Ruyi Heavy News Repositioning Lycra In The Short Term To Complete IPO

Fear of eventful years

Embrace brilliant future

Shandong Ruyi group's joint statement with Leica group

May 14, 2020

Respected shareholders and investors:

As time goes by, the Lycra group has been holding and operating independently for over a year as Ruyi group. 2019 is the first year of Ruyi group's Leica group. Despite the challenges of the external environment, the Leica group has maintained a comprehensive and long-term competitive advantage through new technologies and products, and has always maintained a leading position in the market.

The successful experience of Lycra brand in the past more than 60 years is to create value through scientific and technological strategic innovation. In 2020, Lycra group steadily promoted the strategy of technological innovation and business growth. Despite the adverse effects brought by the new crown disease to various countries, industries and enterprises all over the world, we believe that through our active response and the gradual implementation of the Ruyi new Leica strategy, Leica will overcome the short-term difficulties and meet the better future through continuous R & D, business development, capacity optimization, profitability improvement and the listing of China Science and technology innovation board. Tomorrow.

Challenges of global epidemic

The development of new crown pneumonia has become a global epidemic disease, resulting in social isolation and economic stagnation. It also has a great impact on all walks of life, especially in the booming consumer goods industry in Europe and America. Fortunately, during the epidemic period, the order of health LYCRA HyFit fiber has been on the upswing, and has always been in full load production. Despite the current crisis, we still maintain a stable operation and cash flow through a series of initiatives. We firmly believe that with the gradual improvement of the global epidemic situation and the gradual resumption of social work, the downstream consumption will return to normal level. During the outbreak, we try our best to reduce the operating cost of the company during the epidemic period, ensure the stable production of LYCRA HyFit, and maintain the normal production and operation of the company.

Leica's bright spot since joining Ruyi group

We have established the culture of Leica group, including its purpose, mission and principles. In order to retain and attract world-class talents. As a global independent company, the necessary organizational capabilities and workflow have been developed. Strategic investment in brand, research and product innovation to enhance our leadership in the clothing and hygiene products industry.

* The unique market demand driven R & D system of Leica group has been further deepened. ? Research and development around customer needs, product innovation can not only enhance the efficiency of R & D achievements, but also create better customer experience and customer satisfaction. Specifically, we have launched four revolutionary new products that support Lycra's position as an innovative leader and provider of differentiated solutions in the clothing and hygiene products industry. This technical, targeted and unique solution ensures our unique leading position in the industry. In the future, the Lycra group is expected to continue to deepen the R & D system and better serve customer needs while maintaining high investment in R & D field.

* Lycra brand fiber has maintained high stability over the years. ? It is commendable that Lycra has strong pricing power in the market through long-term accumulation and successful brand building. The price of Lycra is far higher than that of its competitors, but its super high stability and continuous technological innovation help realize the cost savings of the whole production cycle and the marked improvement of product value. This is the fundamental factor for the price of Lycra far outperforming its competitors and the competitive advantage that competitors can not surpass in the short term. The performance of the Lycra brand and Lycra empowerment brand customers have achieved win-win results. Leica new material helps customers to get customized performance while helping customers improve bargaining power of terminal products.

* Continue to increase investment in the Chinese market. In May 2019, an advanced R & D laboratory was set up in Foshan, China, which has become the R & D center of local textiles, and is also the focus of attention of important customers. ? In recent years, the millennial generation of Chinese young people has started a wave of consumption, a wave of online shopping and wave of goods. China's brand clothing market has developed like a blowout. It has full potential for development. In 2019, Lycra launched a 360 degree comprehensive marketing plan in China to enhance brand awareness and enhance people's preference for Lycra. The growing middle class in the Chinese market will create more demand for Lycra's high-end fiber materials. At the same time, China has become the world's first aging country. With the further improvement of aging and quality of life, Lycra's new health materials become the gospel of the elderly and infants in China.

