Shandong Ruyi Technology Group Co Ltd Manufacturing 1Q19 Credit report 19 June 2019

SHANDONG RUYI TECHNOLOGY GROUP CAPITAL STRUCTURE (CNYm)

Amount Amount Pro forma Pro forma Issuance Pro forma Instrument Issuers Coupon Maturity outstanding as outstanding as amount amount date leverage at 31-Dec-18 at 31-Mar-19 (CNYm) (USDm)

Short-term secured loans <1 year 1,860 NA(1) NA(1) NA(1) Long-term secured loans >1 year 2,505 NA(1) NA(1) NA(1) Finance lease >1 year 1,400 1,400 1,400 203 Offshore secured bonds(2) 18-May-16 2022-23 2,167 2,167 773 112 Total secured debt 7,932 3,566 2,173 314 0.9x Other short-term loans 5,960 7,202 7,202 1,042 Other long-term loans(2) 2,658 4,612 7,356 1,065 Onshore bonds 2015-19 5.5-7.9% 2019-23 5,703 6,203 6,203 898 Offshore bonds 2016-18 6.95-7.5% 2019-22 6,419 6,419 6,419 929 Total debt 28,672 28,002 29,353 4,248 11.6x Cash and cash equivalent(3) 8,953 8,359 9,710 1,405 External guarantee 2,011 2,011 2,011 Credit facilities (mostly uncommitted)(4) 3,139 3,139 3,139 Net debt 19,719 19,643 19,643 2,843 7.8x LTM adj. EBITDA(4) 2,531 Source: Debtwire, company filings 1) No breakdown of loan types for 1Q19; 2) 51.8%-owned subsidiary, SMCP, announced early redemption of EUR notes due-2023 on 10 May, which are to be refinanced by new EUR 265m amortizing term loan and a EUR 200m revolving credit facilities, with five-year maturity. SMCP also repaid EUR 110m of credit facilities previously drawn with new loans; 3) pro forma cash is cash as of 1Q19 after adjusting for bond redeemed and new debt issued between April and date of this report date; 4) no disclosure on whether credit facilities are committed or not. However, most of credit facilities are provided by onshore banks, which are uncommitted.

OVERVIEW improving a tad, was still 7.7x as of end ISSUER SUMMARY March. That is up from 3.8x in 2012, the Shandong Ruyi Technology Group, a year before the company began raising Country China Shandong-based textile manufacturer and significant amounts of debt to fund diverse Sector Manufacturing (other) global fashion brands owner, showed in its overseas acquisitions, including cotton latest results that 1Q19 revenue and farms in , fashion brands in France Credit rating B/B2/NA EBITDA improved largely as the result of its and and a power plant in . Total assets (31-Mar-19) CNY 67.9bn 51.8%-owned French luxury fashion brand manager and retailer SMCP. However, a Prompted by frustration over Ruyi’s Total debt (31-Mar-19) CNY 27.7bn series of debt-funded acquisition - including apparent lack of a refinancing plan, holders SMCP in 2016 - combined with the poor of the USD 345m, 7.5% due-2019s floated MAJOR EVENTS performance from its legacy textile the idea of an exchange offer early this Next earnings release: Aug-19 business has left Ruyi with high leverage year, according to a 15 March Debtwire and weak liquidity ahead of the December article. Instead, the company eventually Next significant maturity: Dec-19 maturity of USD 345m bonds. touted other refinancing options, including Source: Debtwire, company financials spinning off self-used commercial and In total, Ruyi reported CNY 12.3bn debt industrial properties into a Singapore due within one year of 31 March 2018 - REIT, an ambitious deal considering that Weighing on the private company’s credit including the USD bonds and CNY 2.7bn the underlying assets are in third-tier profile is its corporate governance domestic notes maturing or puttable by Chinese cities, as per a 9 May Debtwire stumbles. As Debtwire reported in mid- November - against just CNY 8.36bn cash, article. (For more details on Ruyi’s potential 2017, the state backed shareholder Ruyi including restricted. Its net leverage, while refinancing plans, see page 3). disclosed in its bond offering circulars had actually transferred the stake to another state entity, a foible management later FINANCIAL SUMMARY (USDm) blamed on the shareholder’s lack of Period-end 31-Dec 31-Dec 31-Dec 31-Dec 31-Mar 31-Mar 31-Mar YoY % ∆ disclosures. (For more details on Ruyi’s 2015 2016 2017 2018 TTM to Mar 1Q18 1Q19 corporate governance issues, see page 4.) Revenue 22,770 29,087 35,738 34,282 37,306 8,807 11,831 34.3% Adj. EBITDA 1,702 2,487 3,782 2,375 2,531 737 894 21.2% ASIA CREDIT RESEARCH EBITDA margin 7.5% 8.6% 10.6% 6.9% 6.8% 8.4% 7.6% Operating cash flow 959 2,498 3,256 1,895 1,871 144 120 -16.6% Capex (1,369) (2,194) (2,104) (2,963) (2,936) (82) (55) -33.1% Michelle Lee, Research Analyst Free cash flow (410) 303 1,152 (1,069) (1,066) 62 65 5.3% +852 2158 9689 Cash and cash equivalents 8,396 8,583 9,811 8,953 8,359 9,758 8,359 -14.3% [email protected] Total debt 15,372 24,011 25,516 28,008 27,747 24,717 27,747 12.3% Total debt/adj. EBITDA 9.0x 9.7x 6.7x 11.8x 11.0x - - Ryan Patwell, Head of Research, Debtwire Asia Net debt/adj. EBITDA 4.1x 6.2x 4.2x 8.0x 7.7x - - +852 2158 9777 Interest expense, gross (630) (1,216) (1,340) (1,508) (1,603) (278) (374) 34.4% [email protected] Adj EBITDA/interest expense 2.7x 2.0x 2.8x 1.6x 1.6x 2.7x 2.4x Source: Debtwire, company financials

