Anhui Conch Material Technology Announces Potential Deemed Disposal via Subsidiary Capital Increase and Share Expansion

Key Highlights of the Announcement

• Potential Capital Increase and Share Expansion: Anhui Conch Material Technology Co., Ltd. has announced that its 90%-owned subsidiary, Ningbo Conch New Material Technology Co., Ltd., plans to increase its capital and expand its shareholding structure by introducing new investors through a public tender process. This is scheduled to take place in February 2026, with completion targeted for March 2026.
• Shareholding Structure Changes:
  • Prior to the transaction, Anhui Conch Material Technology holds 90% of Ningbo Conch New Material, and Ningbo Industrial Investment Group Co., Ltd. holds the remaining 10%.
  • Post-transaction, Anhui Conch Material Technology’s stake will be diluted from 90% to 80%, Ningbo Industrial Investment Group’s stake will decrease to 8.9%, and a new investor will acquire an 11.1% stake by subscribing to RMB36.25 million of new registered capital.
• Valuation and Pricing:
  • The initial tender price for the new capital will be determined based on an independent professional valuation.
  • Anhui Zhonglian Guoxin Assets Valuation Company Limited appraised the net asset value of Ningbo Conch New Material at RMB385 million (income approach) and RMB366.51 million (asset-based approach) as of 30 November 2025.
  • The price per RMB1 of registered capital will not be less than RMB1.3276, and must not be lower than the appraised net asset value per registered capital prior to the increase and expansion.
• Impact on Financial Statements: After the transaction, Ningbo Conch New Material will remain a subsidiary of Anhui Conch Material Technology, so the scope of consolidated financial statements will not change.
• Rationale and Benefits:
  • The capital increase and share expansion are expected to optimize the Group’s capital structure, reduce gearing, and enhance operational quality.
  • Management believes the move lays a solid foundation for stable operation and sustainable development.
• Regulatory and Listing Rule Implications:
  • The dilution of Anhui Conch Material Technology’s stake from 90% to 80% constitutes a deemed disposal under Hong Kong Listing Rules.
  • If the incoming investor is a connected person, the transaction may also be classified as a connected transaction, triggering additional disclosure and approval requirements.
  • The company will make further announcements if the transaction proceeds or if any binding agreements are signed.
• Current Status: No binding agreements, arrangements, or commitments have been made as of the announcement date. The capital increase and share expansion may or may not proceed.

Potential Share Price Sensitivities

• Equity Dilution: The proposed transaction will dilute the company’s ownership in its subsidiary, which may impact future earnings consolidation and perceived control over the subsidiary.
• Strategic Investor Introduction: The introduction of a new investor could bring strategic or financial benefits, but also changes to the subsidiary’s governance.
• Regulatory Implications: If the transaction triggers notifiable or connected transaction requirements, additional scrutiny and potential approval from independent shareholders may delay or impact execution.
• Uncertainty: As the transaction is not yet binding and may not proceed, share price volatility may result from investor speculation or market interpretation of the announcement.

Detailed Transaction Timeline and Process

1. February 2026: Public tender for the capital increase and share expansion to be conducted at Anhui Assets and Equity Exchange.
2. March 2026 (expected): Completion of the capital increase and share expansion; signing of the Capital Increase Agreement.
3. Subsequent Announcements: The company will provide timely updates per regulatory requirements if material developments occur.

Company and Subsidiary Overview

• Anhui Conch Material Technology Co., Ltd.: Engaged in research, development, production, and sale of cement and concrete additives and intermediates.
• Ningbo Conch New Material Technology Co., Ltd.: Established July 2019, focused on research, development, production, and sale of fine chemicals derived from epoxy derivatives.

Board Composition (as of Announcement Date)

• Ding Feng (Chairman and Non-executive Director)
• Chen Feng, Bai Lin (Executive Directors)
• Feng Fangbo, Zhao Hongyi, Jin Feng, Fan Haibin (Non-executive Directors)
• Li Jiang, Chen Jiemiao, Xu Xu, Zeng Xiangfei (Independent Non-executive Directors)

Investor Advisory

Shareholders and potential investors are advised to exercise caution when dealing in the shares of Anhui Conch Material Technology as the capital increase and share expansion may or may not proceed as planned.

Disclaimer: The information provided above is a summary of an official company announcement and is intended for reference purposes only. It does not constitute investment advice. Investors should consult their own advisors and read the original company filings and disclosures before making investment decisions. The company has not entered into any binding agreements as of the date of this announcement, and the transaction is subject to change or cancellation.

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