Cooperative investment methods

The investment funds for this project are based on the establishment of industrial investment funds, equity direct investment and other diversified cooperative investment forms as the operation and management foundation, ensuring that the project construction is implemented step by step according to the established total scale goals, and achieving a win-win situation through IPO on the main board. The basic path of cooperative investment is as follows:

• 1. Establish a cooperation framework and sign an Investment Cooperation Agreement.

• 2. fundraising and arrangement of investment funds. The overall construction scale of this project is planned to produce several automated production lines with an annual output of about 10000 sets of various types of equipment, with a total investment not exceeding about RMB 10 billion. The project is planned to be completed in three phases, with a construction period of one year for each production line. The first phase starts with the construction of one equipment production line (such as a four station CNC machining center), with an estimated investment of no less than 2.2 billion yuan. The government will provide 50 acres of industrial land and build 30000 square meters of factory buildings on behalf of the company (before going public, the Dema project company will repurchase all the land and factory buildings at the agreed price), while reserving 150 acres of industrial land and 100 acres of commercial and residential land for subsequent equipment production line construction (for employees to live and work in peace and contentment). The project investment funds will be invested by the government recommending local platform companies to establish a special fund for high-end intelligent manufacturing industry, or by introducing traditional equipment manufacturers for joint investment, with a cash contribution of RMB 2 billion, accounting for 25% of the shares, mainly used for the research and development, customization, and equipment procurement of equipment production lines. Dema Company invests in intellectual property and some working capital, accounting for 75% of the shares.

• 3. Product Market Promotion Plan: The complete set of equipment products produced in cooperation with the project company will first meet the market demand of 100 automated production lines for forged wheel hubs nationwide by Party A in the first three years. After completing the construction and production of extrusion machines, injection molding machines, and other product assembly lines, the production capacity will gradually be released to meet the industrial chain needs of the automotive lightweight parts industry and the bearing industry and other mechanical processing industries. Starting from the fourth year, various products will be gradually launched into domestic and foreign markets.

• 4. The entry of project funds and the method of investment recovery. The entry of project funds is flexibly selected by investment partners recommended by the government, and the main methods are as follows: (1) Establishing a special high-end equipment manufacturing industry investment fund or introducing equipment manufacturers; (2) Direct equity investment method

Government recommended investment partners or fund investment recovery methods:

• (1) Listing recovery: Dema Company has partnered with PwC, leading securities firms, and other companies to prepare for independent application for listing of all its project subsidiaries (planning to establish a company for one equipment product). After 3 years, the project company will calculate the equity value of the subsidiary of this project (such as CNC machining center) based on a minimum P/E ratio of 20 times, with an estimated equity value of about 200 billion yuan and a 25% equity market value of about 50 billion yuan.

• (2) Collection of tax and subsidy rewards, that is, starting from the second year after the construction period, the total investment amount will be repaid with annual tax interest. The average yield per mu of land tax will be three times higher than the local government or investors, and the excess will be rewarded to our company.

Policy requirements for project implementation

• 1. Adjust 50 acres of industrial factory construction land in one go, build 30000 square meters of factory buildings on behalf of others, reserve 150 acres of industrial land and 100 acres of residential land.

• 2. Each production line has a 6000KW electricity demand configuration and preferential pricing policies.

• 3. It is best for the project site to be located less than 50 kilometers from the port.

• 4. Various high-tech enterprise policies enjoyed (such as preferential policies, support funds, policy subsidies, etc.).

• 5. Enterprise tax incentives: When the project is put into production and the average tax revenue per mu exceeds the local average tax revenue by three times, the excess amount in the first five years will be rewarded to the project company with 90% retained by the local finance, and the excess amount in the next five years will be rewarded to the project company with 80% retained by the local finance.

Promotion and application prospects and measures

The four station five axis vertical machining center developed in this project has a good market Dermand. The reason is that the five axis machining center is a professional five axis equipment specifically used for processing non-metallic and non-ferrous materials. It can perform high-precision machining on complex spatial surfaces, and the workpiece can be clamped in one go to complete multi sided irregular machining. Both military and private enterprises are using five axis equipment for processing, simplifying the processing process and complexity, and reducing production costs. Therefore, the multi station five axis machining center developed in this project has high precision and production efficiency, and has a large Dermand in domestic and foreign markets.