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BUSINESS DESCRIPTION

Shandong Ruyi Technology Group transformed accessories. Claudie Pierlot focuses in tradi- “Other” segment: Made up 8.7% of the group’s from a state-owned enterprise to a privately held tional style women and girls' clothes, bags, gross profits. This segment includes cotton plant company in 2001. Shandong-based Ruyi operates shoes and accessories. and electricity and steam generation. Ruyi owns a 93,483 hectares cotton farm in Australia a full textile and apparel products value chain. Its ● Renown (3606 TYO): Ruyi acquired control in upstream capacity includes raw materials sourc- (Cubbie Station), which mainly sells locally. Ruyi 2010 and owned 53% of the Japanese apparel also owns a 50% stake in a power plant in Paki- ing, wool and cotton production, and ownership manufactures and purveyor as of end-2018. of sheep farms and cotton fields in Australia. stan with 660MWx2 capacity in a joint venture Renown’s gross profit was JPY 29bn (CNY with China Huaneng Group. According to Midstream includes wool- and cotton-based fab- 1.85bn) during FY19 ended- February, which rics manufacturing, apparel design and produc- Debtwire 9 May report, the plant generated equates to 20.7% of Ruyi’s 2018 gross profit. CNY 700m profits last year. tion. Downstream includes apparel retailers, in Renown operates 29 brands including Durban, addition to selling through distributors. Ruyi also Aquascutum and Simple Life. D'urban focuses Shareholding: Beijing Ruyi Fashion Investment engages in textile raw materials trading. Main in men's business and leisure wear. Aquascu- Holding is Ruyi’s largest controlling shareholder segments include apparel, yarn and fabrics, tex- tum is a British classic brand known for women with a 53.49% stake. This gives the group’s ulti- tile raw material trading, as detailed below: waterproof trench coats, also designs and sells mate controller and chairman Qiu Yafu a look- Apparel segment: Made up 78.7% of the group’s men and women’s luxury clothes and accesso- through stake of 27.3%. (See 28 May 2018 Share- CNY 8.94bn total gross profit in 2018, with a rela- ries. Simple Life offers men and women's natu- holder Profile on Qiu Yafu for detailed back- tively juicy gross profit margin of 57.3%. The seg- ral and simple modern casual clothes. ground). As of 12 March, Beijing Ruyi’s 51.4% ment includes Ruyi’s self-produced high-end suits had been pledged to back borrowings from Chi- Yarn & fabrics segment: Made up 8.7% of the na Cinda Asset Management, Shandong Interna- and brands held through acquired stakes in brand group’s CNY 8.94bn total gross profits in 2018, operators, which contributed more than 90% of the tional Trust Investment and , ac- with a GPM of 10.6%. Cotton yard and wool, cording to the 12 March 2019 onshore bond OC. segment’s revenues, according to the April 2019 which contributed 46.6% and 37.5% of the seg- onshore bond OC. Ruyi owns about 40 brands. Its ment’s 1Q18(1) revenue respectively in 2018 were Yinchuan Financial Holding, which is majority major consolidated brand operators include: the main products. Other products include Denim owned by Yinchuan State-owned Assets Super- ● SMCP (SMCP EPA): Ruyi acquired control of (7.2% of the segment’s revenue) and spandex vision and Administration Commission (SASAC), (2.8% of segment’s revenue). 45.9% of yarn and holds a 26% stake in Ruyi. the French subsidiary in 2016 and owned a (1) 51.8% stake as of end-2018. Its gross profit fabric production are sold overseas as of 1Q18 . Japanese trading corporation Itochu Group is the equivalent to 56.4% of Ruyi’s total gross profit. Textile raw material trading segment: Made up third largest shareholder, with 11.72% stake. SMCP operates wholesale and retail sales of 3.8% of the group’s total gross profits in 2018, The remaining 6.6% is held by Mild International. accessible luxury brands Sandro, Maje and with a GPM of 2.8%. Main trading products in- (1) The latest data available Claudie Pierlot. Sandro designs and sells wom- clude cotton (49.2% of segment’s revenue in en clothes, bags and shoes and active and 1Q18(1)) and cotton yarn (44.1% of segment’s smart casual attire for men. Maje designs and revenue in 1Q18(1)). Other trading products in- sells women urban fashion including bags and clude wool top and dyed fabrics.

REVENUE AND GROSS PROFIT BREAKDOWN IN 2018 GROSS PROFIT MARGIN BY SEGMENT IN 2018

Source: Debtwire, company filings Source: Debtwire, company filings

Cash flow: Free cash flow looks likely to Reduced capex seems likely because the trapped in working capital. S&P noted in a improve in 2019 on the back of lowered main reason for the 2018 increase was not 15 May press release that Ruyi would capex, but should still be negative for the higher maintenance capex but rather the likely have growing working capital needs year, meaning the company is unlikely to CNY 1.2bn purchase of an office building in 2019 in order to fund its planned have excess internal cash to help repay in Jining, Shandong from Industrial & expansion of self-owned stores as well to debt, leaving a lot of liability management Commercial Bank ICBC. penetrate online channels. left to do. In 1Q19, free cash flow improved slightly 1Q is not a good barometer for Ruyi's Using the TTM end-March operating cash YoY, to CNY 65m (CNY 62m in 1Q18), performance, given that in the past two flow of 1.9bn, and assuming Ruyi continues because capex was only CNY 55m (1Q18: years, OCF and capex for the quarter to rein in capex to 2016-2017 average CNY 85m), offsetting a 16.6% decline in made up a fraction of the full year figures. levels of CNY 2.1bn, 2019 free cash flow OCF, to CNY 120m. OCF fell despite a should improve but still come in around 21.2% increase in EBITDA, to CNY 894m. Business performance: Revenue grew by negative CNY 300m. 2018 FCF was That was partly the result of a 17.4% YoY 34.3% YoY in 1Q to CNY 11.83bn, helping negative CNY 1.07bn, when capex was rise in cash interest paid, to CNY 370m. EBITDA increase by 21.2% YoY, to CNY CNY 2.96bn. The undisclosed remainder may have been 894m. The 82bps EBITDA margin

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contraction, to 7.6%, continued the 20018 assumption that the properties are ● Drawing on credit facilities: Management trend, when revenue fell 4.1%, to CNY worth CNY 8bn (USD 1.19bn), as per a 9 considered drawing on domestic 34.28bn, but EBITDA fell 37.2%, to CNY May Debtwire article. The valuation is uncommitted credit lines from Citic Bank 2.38bn. key because management plans to sell a and Minsheng Bank, which have at least minority stake in the REIT to raise CNY CNY 4.5bn remaining unused as per the Ruyi doesn’t break out segmented EBITDA, 3bn for the redemption of the due- 30 April Debtwire report. but based on the limited disclosures it and December notes. The Debtwire article some of its subsidiaries do make, the 2018 highlighted doubts as to whether Leverage & debt profile: Aided by EBITDA decline appears to be largely investors would buy into a REIT whose improved YoY EBITDA in 1Q19, net debt to driven by a significant decline in the non- underlying assets are located in third- EBITDA for TTM ended March improved a apparel segment. tier Chinese cities. S-REITS require the tad, to 7.7x, from 8x as of end December. underlying assets to yield in excess of But leverage remains significantly higher The legacy yarn and fabrics segment’s five-year Singapore sovereign bonds than the 4.1x in 2015, the year before a revenue declined by 31.4% in 2018, to (currently yielding 1.99%), King & Wood Ruyi vehicle’s EUR 1.3bn purchase of CNY 7.44bn, leading to a CNY 431m Mallesons stated in a 13 September SMCP. Because of its debt-fueled decline in gross profit, to CNY 785m, 2018 report in Lexology, an online expansion (see page 5 for a list of according to the financial statement. publication for legal updates, analysis acquisitions), Ruyi’s debt has soared in Management noted in the annual report and insights. In April, Ruyi mandated recent years at a much faster pace than that the fall in revenue was the result of DBS Bank to run a USD 450m IPO in EBITDA. Its CNY 27.75bn total debt as of the deconsolidation of subsidiaries Ruyi Singapore of the property assets, as TTM to end-March 2019 was 80.5% higher sold to its parent company, which a June Debtwire reported at the time. than as of end 2015. EBITDA rose by just 2018 Dagong Global Credit Rating report 48.7% during that period. stated was for CNY 1.925bn in late 2017 ● Selling its 50% stake in a 660x2 MW (see related parties transactions section thermal-power plant in Pakistan: Joint- To back the purchases, Ruyi has had to tap on page 4). venture partner China Huaneng Group the expressive private debt market, as had been interested in buying out Ruyi’s Debtwire exclusively reported. A Ruyi-led The company's "other" non-apparel stake, but Ruyi’s USD 3.5bn valuation consortium’s equity contribution for segment, which includes a cotton farm in for plant was too high, considering the its USD 2.37bn Lycra Company acquisition Australia and a 50% stake in a Pakistan industry P/E is usually 10x and the plant closed in January was part-funded by a power plant, experienced a 27.7% decline generates CNY 500m-CNY 700m (USD Credit Suisse-arranged USD 400m, low- in gross profit for the year, to CNY 777m. 72.4m-101.3m) profit annually, teens-coupon-plus-equity-kicker three- Ruyi doesn't explain in the 2018 annual according to the 30 April Debtwire year mezz facility. In addition, members of report the reason for the decline. article. At that multiple, the plant would the consortium raised USD 150m, nearly only be worth between USD 724m and 20% junior mezz from a Chinese Ruyi's remaining operations consists of its USD 1.01bn. Ruyi bought the 50% stake institution’s offshore arm. apparel businesses, which accounted for for only USD 180m in 2015. 78.7% of gross profit in 2018. Apparel is Debtwire estimates that Ruyi has CNY almost entirely made up of 51.8%-owned ● USD 500m offshore bond issuance 29.35bn pro forma debt as of 18 June, SMCP and 53%-owned Japanese apparel quota expiring by end-March 2020: after accounting for a new EUR 465m due- producer and brands operator Renown. Ruyi is reluctant to refinance through an 2024 credit facility at SMCP closed on 9 SMCP’s reported gross profit is equivalent offshore bond issuance, given where it May. The new facility was used in part to to 56.4% of Ryui’s consolidated gross outstanding notes are yielding, as per refinance a EUR 110m due-2022 credit profit in 2018(4). Its EBITDA for the year the 30 April Debtwire report. The facility and also to redeem early the French rose 4.2% YoY. December 2019s were yielding 15.55% retailer’s EUR 180m due-2023 notes. as of 18 June and due-July 2022s were Renown on the other hand experienced an at 15.19%, according to Markit. The company’s debt mostly sits at the EBITDA loss in FY19 through February of following entities: CNY 109m compared to positive EBITDA of CNY 56m in the year prior. While the different fiscal year end makes it hard to ASSET VS DEBT GROWTH BETWEEN 2016-18 precisely quantify Renown's impact, its standalone figures for FY19 suggest that its contribution to the overall decline in Ruyi's EBITDA in 2018 was relatively minor.

