Core Viewpoint - Longking Environmental (龙净环保) plans to raise 2 billion yuan through a private placement, with its controlling shareholder Zijin Mining (紫金矿业) intending to fully subscribe to the new shares at a price of 11.91 yuan per share, which is approximately 75% of the current market price, leading to potential dilution of immediate earnings [1][2]. Summary by Sections Private Placement Details - The private placement will involve issuing up to 168 million shares at a price of 11.91 yuan per share, which represents a discount of nearly 25% compared to the closing price of 15.85 yuan on October 24 [2]. - The issuance is expected to dilute the earnings per share (EPS) for existing shareholders, as the increase in share capital will lead to a higher number of shares outstanding [2]. Financial Impact - Longking Environmental acknowledges that the issuance will have a dilutive effect on immediate earnings, with projections indicating a decrease in EPS under various profit growth scenarios for 2026 compared to 2025 [2][3]. - The company plans to enhance fund management and improve operational efficiency to mitigate the impact on immediate returns [3]. Purpose of Fundraising - The 2 billion yuan raised will be used to supplement working capital, addressing the high financial leverage resulting from previous funding methods such as bank loans and convertible bonds, which have increased financial risks and reduced profitability [4]. - Longking Environmental's debt-to-asset ratios over the past three years have been 71.32%, 68.58%, 61.42%, and 62.01%, indicating a relatively high leverage compared to the industry average of 59.42% [4]. Shareholder Dynamics - The private placement aims to increase Zijin Mining's stake in Longking Environmental from 25% to 33.76%, which is intended to enhance decision-making efficiency within the company [4]. - The previous attempt at a private placement in July 2023 was unsuccessful due to low utilization of raised funds and unfavorable market conditions [5]. Regulatory Approval - The private placement requires approval from Longking Environmental's shareholders and relevant regulatory bodies, with a special shareholder meeting scheduled for November 7 to discuss the proposal [5].