Shandong Stock Watch | Capital Operations Carefully Calculated, China Pet Inc. Billion "Replenish Liquidity"

On March 18, 2026, Yantai Zhongchong Food Co., Ltd. (hereinafter referred to as “Zhongchong Co.”; stock code: 002891.SZ), a listed company in China’s pet food industry, announced that the board of directors approved a proposal to temporarily use no more than 476 million yuan of idle raised funds to supplement working capital for a period of 12 months. Just one day before this new proposal was issued, the company had fully repaid the previous 500 million yuan used for the same purpose into a dedicated account.

This seamless operation of “repayment” and “use” is not just a simple financial maneuver but a typical example of how a listed company manages large amounts of raised funds efficiently in daily operations, aiming to minimize financial costs. For Zhongchong Co., which is in a critical period of fierce industry competition and expansion, every penny of efficiency is crucial.

Public information shows that Yantai Zhongchong Food Co., Ltd. was established in January 2002 and listed on the Shenzhen Stock Exchange Main Board in 2017, regarded by the market as the “First Pet Food Stock.” The company’s legal representative is Hao Zhongli, with a registered capital of 294 million yuan, headquartered in Yantai, Shandong Province.

After more than twenty years of development, Zhongchong Co. has evolved from an early OEM manufacturer of pet snacks to an important industry player with its own brand matrix. The company operates several well-known pet brands including “WANPY,” “TOPTREES,” “ZEAL,” and “GREAT JACK’S,” with product lines covering dry food, wet food, treats, and freeze-dried products for dogs and cats.

Source: Secutip

According to the “Announcement on Using Part of Idle Raised Funds to Temporarily Supplement Working Capital” issued by Zhongchong Co., this 476 million yuan is not from bank loans but from the company’s own “idle” raised funds. The source can be traced back to 2022, when the company raised a total of 769 million yuan through a public issuance of convertible bonds. After deducting issuance costs, the net amount received was approximately 755 million yuan.

This fund has a clear designated purpose. According to the fundraising prospectus, it was planned to be used for five specific projects and to supplement working capital, including the “Annual Production of 60,000 Tons of High-Quality Pet Dry Food Project,” “Annual Production of 40,000 Tons of New Type Wet Pet Food Project,” “Annual Production of 2,000 Tons of Freeze-Dried Pet Food Project,” “Smart Vertical Warehouse Renovation Project,” and “Supplementary Working Capital.”

However, large projects are built in phases according to progress, during which a significant amount of funds may remain temporarily idle.

Leaving money “lying” in accounts is undoubtedly a waste. Therefore, Zhongchong Co.'s board decided that, without affecting the normal use of funds for the above projects, the idle funds could be temporarily withdrawn to supplement the company’s daily operating cash flow.

The company’s announcement clearly explained the purpose of this move: to improve the efficiency of fund utilization and reduce financial costs. The announcement even included a financial calculation: based on the current one-year loan market quotation rate of 3.00%, using this 476 million yuan could save approximately 14.28 million yuan in financial expenses. This savings will directly boost the company’s profits.

It is noteworthy that this is the second time Zhongchong Co. has undertaken such an operation within a year. In March 2025, the company’s board also approved a proposal to use no more than 500 million yuan of idle raised funds to temporarily supplement working capital, with a similar 12-month period.

According to another announcement titled “Early Repayment of Idle Raised Funds Used for Temporary Working Capital,” as of March 16, 2026, the entire 500 million yuan had been repaid early. This essentially means the company was “replacing old debt with new,” completing a relay of funds.

The company commits that the replenished funds will be strictly used for production and operation related to its main business, not for high-risk areas such as securities investment. Additionally, before the 12-month period expires or when the projects require, the funds will be promptly and fully returned to the dedicated raised fund account. This proposal has been approved by the company’s board and verified without objection by the sponsor, Lianchu Securities Co., Ltd., in accordance with Shenzhen Stock Exchange regulations.

Text: Zhou Tao