Ruyi’s refinancing options: Management, beginning in late April and during meetings with credit investors in early May, outlined the following refinancing options for the USD bonds, as Debtwire reported:

● Listing via a Singapore REIT commercial and industrial properties provisionally valued at CNY 8bn: Ruyi hired PricewaterhouseCoopers to appraise the properties but has been proceeding under management’s Source: Debtwire, company filings

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● Ruyi: CNY 12.64bn, or 45.5% of total resulting in a net purchase from Ruyi of Ruyi’s April 2019 onshore bond OC group debt as of end-1Q19, including CNY 909m. discloses that Tonglian’s stake was CNY 6.2bn onshore bonds (44.5% of transferred in August 2017 to fellow total debt in 2018). The unlisted entity In addition, related parties including the Yinchuan SASAC entity Yinchuan held 55.2% of the group’s total asset three subsidiaries purchased CNY 4.46bn Financial Holding. and 39.9% (CNY 3.34bn) of the of goods and services from Ruyi last year group’s cash as of 1Q19. Debtwire and sold CNY 1.85bn back, its 2018 annual 1) The latest info available reported on 9 May that unrestricted report shows. cash at the parent level was at least 2) Successful listing as REIT in Singapore CNY 2bn. Capital spending: Ruyi’s CNY 2.96bn requires 75% of the underlying assets capital expenditures in 2018 was elevated to generate stable cash flow and ● Prime Bloom Holdings: The BVI- compared to 2016 and 2017 due in large yield more than 5-year Singapore incorporated offshore financing part to the CNY 1.2bn purchase in 4Q18 sovereign bonds. vehicle through which Ruyi issued the of the office building from ICBC. USD 300m due-July 2022s as well as 3) Return on assets is calculated as EBIT the USD 345m due– December 2019s. The group provides only limited disclosure over average total assets. Both of the notes are guaranteed by on it capex breakdown but it seem that a the onshore parent company. disproportionate amount is on its 4) Debtwire estimate based on struggling non-apparel businesses. comparing the size of SMCP and ● SCMP: CNY 2.49bn (EUR 320m) debt Renown’s gross profit in standalone as of end-2018, which is 8.9% of total SMCP and Renown, whose standalone financials to Ruyi’s consolidated group debt. That includes EUR 100m gross profit equated to 77% of Ruyi’s gross figures for its apparel division senior secured floating rate notes due profit, reported capex of CNY 414m and -November 2022 and EUR 180m, CNY 165m for their most recent receptive 5) SMCP has financials for 2018 5.88% secured notes due May-2023. full financial years(5) equivalent to only and Renown has financials for FY19- about 20% of consolidated capex. ended February. ● Ruyi additionally reported CNY 2.01bn external guarantees as of end- Ruyi, in its April 2019 bond OC, states December. that it is developing industrial parks and factories to upgrade and expand its Corporate Governance: production capacity and that this project is expected to be completed in 2019. Related parties transactions: In October 2017, Ruyi sold three subsidiaries to The rationale for this investment is parent company Beijing Ruyi Fashion questionable given that the bulk of Investment Holding Co, according to the Ruyi’s cash flows now come from its April 2019 onshore bond OC. The company ownership of overseas brands and that didn’t disclose how much it received for the its other businesses, including yarn, subsidiaries, but Dagong Global Credit fabrics and textile raw material trading Rating stated in a June 2018 rating report generate razor thin margins and likely that the amount was CNY 1.925bn. contribute only minimal EBITDA.

The three subsidiaries were 50.69% Shareholding Disclosures: As Debtwire owned dyed fabrics manufacturer Jining first reported in July 2017, Ruyi was Ruyi Printing and Dyeing, wholly owned touting a 26% stake held by Yinchuan home textile manufacturer Jining Ruyi Tonglian Capital Investment Operation Home Textile and 79.66% owned cotton even though the government-owned yarn manufacturer Chongqing Sanxia investment vehicle disclosed at the time Technology Textile. Ruyi stated in the that it disposed of the stake in 2016. onshore bond OC that these subsidiaries were disposed due to their high In response to the Debtwire report, manufacturing costs. The company's the company clarified that it hadn’t financial statements don’t demonstrate an previously been made aware of the improvement in cost efficiency since the disposal because the stake had been sale. Ruyi’s yarn and fabrics segment transferred to another vehicle owned by revenue declined by 31.4% in 2018, and the Yinchuan government, which also gross profit margins actually declined to took back from Ruyi stakes in two 10.6% from 11.2% in 2017 (2016 margins financial units in early 2017 without were 10.7%). notifying the company.

The Dagong rating report stated Ruyi Yinchuan State-owned Assets Supervision disposed the facilities because they were & Administration Commission’s (SASAC) outdated. That hasn’t stopped Ruyi from Yinchuan Tonglian Capital Investment transacting with them post the disposal. Operation gained its exposure in Ruyi in In 2018, these three units purchased CNY 2015 by buying preference shares for CNY 2.27bn goods or services from Ruyi and 2bn entitling the holder to a 26% equity sold CNY 1.36bn of goods or services back, stake in the company.

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OVERSEAS ACQUISITIONS

Acquisition(/ Consideration Stake Stake owned Assets announced ) Description (USDm) acquired as of 2018 date

Renown Inc. 2010 45.8 41.26% Renown is a Japanese apparel designer, manufacturer and seller. It owns 29 brands including 52.99% (3606 TYO) 2013 NA 11.73% D’URBAN, Aquascutum and Simple Life, with 2,491 stores as of end-1Q18 93,483 hectares cotton farm with 65 thousands tons annual production. Ruyi currently has an 80% Cubbie cotton farm, 2013 249 80% NA(1) stake but will need to sell off at least an 29% stake — bringing Ruyi’s holding down to 51% — by Australia October 2019, as required by Australia’s Foreign Investment Review Board.

