Shanghai Feile Audio’s special announcement explains the acquisition doubts

The transaction price of Feile Audio’s acquisition of the target company is determined by negotiation between the parties to the transaction with reference to the evaluation results of the asset evaluation report issued by an asset evaluation agency with securities business qualifications and subject to filing and confirmation by the competent state-owned assets supervision and administration department. The transaction price does not exceed the evaluation results of the asset evaluation report issued by the asset evaluation agency. Before Feile Audio held its second board meeting to determine the transaction price, the underlying asset assessment report had been reviewed and approved by an expert review meeting organized by the Shanghai State-owned Assets Supervision and Administration Commission [Weibo]. Regarding the pricing basis of the underlying assets, as well as the fairness and rationality analysis of the price-earnings ratio, price-to-book ratio and other indicators calculated based on the asset evaluation results, the restructuring report made detailed disclosures in "Section 8 Pricing Basis and Fairness and Reasonability Analysis of the Target Assets of this Transaction". It is worth explaining that the target company uses the income method to determine the asset appraisal value by estimating the expected income of the asset in the future and converting it into the current value using an appropriate discount rate to determine the value of the appraisal object. Relevant price-to-earnings ratios and other indicators are simulated and calculated based on asset evaluation results and are used for comparison and verification. Calculated based on the underlying company's transaction price and 2014 forecast net profit, the price-to-earnings ratio is 11.41 times, significantly lower than the industry average.