On the whole, the Leica group has developed from an undertakings in the company of global company to an independent global company. It has gone through an extraordinary year. After several years of accumulation of brand, product and sales, the business of Lycra group is still in steady development, and it is increasingly integrated with the controlling shareholder, Ruyi group, and highly valued. The management team of Ruyi group and Lycra group jointly formulated detailed and detailed plans for the future efficiency improvement and sustainable development of Lycra. At the same time, we also noted that the changes in the actual controller, the change from the division to the company, and the unavoidable one-time investment in the restructuring process had a greater impact on the performance of the Leica group in 2019. These performance fluctuations, in the Ruyi group's acquisition of the beginning, we already have expectations. I will mount a long wind some day and break the heavy waves, and set my cloudy sail straight and bridge the deep, deep sea. Compared with short-term performance, we are more concerned about the long-term development of enterprises. The short term adjustment in 2019 will lay a good foundation for the rapid development of the new Lycra group in the next 5 years.

Prospects for 2020 and changes in epidemic situation

The epidemic has brought new challenges to the new and long-standing company of Lycra group. The slowdown in downstream demand caused by the epidemic poses a severe challenge to our financial situation. In the era of profound changes in technology, society and consumer expectations, our only choice is to change and keep pace with the times and turn crises into opportunities. We are readjusting and focusing on the necessary changes to the company so as to restore orderly business and continuously enhance shareholder value in order to succeed. Specifically, we will continue to improve the following tasks this year:

Today, Ruyi group and management announced that the Lycra group will be repositioned. Lycra's R & D investment and product technology content have been the industry label and core competitiveness of the brand. Under this epidemic situation, the advantages of various fiber new materials of Leica group in different fields and different scenes have been further reflected. It will be a great success. Lycra group has become the world's leading new material technology enterprise in fact. In the future, we will focus on this positioning, optimize the business of Leica group, enhance operational efficiency, and more effectively link up the capital market.

In the very epidemic period, targeted cost saving is one of the key means for enterprises to maintain development and profitability. In 2020, our main task was to further improve the business restructuring carried out in 2019 to enhance the overall profitability of the Leica group.

At the same time, we expect to further strengthen the synergy between Ruyi group and Lycra group. Ruyi's original intention of investing in the Leica group is to see the potential synergy between Lyme group and China market and Lycra. This synergy effect includes, but is not limited to, the synergy of values (to create a new Lycra), brand synergy (optimization of brand matrix, and Xiang Qihe's layout of Ruyi Industry Chain), cost synergy (full use of Asian and domestic cost advantages), synergy of production capacity (domestic production capacity to be exploited), etc. The realization of these synergies is also the foundation for Leica to achieve rapid growth in the future.

Lycra group, as the leader of the world's new technology and new material sector, should better integrate into China's consumer market with huge potential and high growth, enhance China's regional production capacity and market share, and seize the opportunities for development in China. Leica's R & D investment, innovation capability, patented technology, close to the needs of customers' technology reserves, the research and development system with strong conversion rate, and the contribution rate of the newly developed technology and products to the company's revenue up to 60% are fully consistent with the theme of technological innovation highly recognized in China's capital market. China Science and technology board was set up in 2019, and its positioning is China's "NASDAQ". By the first quarter, nearly 100 technology companies have gone public. China's capital market gives higher value to those companies with hard core technology attributes and fast-growing 40X. With the new material positioning, sales scale and industry status of Leica group, it is estimated that the market value can reach 200-300 billion yuan (about 30-40 billion US dollars), and the IPO can be completed in a relatively short time.

To sum up, 2020 will be the first year of the "Ruiyi new Lycra" sailing, and also the starting point of the Leica high-speed development in the next 5 years. We expect that these strategic measures will lay a good foundation for landing in China's science and technology board market.

We sincerely thank all investors for their support for Ruyi group and Lycra group in the past. In the crucial period of the 100 year old pandemic and the transformation and development of the Leica group, we also earnestly hope that all investors will fully understand the complex situation faced by the Leica group and Ruyi, eliminate interference and work together to overcome difficulties.

Confucius, an ancient Chinese thinker, once said that all rivers must flow eastward to the sea. As long as people yearn for a better life, Lycra's products will always have loyal customers, and our products will achieve better growth. We firmly believe that Ruyi group and Lycra group can create a brighter future by implementing the new strategic layout, strengthening synergy with Ruyi, continuous research and development, optimizing production capacity, strengthening the Chinese market, closely linking up the capital market and a series of initiatives. Only in this way can we realize the win-win situation between the Leica group and the investors from all sides.