Lempriere, founded in 1857, supply’s wool and wool top to textile mills and fashion companies Lempriere (Australia) globally. The company has trading offices in Australia, South Africa, Argentina, United States, and Jun-16 44 51% 51% Co., Ltd. . Lempriere owns wool processing assets in New Zealand and Europe, and has offices in China.

Total project investment was USD 1.8bn, including USD 360m of capital contributed by Ruyi and 2x660MW Power 2015 180 50.00% 50.00% China Huaneng Group, and USD 1.44bn loans under the JV. The plant generated USD 104m plant in Pakistan profits in 2018, as per 9 May 19 Debtwire report

Ruyi partnered with LGFV Yinchuan Weixin Fund to purchase a 81.9% stake in SMCP for EUR 1.3bn. The deal was done through a JV, Jining Ruyi Garment Development, which Ruyi owned a 51.8% stake in while the rest was held by the LGFV. That gave Ruyi a 42.4% look through stake in SMCP at the time of the acquisition. SMCP Oct-16 NA 42.41% 53.9% While it is not clear how much exactly Ruyi put up for the deal, Ruyi’s total debt shot up by 56.2% in end-2016 from the previous year. SMCP had an IPO on 20 Oct 17, and shareholders received a total of EUR 496m from the IPO, of which Ruyi received EUR 261m. The IPO dropped Ruyi’s stake in the company to 31.75%. But Ruyi on 15 August 2018 bought out its JV partner, bringing its stake back up to 53.9%.

Trinity operates in retail and wholesale of premium menswear in China, Singapore and Europe with Trinity Ltd (891 HK) Nov-17 284 51.98% 51.90% a total of 253 stores and owns brands including Cerruti 1881, Gieves & Hawkes and Kent & Curwen.

A consortium including Ruyi bought the USD-based spandex brand Lycra for USD 2.5bn, according to S&P’s 15 May press release. Though Ruyi's stake in Lycra or the consortium is not disclosed, a 2 April Debtwire report noted that the acquisition funding comprised USD 175m Invista's apparel & >10% from Ruyi entities, USD 170m from Itochu Group, USD 500m from Koch Industries and the >10% minority advanced textiles Jan-19 175 minority remaining funds after debt raised from Ruyi's local government, which is expected to be about stake business (Lycra) stake USD 550m, as per Debtwire 2 April report. The debt raised includes a USD 400m 3-year mezzanine facility from Credit Suisse, USD 150m from Chinese bank's offshore arm, USD 690m notes due-2025 and EUR 250m notes due-2023. According to this capital contribution breakdown, Ruyi holds about 12.5% stake in Lycra.

The deal was extended to 30 May 19 as Ruyi failed to make the remaining USD 13.2m payment by end-2018, the previous agreed completion date, citing pending approval from the Chinese Bagir Group Ltd (Nov-17) 16.5 53.70% Pending government. Bagir (BAGR LON) is a Israel based designer and manufacturer of tailored fashion that primarily operates in Europe and the United States.

NA Shandong Ruyi Investment Holding, JAB Holding and Bally's management team signed definitive Bally International (Feb-18) 700 (controlling Pending agreement for the acquisition of a controlling stake (unspecified) in Bally by Ruyi for about USD A.G. stake) 700m. No further news on whether the transaction was completed as of this reports date.

Source: Debtwire, 12 Apr 19 onshore bond OC

Credit report DW-APAC 19-June-19 Page 5 Shandong Ruyi Technology Group Co Ltd Manufacturing 1Q19 Credit report 19 June 2019 China

CAPITAL STRUCTURE (CNYm) Est Amount Amount Pro Annual Pro Out- Out- Pro Issuance Forma Interest Forma Instrument Issuers Coupon Maturity standing standing Forma Price Yield Guarantor Date amount on Pro Lever- as at 31- as at 31- amount (USD m) forma age DEC-18 MAR-19 amounts Short-term secured loans < 1 year 1,860 NA (1) NA (1) NA (1) Long-term secured loans > 1 year 2,505 NA (1) NA (1) NA (1) Finance lease > 1 year 1,400 1,400 1,400 203 Offshore secured bonds 3m EURI- BiSoho/ MidSoho S.A.S EUR 100m senior secured floating rate notes 18-May-16 BOR + 1-Nov-22 773 773 773 112 SMCP (parent) 600bps (2) BiSoho/ MidSoho S.A.S EUR 371m 7-year callableenior secured notes 18-May-16 5.88% 1-May-23 1,394 1,394 0 0 82 SMCP (parent) Total secured debt 7,932 3,566 2,173 314 0.9x Short-term guaranteed loans < 1 year 4,110 NA (1) NA (1) NA (1) Long-term guaranteed loans > 1 year 313 NA (1) NA (1) NA (1) Short-term credit loans < 1 year 318 NA (1) NA (1) NA (1) Long-term credit loans > 1 year 1,698 NA (1) NA (1) NA (1) < 1 year 1,533 7,202 7,202 1,042 Other loans(2) > 1 year 647 4,612 7,356 1,065 Onshore bonds CNY 2bn 5-year puttable corporate bond(3) Shandong Ruyi 23-Oct-15 7.90% 23-Oct-20 1,903 1,903 1,903 275 150 CNY 300m 5-year corporate bond(4) Shandong Ruyi 14-Nov-17 7.60% 14-Nov-22 300 300 300 43 23 CNY 1.5bn 5-year corporate bond(4) Shandong Ruyi 18-Sep-18 7.90% 18-Sep-23 1,500 1,500 1,500 217 119 CNY 500m 3-year medium-term notes I Shandong Ruyi 28-Mar-16 5.99% 28-Mar-19 500 0 0 0 0 CNY 500m 3-year medium-term notes II Shandong Ruyi 31-Aug-16 5.50% 31-Aug-19 500 500 500 72 28 CNY 1bn 3-year medium-term notes I Shandong Ruyi 14-Dec-17 7.50% 14-Dec-20 1,000 1,000 1,000 145 75 CNY 1bn 3-year medium-term notes I Shandong Ruyi 15-Mar-19 7.50% 15-Mar-22 0 1,000 1,000 145 75 Subtotal 5,703 6,203 6,203 898 Offshore bonds Shandong Ruyi 19-Dec-16 1,728 1,728 1,728 250 Technology Prime Bloom Group, Forever USD 345m 3-year callable senior notes Holdings 7.50% 19-Dec-19 96.28 15.55% 179 11-Jan-17 656 656 656 95 Winner Intl Development Shandong Ruyi 5-Jul-17 1,382 1,382 1,382 200 Technology Prime Bloom USD 300m 5-year callable senior notes 6.95% 5-Jul-22 80.50 15.19% 144 Group, Forever Holdings 10-Nov-17 691 691 691 100 Winner Intl Development "2019 Luxembourg bond"(5) NA 2018 NA NA 1,962 1,962 1,962 284 Subtotal 6,419 6,419 6,419 929 Total debt 28,672 28,002 29,353 4,248 11.6x Out of balance sheet debt Eagle Super Eagle Global Holding Intermediate B.V (parent), Global Holding Eagle Global USD 690m 7-year callable senior first-lien B.V (6) 4-May-18 7.50% 1-May-25 4,768 4,768 4,768 690 96.75 8.21% Holding B.V, Ruyi secured notes (Netherlands), US Acquisition Ruyi Parent Corp, US Finance/ Ruyi US LYCRA Acquisition Corp. Eagle Super Eagle Global Holding Intermediate B.V (parent), Global Holding Eagle Global EUR 250m 5-year senior first-lien callable B.V (6) 4-May-18 5.38% 1-May-23 1,933 1,933 1,933 280 95.92 6.59% Holding B.V, Ruyi secured notes (Netherlands), US Acquisition Ruyi Parent Corp, US Finance/ Ruyi US LYCRA Acquisition Corp. Total debt, incl out of balance sheet debt 35,372 34,703 36,053 5,217 14.2x Cash & Cash Equivalent (7) 8,953 8,359 9,710 1,405 External guarantee 2,011 2,011 2,011 Credit facilities (mostly uncommitted(8)) 3,139 3,139 3,139 Net Debt 19,719 19,643 19,643 2,843 7.8x Net debt, incl out of balance sheet debt 26,419 26,343 26,343 3,812 10.4x LTM Adj. EBITDA 2,531 Source: Debtwire, company filings (1) No breakdown on loan types for 1Q19. (2) 51.8% owned subsidiary SMCP announced early redemption of the EUR notes due-2023 on 10 May, which would be refinanced by a new EUR 265m amortizing term loan and a EUR 200m revolving credit facilitiy, with 5-year maturity. SMCP also repaid EUR 110m of credit facilitiy previously drawn with the new loans. (3) On 23 Oct 18, issuer adjusted coupon from 5.95% to 7.9% and holders of CNY 96.9m exercised put option. Issuer has option to adjust coupon rate and the note is puttable for investor on 23 Oct 19. (4) At the end of the second and forth years, issuer has option to adjust coupon rate and the note is puttable for investor. (5) According to AR2018, no other detail of the bond is provided. (6) Out of balance sheet bonds, with Ruyi stake in the issuer unknown except that the bond OC stated "the Issuers are entities beneficially owned by the Equity Investors and controlled by Shandong Ruyi Technology Group." (7) Pro forma cash is cash as of 1Q19 after adjustment for bond redeemed and new debt issued between April and this report date. (8) No disclosure on whether the credit facilities are committed or not. However, most of the credit facilities are provided by onshore banks, which are uncommitted.