Assuming an annual production of 1 million forged wheels, the advantages of Derma Double Head Machining Center are as follows:

• A. The production efficiency of Derma machining center (16000 units per year) is 8 times that of international five axis machining center (2000 units per year);

• B. Save approximately 96% of factory space;

• C. Annual electricity and labor savings of 600000 yuan in the factory, saving a total of 6 million yuan in 10 years;

• D. The product's smoothness is improved by two orders of magnitude, without the need for polishing, saving an annual polishing fee of 30 yuan/piece x 1 million pieces=30 million yuan/year, and saving 300 million yuan in 10 years;

• E. The international five axis machining center costs 3 million yuan per unit, with an annual output of 1 million requiring 496 units and a total investment of 1.488 billion yuan. The Derma dual station machining center costs 5.1 million yuan per unit, with an annual output of 1 million requiring only 62 units and a total investment of 312 million yuan, saving 1.171 billion yuan;

• F, Derma equipment has light weight, low wear and tear, and a lifespan of 15 years, which is twice the lifespan of all equipment on the market! Based on this calculation, the current international five axis machining center is 3 million yuan per unit, and the pricing of Derma machining center equipment should be three times higher than the international five axis machining center price, which is 9 million yuan per unit. Currently, pricing only 5.1 million yuan is completely reasonable.

Cost control advantages of Derma equipment for forged wheel products

• A. Key points for reducing manufacturing costs of Luwei forged wheels compared to ordinary forged wheels:

• 1. Double head machining center - reduce by 300 yuan/piece;

• 2. Forging press - reduce by 80 yuan/piece;

• 3. Lathe, rotary press, furnace total - reduced by 100 yuan/piece;

• 4. Assembly line technology - reduce by 60 yuan/piece;

• 5. Large scale mass production after industry integration - reduced by 300 yuan per unit The reason is that the existing forging wheel manufacturers are each in their own formation and uneven. The cost of ordinary forging wheel products remains high, while traditional casting wheel hubs are cost-effective. With the emergence of Luwei products and the rise of aluminum materials, there is no market advantage compared to Luwei products. Luwei Company will organize the entire industry and gradually empower and integrate ordinary forging wheel hub factories and casting wheel hub factories with advanced Derma equipment to become Luwei The profit for each product is 200 yuan;

• In summary, the total manufacturing cost of the product can be saved by 840 yuan per unit.

Progressiveness advantage of Derma equipment

• The two disruptive four-dimensional design theories pioneered by Derma Corporation are "nuclear weapons" that completely surpass the high-end equipment manufacturing field of developed Western industrial countries, and are great inventions in high-tech manufacturing technology leading the world. With the full opening of the five axis machining center developed by Derma Company in 2023, it will completely change the market pattern of world machining centers and overturn the entire market's Dermand for machining centers. This is where Derma Company's industrial high-tech strength lies.

• All the machinery developed and manufactured by Derma is 80% lighter than traditional machinery of the same type, which has been proven to be a miracle; The first application in the forging wheel assembly line not only fills multiple gaps in the world's forging wheel technology, but also brings high returns, high profits, and high taxes to the social economy,

• Allowing cooperative investors to share the huge dividends brought by high-end intelligent manufacturing ahead of time.

• For example, if an investor only invests 1 billion yuan now and makes a profit of 1 billion yuan in the second year, who can achieve the doubling of annual profit and investment? Moreover, at present, the Luwei forging wheel products are only sold at one-third of the market average price, and the operating efficiency is already very considerable. After cultivating the market for three years, when we return to the selling price of 3000 yuan per unit, what will the operating profit be

• B. In today's new mechanical manufacturing industry, only Derma Company is unique, and it is an advanced representative of China's national industrial rise surpassing the world's industrial manufacturing. This is an undeniable fact, which is not only the pride of the Chinese people, but also a strong guarantee for the sustainable development of the Chinese economy in the future.