan. The net proceeds, after deducting issuance expenses, are拟 to be invested in three major projects: the Integrated Green and Intelligent High-End Shipbuilding Project, the Supporting Upgrade Project for Green Shipbuilding Block Assembly at Hengli Shipbuilding (Dalian) Co., Ltd., and the Supporting Project for Berths 3–6 of the Green High-End Shipbuilding Project:
Songfa Co., Ltd. stated that the Green, Smart, and High-End Integrated Shipbuilding Project primarily involves the construction of production facilities for steel pre-treatment, steel cutting, assembly and welding, section pre-outfitting, section painting, and final assembly and outfitting, with the final product being complete vessels; The project includes the construction of a steel yard for storing various types of shipbuilding steel plates required for vessel production, as well as a section yard for storing the curved sections produced during the aforementioned manufacturing processes. The project essentially covers all major stages of shipbuilding.
The block supporting project mainly focuses on the construction of production facilities covering assembly and welding, block pre-outfitting, and block painting. Its output consists of large ship blocks, which serve as critical prefabricated components prior to ship hull erection. The project also includes supporting construction of a block storage yard for the stacking and storage of finished ship blocks from this production stage. The wharf project centers on upgrading the company’s quay outfitting capacity, covering production processes such as berth outfitting and quay-side painting.
It represents the final key working procedure in the complete shipbuilding process.
As of December 31, 2025, Songfa Co., Ltd. expects its capital expenditures over the next three years to exceed 22 billion yuan (approximately $3.243 billion). In addition to the three aforementioned fundraising projects, these include the Hengli Shipbuilding (Dalian) Co., Ltd. No. 8 Outfitting Wharf Project, the Hengli Heavy Industries Group Co., Ltd. International Ship R&D and Design Center Project (Phase I), the Green High-end Equipment Manufacturing Project and Supporting Projects, and the Hengli Heavy Industries Industrial Park Living Area, as follows:
Songfa Co., Ltd. pointed out that its existing key production facilities, including core ship berths, section workshops, final assembly sites, and outfitting workshops, are all operating at full capacity. Existing production capacity is nearing saturation, with core ship berth production already covering the next 3-4 years, limiting its ability to accept new orders. The existing production capacity is insufficient to fully match the execution of existing orders and subsequent market expansion needs. Therefore, the proposed new production capacity from this fundraising project is reasonable.
Currently, Songfa Co., Ltd. has 10 berths capable of simultaneously building ships with a deadweight tonnage of less than 200,000 tons and 8 berths capable of simultaneously building ships with a deadweight tonnage of 200,000 tons or more. Under normal circumstances, each ship occupies a berth for a period of 3 to 4 months.
Upon the successful completion of this fundraising and investment project, Songfa Co., Ltd. will have the capacity to simultaneously build 10 vessels with a deadweight tonnage of less than 200,000 tons and 12 vessels with a deadweight tonnage of 200,000 tons or more, for a total of 22 berths.
In terms of new ship orders, as of March 31, 2026, Songfa Co., Ltd. had a firm order book of 284 vessels, with a total order value of $27.513 billion. The orders cover the mainstream segments of the shipping market, including bulk carriers, container ships, and oil tankers. Among these, container ships and oil tankers—which offer relatively higher value-added—account for over 60% of the total order value, indicating a continued optimization of the order mix. Combined with the 18 new vessels contracted in April 2026, Hengli Heavy Industry currently has a backlog of over 300 vessels.
As of April 30, 2026, Hengli Heavy Industries had secured 126 new orders this year, covering mainstream vessel types such as oil tankers, bulk carriers, and container ships, already surpassing the 115 orders secured in all of 2025. In 2025, the company ranked second in China and second globally in terms of new orders secured.
To better meet strong market demand, Songfa Co., Ltd. has integrated the additional production capacity generated by this fundraising project into its overall order intake planning and production scheduling. Therefore, Songfa Co., Ltd. urgently needs to accelerate the fulfillment of its existing orders through the implementation of this fundraising project, ensure on-time delivery, maintain its ability to continuously secure new orders, and ensure long-term, stable growth in its performance.
In terms of shipbuilding and delivery, Songfa Co., Ltd. delivered 17 vessels in 2025, a 325% increase year-over-year.
The range of delivered vessel types expanded from 61,000 DWT bulk carriers to include 82,000 DWT bulk carriers, 181,000 DWT bulk carriers, and 306,000 DWT VLCCs; Construction commenced on high-tech vessels such as 325,000 DWT methanol-fuel-ready VLOCs, 21,000-TEU dual-fuel ultra-large container ships, and 93,000-cubic-meter VLACs.
Regarding its business development plan, Songfa Co., Ltd. stated that it will accelerate research and development of key core technologies in the future, focusing its R&D efforts on high-value-added vessel types such as LNG carriers and VLACs, while further enhancing the market competitiveness of its main vessel types, including ultra-large container ships and VLCCs. The company aims to achieve new breakthroughs in the high-end vessel market, accelerate the intelligent upgrading of its shipyards, establish a comprehensive digital management and control system, and minimize production costs and construction lead times to the greatest extent possible.