Credit report DW-APAC 19-June-19 Page 6 Shandong Ruyi Technology Group Co Ltd Manufacturing 1Q19 Credit report 19 June 2019 China

CREDIT FACILITIES BY LENDERS AS OF 31-DEC-18 (CNY m) Lenders Total Used Remaining unused Export-Import Bank of China 2,028 1,831 197 Industrial and Commercial Bank of China 2,043 1,925 118 (French Consortium) 1,951 1,129 821 Bank of China 1,425 1,333 92 Agricultural Bank of China 1,357 1,319 38 1,390 1,112 278 Heng Feng bank 1,200 1,086 114 888 404 484 ANZ bank 866 866 0 China CITIC Bank 660 585 75 Agricultural Development Bank of China 849 299 550 Taian Bank 400 353 47 Yellow River Rural Commercial Bank 300 297 3 Qilu Bank 300 281 19 Bank of Rizhao 300 205 95 230 212 18 150 150 0 Sumitomo Mitsui Banking Corporation 172 172 0 Baoshang Bank 200 200 0 190 160 30 Bank of Jining 170 110 60 Weihai City Commercial Bank 150 140 10 Bank of Ningxia 150 145 5 Bank of Shizuishan 100 100 0 Xinjiang Bank 100 100 0 Wenshang Rural Credit Cooperatives 96 96 0 Qi Shang Bank 84 55 29 Zaozhuang Bank 80 80 0 80 80 0 Bank of Weifang 64 31 33 50 50 0 26 2 24 Jining Rural Commercial Bank 23 23 0 Dezhou Bank 13 13 0 China Industrial International Trust 200 200 0 Total 18,284 15,145(1) 3,139 Source: Debtwire, company financials (1) The total credit facilities used of CNY 15.1bn exceeded CNY 13bn total loans disclosed from the balance sheet (see capital structure on page 6), but no explanation was provided in the annual report.

SUBSIDIARIES WITH SHARES PLEDGED TO LOANS (AS OF 31-DEC-18)

Subsidiaries Subsidiaries (Chinese name) Shares owned Shares pledged(1)

Shandong Ruyi Woolen Garment Group Holding 山东如意毛纺服装集团股份有限公司 23.12% 23.12%

Jining Ruyi High-tech Fiber Material 济宁如意高新纤维材料有限公司 100% 100%

Wenshang Ruyi Technological Textile 汶上如意技术纺织有限公司 100% 100%

Xinjiang Ruyi Textile Garment 新疆如意纺织服装有限公司 60% 60.00%

Shandong Jining Ruyi Export & Import 山东济宁如意进出口有限公司 57.8% 57.80%

Shandong Huaneng Ruyi Coal and Electricity 山东华能如意煤电有限公司 50% 41.98% Source: Debtwire, company filings (1) As of 31-DEC-18 except Shangdong Ruyi Wooden Garment

Credit report DW-APAC 19-June-19 Page 7 Shandong Ruyi Technology Group Co Ltd Manufacturing 1Q19 Credit report 19 June 2019 China

RESTRICTED ASSETS AS OF 31-DEC-18 Pledged Book value Pledged asset Entities Entities (Chinese name) Creditors asset type (CNY m) 山东如意科技集 Fixed assets Ruyi Building Shandong Ruyi Technology Group 团有限公司 China CITIC Bank 211 山东如意科技集 China Construction Bank, Fixed assets Industrial Park factory Shandong Ruyi Technology Group 65 团有限公司 Bank of Communications

Fixed assets Property Gaoqing Ruyi Textile 高青如意纺织有限公司 Agricultural Bank of China 64

Fixed assets Property Linyi Aotai Textiles 临邑澳泰纺织有限公司 Agricultural Bank of China 5 Export-Import Bank of China, Fixed assets Factory Ningxia Ruyi Technology Fashion Industry 宁夏如意科技时尚产业有限公司 99 Agricultural Bank of China Fixed assets Property Shandong Ruyi Woolen Garment Group Holding 山东如意毛纺服装集团股份有限公司 China Construction Bank 45

Fixed assets Machinery equipment Wenshang Ruyi Technological Textile 汶上如意技术纺织有限公司 Wenshang Rural Credit Cooperatives 56

Fixed assets Machinery equipment Gaoqing Ruyi Textile 高青如意纺织有限公司 Gaoqing Rural Commercial Bank 28

Fixed assets Machinery equipment Jining Ruyi High-tech Fiber Material 济宁如意高新纤维材料有限公司 Bank of China 135

Fixed assets Machinery equipment Taian Ruyi Technology Fashion Industry 泰安如意科技时尚产业有限公司 Bank of China 94

Fixed assets Total 802

Intangibles Land Taian Ruyi Technology Fashion Industry 泰安如意科技时尚产业有限公司 Bank of China 52 山东如意科技集 Intangibles Ruyi Building's land Shandong Ruyi Technology Group 团有限公司 China CITIC Bank 12 Industrial Park 山东如意科技集 China Construction Bank, Intangibles Shandong Ruyi Technology Group 37 factory's land 团有限公司 Bank of Communications

