Zhongyan Shares: Partial IPO Fund Projects Revised to Invest in Medical Devices

On March 6, ZY Co., Ltd. (688716) announced a change in some of its fundraising investment projects. The original project name was "Innovation and Technology R&D Center Project," which has now been changed to "Houhe Medical Device R&D Center Project."

The announcement states that the investment amount for the new project is 70.75 million yuan, of which 51.29 million yuan will be reallocated from the raised funds, all of which will be used for the construction of the new project. It is expected to be ready for its intended use by December 2027.

The original investment project had a total investment of 66.29 million yuan, with a planned use of 58.25 million yuan in raised funds, and 8.6 million yuan had been actually invested as of the announcement date. The new project is implemented by the wholly-owned subsidiary Jilin Houhe Medical Technology Co., Ltd., and the proportion of the changed funds to the net amount of the initial public offering funds is 6.41%.

To enhance the efficiency of capital utilization, the company plans to continue investing in the original project with its own funds, implementing it according to actual needs in the future. Meanwhile, in line with industry trends and market demands, it is proposed to focus the raised capital on more urgent new projects, to accelerate the core R&D process and ensure the quality of the projects and the long-term benefits of the company. As the aging population in China deepens, the demand for bone implant materials continues to grow. China has become the second-largest orthopedic medical device market globally, but the raw material for medical-grade polyetheretherketone (PEEK) still largely relies on imports. Based on the company's R&D planning and the expansion of new business, the company's layout in the field of medical-grade PEEK and its downstream medical devices is progressing rapidly, with strong market demand. Currently, companies such as Kangtuo Medical, DaBo Medical, and Medprin have successively adopted the company's medical-grade PEEK raw materials and obtained relevant product registrations (or completed raw material changes). Therefore, the company urgently needs to build a specialized medical device R&D center, further increasing the R&D investment in the application of PEEK in the medical device field, upgrading the product capabilities of medical-grade materials, and expanding the application scenarios of the company's medical-grade PEEK, thereby actively responding to the market demand for the domestication of medical-grade PEEK.

The announcement also points out some risks associated with the current change in the use of proceeds from the fundraising project.

The change to the use of raised funds for this project has been carefully studied in light of the project's actual implementation status and internal and external conditions. However, uncertainties such as technological iteration may still arise during the implementation of the new project, resulting in uncertainty regarding its execution.

The Company plans to purchase the plot located at the northwest corner of the intersection of Guo Dao 204 and Jianye Road in Shuangfeng Town, Taicang City, Jiangsu Province—the Phase I Project of Taicang Shuangchen Science and Innovation Park (Building A2, north side factory building)—and to lease the first floor of Building A4 within the same park to implement a new project. The specific location shall be subject to the formal written agreements for the factory purchase and lease. As of the date of this announcement’s disclosure, the Company has not yet entered into formal written agreements with the relevant parties regarding the factory purchase and lease.

As of the date of this announcement, the relevant approvals and filing procedures for the new project, including development and reform, environmental protection, etc., are under preparation. The company still needs to obtain the corresponding environmental impact assessment and other approvals according to the project planning before proceeding. If the relevant approvals are not obtained or not obtained in a timely manner, it may lead to the project implementation schedule not meeting expectations.

According to available information, Zhongyan Co., Ltd. primarily manufactures PEEK in resin form.

Recent annual reports show that Zhongyan Company has been under pressure in terms of performance in recent years. From 2023 to the first nine months of 2025, the company's net profit growth rate has remained negative, indicating weak performance growth. The net profit growth rates for the company were -2.43%, -27.99%, and -65.07% respectively from 2023 to the first nine months of 2025.

In 2025, the company achieved operating revenue of RMB 309 million, an increase of 11.58% year-on-year; net profit attributable to shareholders amounted to RMB 11.8652 million, a decrease of 69.8% year-on-year; and net profit attributable to shareholders after deducting non-recurring gains and losses was RMB 4.8557 million, a decrease of 80.21% year-on-year.