Intangibles Land Gaoqing Ruyi Textile 高青如意纺织有限公司 Agricultural Bank of China 39

Intangibles Land Ningxia Ruyi Technology Fashion Industry 宁夏如意科技时尚产业有限公司 Export-Import Bank of China, ICBC 73

Intangibles Land Shandong Ruyi Woolen Garment Group Holding 山东如意毛纺服装集团股份有限公司 China Construction Bank 27

Intangibles Total 239

Fudian Bank, Ping An Securities, Equity shares Equity shares Shandong Ruyi Wool Textile Group 山东如意毛纺集团有限公司 Yinchuan Shengrong Investment, 795 Yinchuan Hongying Investment Equity shares Equity shares Shandong Ruyi Technology Group 山东如意科技集团有限公司 Bohai International Trust 318

Equity shares Total 1,113 Cash & cash Total 4,106 equivalents Total Total 6,259 Source: Debtwire, company filings

COTTON YARN AVERAGE SELLING PRICE VS DEBT MATURITY PROFILE AS OF 31-MAR-19 INPUTS UNIT COST TRNED(1)

Finance lease Onshore bonds 12 Offshore bonds Bank & other loans

EUR senior secured notes CNY bn 10 0.5

2.4 8 1.4 6 2.0

4 7.2 0.3 4.6 1.5 2 2.1 2.9 1.4 1.0 0.8 0 1 year > 1 Year 2 year 3 year 4 year > 5 year

Source: Debtwire, company filings Source: Debtwire, company filings (1) 1Q18 is the latest data available. YoY % change of 1Q18 or 1Q17 data unavailable, the % (1) 1Q18 is the latest data available. YoY % change of 1Q18 or 1Q17 data unavailable, the % change is calculated using 2017 price instead assuming FY18 has similar price level. change is calculated using 2017 price instead assuming FY18 has similar price level. Credit report DW-APAC 19-June-19 Page 8 Shandong Ruyi Technology Group Co Ltd Manufacturing 1Q19 Credit report 19 June 2019 China

WOOLEN FABRICS AVERAGE SELLING PRICE VS (1) DENIM AVERAGE SELLING PRICE VS INPUTS UNIT COST TRNED INPUTS UNIT COST TRNED(1)

Source: Debtwire, company filings Source: Debtwire, company filings (1) 1Q18 is the latest data available. YoY % change of 1Q18 or 1Q17 data unavailable, the % (1) 1Q18 is the latest data available. YoY % change of 1Q18 or 1Q17 data unavailable, the % change is calculated using 2017 price instead assuming FY18 has similar price level. change is calculated using 2017 price instead assuming FY18 has similar price level.

YARN & FABRICS PRODUCTION AND SALES

(1) 2015 2016 2017 1Q18 Production capacity ('000 tons) 100 200 200 200 Production volume ('000 tons) 81.3 183.5 184.5 41

Utilization rate (%) 81.3% 91.8% 92.3% 20.5% Cotton yarn Sales volume ('000 tons) 71.4 173.3 194.5 40.4

Sales value (CNY m) 2296 3915 4567 917

Average selling price (CNY/ton) 32,163 22,593 23,480 22,706

Sell-through rate (%) 87.8% 94.4% 105.4% 98.5% Production capacity (m meters) 250 250 250 -

Production volume (m meters) 235 243 182 - Utilization rate (%) 94.0% 97.2% 72.8% -

Dyed fabrics Sales volume (m meters) 214 231 170 - Sales value (CNY m) 1689 1732 1259 -

Average selling price (CNY/meter) 7.89 7.50 7.41 - Sell-through rate (%) 91.1% 95.1% 93.4% -

Production capacity (m meters) 30 30 30 30 Production volume (m meters) 27.1 29.0 29.5 8

Utilization rate (%) 90.4% 96.7% 98.3% 26.7% Denim Sales volume (m meters) 27.8 39.0 37.0 7.0

Sales value (CNY m) 510.0 763.5 783.4 141.2 Average selling price (CNY/meter) 18.32 19.58 21.17 20.17

Sell-through rate (%) 102.7% 134.5% 125.4% 87.5%

Production capacity (m meter) 9.9 9.9 9.9 10 Production volume (m meter) 8.4 9.1 9.7 2.4

Utilization rate (%) 84.7% 92.2% 97.5% 24.5% Woolen fabrics Sales volume (m meter) 7.0 8.9 7.4 1.7

Sales value (CNY m) 388.0 356.9 284.0 54.5 Average selling price (CNY/meter) 55.58 39.90 38.45 32.81

Sell-through rate (%) 83.3% 98.0% 76.5% 67.9% Source: Debtwire, Apr 19 onshore bond OC (1) 1Q18 is the latest data available, and 1Q17 data is unavailable

Credit report DW-APAC 19-June-19 Page 9 Shandong Ruyi Technology Group Co Ltd Manufacturing 1Q19 Credit report 19 June 2019 China

RAW MATERIAL PURCHASES 2015 2016 2017 1Q18(1) Purchases volume Raw cotton ('000 tons) 68.5 99.2 94.8 23.6 Cotton yarn ('000 tons) 36.7 37.8 25.3 6.2 Grey fabric ('000 meters) 193,024 229,215 155,875 - PTG ('000 tons) 7.6 10.6 7.2 1.8 Raw wool ('000 tons) 40.4 43.1 32.5 5.2 Wool ('000 tons) 2.4 2.9 2.6 0.5 Average unit cost Raw cotton (CNY/ton) 15,108 13,995 14,098 14,008 Cotton yarn (CNY/ton) 23,829 22,116 23,201 23,366 Grey fabric (CNY/meter) 5.1 4.7 5.2 - PTG (CNY/ton) 17,148 17,351 15,644 15,522 Raw wool (CNY/ton) 67,102 71,502 72,632 71,675 Wool (CNY/ton) 74,300 87,952 109,605 85,876 Total purchase cost Raw cotton (CNY m) 1,035 1,389 ` 331 Cotton yarn (CNY m) 875 835 587 145 Grey fabric (CNY m) 977 1,080 815 0 PTG (CNY m) 130 183 113 28 Raw wool (CNY m) 2,711 3,082 2,361 373 Wool (CNY m) 178 251 285 43 Total (CNY m) 5,906 6,820 5,496 919 Source: Debtwire, 12 Mar 19 onshore bond OC (1) 1Q18 is the latest data available, and 1Q17 data is unavailable

TEXTILE RAW MATERIAL TRADING DATA 2015 2016 2017 1Q18(1) Import volume ('000 tons) 231 125.5 167.3 41.8 Domestic purchase volume ('000 tons) 101.8 180.1 182.5 68.9 Average unit cost (CNY/ton) 12,286 12,695 13,212 12,912 Cotton Sales volume ('000 tons) 325.5 283.3 387.4 120.3 Average selling price (CNY/ton) 13,318 13,375 13,679 13,842 Sell-through rate 97.8% 92.7% 110.7% 108.7% Unit gross margin 7.7% 5.1% 3.4% 6.7% Import volume ('000 tons) 54.7 55.7 68.1 27.2 Domestic purchase volume ('000 tons) 88.1 135.4 124.6 60.1 Average unit cost (CNY/ton) 19,645 16,986 15,749 15,326 Cotton yarn Sales volume ('000 tons) 120.8 187.6 193.3 92.6 Average selling price (CNY/ton) 20,516 17,722 16,045 16,126 Sell-through rate 84.6% 98.2% 100.3% 106.1% Unit gross margin 4.2% 4.2% 1.8% 5.0% Import volume ('000 tons) 7.3 5.6 7.7 1.9 Domestic purchase volume ('000 tons) 0 0 0 0 Average unit cost (CNY/ton) 72,148 75,538 78,125 76,059 Wool top Sales volume ('000 tons) 7.5 6 8.1 1.7 Average selling price (CNY/ton) 75,651 80,978 80,748 79,349 Sell-through rate 102.7% 107.1% 105.2% 89.5% Unit gross margin 4.6% 6.7% 3.2% 4.1% Import volume ('000 meters) 32,392 13,529 9,265 3,681 Domestic purchase volume ('000 meters) 66,193 79,473 90,283 7,512 Average unit cost (CNY/meter) 6.52 5.87 5.51 5.46 Dyed fabrics Sales volume ('000 meters) 90,370 126,400 114,829 16,286 Average selling price (CNY/meters) 7.43 6.06 5.57 5.53 Sell-through rate 91.7% 135.9% 115.4% 145.5% Unit gross margin 12.2% 3.1% 1.1% 1.3% Source: Debtwire, 12 Mar 19 onshore bond OC (1) 1Q18 is the latest data available, and 1Q17 data is unavailable

Credit report DW-APAC 19-June-19 Page 10 Shandong Ruyi Technology Group Co Ltd Manufacturing 1Q19 Credit report 19 June 2019 China

FINANCIAL SUMMARY (USDm) Period-end 31-Dec 31-Dec 31-Dec 31-Dec 31-Mar 31-Mar 31-Mar INCOME STATEMENT 2015 2016 2017 2018 TTM to Mar 1Q18 1Q19 Revenue 22,770 29,087 35,738 34,282 37,306 8,807 11,831 Change since last year 8.6% 27.7% 22.9% -4.1% 8.8% 0.8% 34.3% Cost of sales (18,745) (23,054) (26,000) (25,345) (28,698) (6,392) (9,745) Gross profit 4,026 6,033 9,738 8,938 8,608 2,414 2,085 Gross profit margin 17.7% 20.7% 27.2% 26.1% 23.1% 27.4% 17.6% Operating expenses (2,667) (4,345) (6,669) (7,451) (6,973) (1,899) (1,421) EBIT 1,359 1,688 3,069 1,487 1,636 515 665 EBIT margin 6.0% 5.8% 8.6% 4.3% 4.4% 5.9% 5.6% (+) Depreciation and amortization 343 799 713 888 895 222 229 Adjusted EBITDA 1,702 2,487 3,782 2,375 2,531 737 894 Change since last year 46.1% 52.1% -37.2% 6.6% 34.4% 21.2% Adjusted EBITDA margin 7.5% 8.6% 10.6% 6.9% 6.8% 8.4% 7.6% Interest expense, gross (630) (1,216) (1,340) (1,508) (1,603) (278) (374) Other income and gains (losses) 221 2,385 1,353 3,113 3,080 107 74 Net income (loss) 702 2,496 2,847 2,337 2,349 254 266 BALANCE SHEET 2015 2016 2017 2018 TTM to Mar 1Q18 1Q19 Cash & equivalents 8,396 8,583 9,811 8,953 8,359 9,758 8,359 Accounts receivable 2,943 5,079 6,213 5,769 6,034 6,008 6,034 Prepayments and other receivables 4,199 5,898 8,743 10,806 10,143 8,631 10,143 Inventories 4,064 7,079 6,461 7,903 7,880 6,061 7,880 Total current assets 19,659 26,700 32,021 34,561 33,128 30,989 33,128 Non-current assets 14,780 28,676 30,323 34,162 34,787 30,690 34,787 PP&E net 5,962 10,440 9,472 11,057 10,970 9,732 10,970 Construction in progress 4,145 1,732 2,005 1,620 1,660 1,769 1,660 Investments in JV, associates and equity 1,604 4,149 4,846 4,850 6,142 5,716 6,142 Investments and advances 89 252 267 2,028 2,022 307 2,022 Intangible assets & goodwill 2,271 10,748 11,651 11,624 11,163 11,215 11,163 Other non-current assets 708 1,355 2,081 2,983 2,830 1,951 2,830 Total assets 34,439 55,375 62,344 68,723 67,915 61,680 67,915 Accounts payable 5,646 7,216 6,163 7,323 6,620 6,325 6,620 Accrued and other current liabilities 1,640 4,470 3,279 3,998 3,921 3,050 3,921 Total current liabilities 14,298 20,878 17,346 22,746 21,456 17,290 21,456 Total debt (incl. perpetual bond) 15,372 24,011 25,516 28,008 27,747 24,717 27,747 Short term debt 7,011 9,192 7,890 11,424 10,915 7,902 10,915 Long term debt (including perpetual bond) 8,360 14,819 17,626 16,584 16,833 16,815 16,833 Net debt (incl. perpetual bond) 6,976 15,427 15,705 19,055 19,388 14,959 19,388 Total non-current liabilities 8,694 15,103 18,071 16,757 16,976 17,237 16,976 Total liabilities 22,992 35,981 35,417 39,503 38,431 34,527 38,431 Total equity (excl. perpetual bond) 11,447 19,394 26,927 29,220 29,467 27,152 29,467 Minority Interest 1,526 8,086 15,284 15,914 16,035 15,405 16,035 CASH FLOW STATEMENT 2015 2016 2017 2018 TTM to Mar 1Q18 1Q19 Funds from operations 1,774 4,084 4,949 2,649 NA NA NA Changes in working capital 276 348 (356) 1,337 NA NA NA Interest paid (incl. dividend paid for capital securities) (624) (1,565) (833) (1,307) (1,361) (315) (370) Cash tax (466) (370) (503) (785) (787) (209) (211) Operating cash flow, adjusted with interest 959 2,498 3,256 1,895 1,871 144 120 Capital expenditures (1,369) (2,194) (2,104) (2,963) (2,936) (82) (55) Free cash flow (410) 303 1,152 (1,069) (1,066) 62 65 Asset sales 1 121 141 14 1,214 0 1,200 Free cash flow, net (409) 425 1,293 (1,055) 149 62 1,265 Net acquisitions & increase in investments (718) (21,362) (2,856) (1,691) (2,921) (250) (1,479) Net borrowings 1,604 7,714 1,998 1,435 3,121 (514) 1,171 Equity raised 2,000 13,379 2,194 1,506 1,506 Dividend Paid (394) (394) (644) (655) (655) Other financing activities 2,035 120 (1,362) (692) (2,023) 645 (686) Cash flow from investing activities, adjusted (2,079) (23,142) (5,131) (4,563) (4,335) (332) (105) Cash flow from financing activities, adjusted 5,244 20,819 2,186 1,594 1,949 130 485 RATIO ANALYSIS 2015 2016 2017 2018 TTM to Mar 1Q18 1Q19 Net debt / Adj. EBITDA 4.1x 6.2x 4.2x 8.0x 7.7x - - Total debt / Adj. EBITDA 9.0x 9.7x 6.7x 11.8x 11.0x - - Adj. EBITDA / Interest expense 2.7x 2.0x 2.8x 1.6x 1.6x 2.7x 2.4x Current ratio 1.4x 1.3x 1.8x 1.5x 1.5x 1.8x 1.5x Quick ratio 1.1x 0.9x 1.5x 1.2x 1.2x 1.4x 1.2x Source: Debtwire, company filings Credit report DW-APAC 19-June-19 Page 11 Shandong Ruyi Technology Group Co Ltd Manufacturing 1Q19 Credit report 19 June 2019 China

79.5%(1) Qiu Yafu (邱亚夫) (51%) Yinchuan State-owned Assets Supervision & Yinchuan Huichuang Capital Invest- Sun Jianhua (孙建华) (19.48%) Administration Com- ment Holding Co., Ltd. (银川汇创资 Others (29.52%) mission (SASAC) (PRC) 本投资控股有限公司) (PRC)

71.77% 28.23 Beijing Ruyi Fashion Invest- Itochu (China) Group 100% ment Holding Co., Ltd. (北京如 Yinchuan Financial Holding Co. Holding Co., Ltd. (伊藤忠 Ltd (银川市金融控股有限公司) Itochu Corporation (JP) Mild International Pty 意时尚投资控股有限公司) (中国)集团有限公司) (PRC) [8001 TYO)] Ltd (AU) (PRC) (PRC)

53.5% 26.0% 2.2% 11.72% 6.59%

Shandong Ruyi Technology Group Co Ltd CNY 6.2bn onshore bonds Guarantor for USD 345m due –Dec (山东如意科技集团有限公司) (PRC) 19s & USD 300m due-Jul 22s;

100% 80% 69% 31% Ningxia Ruyi Science and Wenshang Ruyi Tech- Jining Gaoxin Ruyi New 64.69% Material Technology Linyi Aotai Textile Co Renown Incorpo- 52.99% Technology Fashion Indus- nology Textile Co., Ltd. Co Ltd. 济宁高新如意新 Ltd. (临邑澳泰纺织有 rated try Co Ltd. 宁夏如意科技时 汶上如意技术纺织有限公 材料科技有限公司 限公司) (PRC) (JP) [3606 TYO] 尚产业有限公司 (PRC) 司 (PRC) (PRC) 100% 20% 85% 85.71% 14.29% Jining Ruyi Energy Tech- Shanghai Printing Net- Jining Gaoxin District Beijing Renown Ruyi 100% Ningxia Ruyi Ecological nology Development Co., work Technology Co Ruyi Jinfu Small Loans Fashion Commercial Textile Co Ltd. 宁夏如意生 Ltd. Ltd. LLC. 济宁高新区如意 and Trading Co Ltd. 济宁如意能源科技发展有 上海印刻网络科技有限 金服小额贷款有限责任 北京瑞纳如意时尚商 态纺织有限公司 (PRC) 限公司 (PRC) 公司 (PRC) 公司 (PRC) 贸有限公司 (PRC)

64.97 50% 99.69 100% Wuhu Ruyi Xinbo In- Huaneng Shandong Jining Ruyi Finanicial Jining Ruyi Hi-tech Fiber vestment Partnership Ruyi Coal Power Co., Holding Investment Forever Winner 100% Material Co Ltd 济宁如意高 LLP. 芜湖如意信博投资 Ltd. Co., Ltd. International Devel- opment (Australia) 新纤维材料有限公司 (PRC) 合伙企业(有限合伙) 华能山东如意煤电有限 济宁如意金控投资有限 Pty. Ltd. (AU) (PRC) 公司 (PRC) 公司 (PRC) 100% 51% Qingdao Free Trade Zone Shandong Ruyi Capital Jining Xueyan Thermal Shandong Jiada Tex- 100% 70% Forever Winner 100% Ruyi Investment Co Ltd. 青 Holding Co., Ltd. Power Co., Ltd. tile Co Ltd. (山东嘉达 岛保税区如意投资有限公司 山东如意资本控股有限公 济宁市雪兖热电有限公 International De- (PRC) 司 (PRC) 司 (PRC) 纺织有限公司) (PRC) velopment Ltd. (HK)

100% 64.29% 49% 51% 100% Qingdao Ruyi Fashion Jining Ruyi Fiber Co., Lempriere Gaoqing Ruyi Textile Co Enterprise Management Ltd. CS Agriculture Pty (Australia) Co Ltd. Ltd. 高青如意纺织有限公司 Consulting Co., Ltd. 青岛如意时尚企业管理咨 济宁如意纤维有限公司 Ltd (AU) (PRC) 询有限公司 (PRC) (PRC) 100% CSTT Holdings Ltd. 100% NA(2) 60% (SG) Xinjiang Ruyi Textile and Xinjiang Ruyi Fashion Cubbie Station cot- 51% Garment Co Ltd. 新疆如意 and Textile Technology Co Ltd. 新疆如意时尚纺 ton farm (AU) 51.9% 纺织服装有限公司 (PRC) Trinity Ltd. (HK) 织科技有限公司 (PRC) 100% 50% [891 HK] (4) (4) 1.8% 58.61% Huaneng Shandong ≈12.5%(3) Shandong Ruyi Woolen 2x660 MW Power Ruyi (Pakistan) Ener- Shandong Jining Ruyi gy (Private) Co., Ltd. The Lycra Compa- Import & Export Co Ltd 山 Garment Group Co Ltd. Plant (PK) (PK) ny (USA) 东济宁如意进出口有限公司 山东如意毛纺服装集团股 (PRC) 份有限公司(PRC) [002193 SZ] 23.12% NA(2) (4) 51.8% 16.07% SMCP Group S.A.S. 60% Bally International EUR 100m due-Nov 22s Shandong Ruyi Woolen (FR) Group Co Ltd. 山东如意毛 Shandong New Kinetic A.G. (CHE) Energy Ruyi Equity In- 纺集团有限责任公司 (PRC) (2) vestment Fund Partner- 54% 100% ship LP. 山东省新动能如 USD 345m due –Dec Prime Bloom Hold- (4) Bagir Group Ltd. 52.01% 意股权投资基金合伙企 19s (ISR) ings Limited (BVI) 业(有限合伙)(PRC)

Source: Debtwire, Jun 17 USD bond OC, company filings, State Administration for Industry & Commerce (SAIC) (1) Look-through stake. (2) Controlling stake (specific stake undisclosed). (3) Ruyi doesn’t disclose the specific stake owns in Lycra, except mentioning it as a >10% minority stake according to 9 May 19 Debtwire report. However, calculating from Debtwire 4 Apr 19 report’s capital contribution breakdown, Ruyi holds about 12.5% in Lycra. (4) Offshore Onshore Shareholdings according to the latest corporate registry filing and financial reports show that Ruyi holds another 9.41% stake via Ruyi Woolen and Jining Ruyi Import & Entities Export. However, a 28 May 19 stock exchange filing shows that Ruyi holds 17.87% stake held via Ruyi Woolen and Jining Ruyi Import & Export instead, and the updated Entities holding structure is not available. Credit report DW-APAC 19-June-19 Page 12 Shandong Ruyi Technology Group Co Ltd Manufacturing 1Q19 Credit report 19 June 2019 China

RUYI TEXTILE & APPAREL PRODUCTS VALUE CHAIN

Source: Debtwire, Jun 17 USD bond OC

USEFUL LINKS ADDITIONAL CONTACT INFORMATION

1Q19 Financial Report: 30-Apr-19 Luc Mongeon 2018 Annual Report: 30-Apr-19 Part 1 & Part 2 Managing Editor, Asia Pacific Onshore Bond OC: 15-Apr-19 +65 6349 8054 [email protected] USD Bond OC: 27-Jun-17 Chaim Estulin Xtract Research: 21-Nov-16 Senior Editor, Asia Pacific +852 2158 9725 Debtwire Report: 15-Aug-17 [email protected] Capital Profile:28 -May 18

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Credit report DW-APAC 19-June-19 Page 13