March 27, 2026 – Chongqing Polycomp International Corporation (CPIC) announced today that it has signed an Equity Transfer Agreement with minority shareholders of its controlled subsidiary Changzhou Hongfa Zongheng New Material Technology Co., Ltd. (Hongfa New Materials). CPIC will acquire a 40% equity stake in Hongfa New Materials for RMB 712 million (approximately USD 98.5 million). Upon completion of the transaction, Hongfa New Materials will become a wholly-owned subsidiary of CPIC.

According to the announcement, the sellers are minority shareholders Tan Kunlun and Tan Lingzhi. Tan Kunlun, holding 34.2153% of Hongfa New Materials' equity, will receive RMB 609,032,340, while Tan Lingzhi, holding 5.7847%, will receive RMB 102,967,660. The combined 40% stake is valued at RMB 712 million.

The transaction has been approved by CPIC's third board of directors at its 14th meeting and has received official approval from the State-owned Assets Supervision and Administration Commission of Yunnan Provincial People's Government. The deal does not require shareholder approval, does not constitute a related-party transaction, and is not considered a material asset restructuring under the Administrative Measures for Material Asset Restructurings of Listed Companies.

Founded on August 28, 2003, with a registered capital of RMB 67.2 million, Hongfa New Materials is based in the Textile Industrial Park of Xixiashu Town, Xinbei District, Changzhou. Its business scope includes technology development, manufacturing, and processing of composite materials, as well as the production of specialty technical textiles for industrial use.

Financial data indicates improving performance at Hongfa New Materials. As of June 30, 2025, the company reported total assets of RMB 3.436 billion and net assets of RMB 1.653 billion. For the full year of 2024, Hongfa New Materials generated operating revenue of RMB 2.038 billion with a net loss of RMB 5.2152 million. However, in the first half of 2025, operating revenue reached RMB 1.066 billion, while net profit surged to RMB 81.2516 million, demonstrating a marked improvement in profitability.

Under the terms of the Equity Transfer Agreement, payment will be made in two installments. Following the effective date of the agreement and the conversion of the target company from a joint-stock company to a limited liability company, the acquirer will pay 30% of the consideration. The remaining 70% will be paid upon satisfaction of all conditions, including the completion of business registration changes. The transaction will be funded through CPIC's own resources and self-raised funds.

Regarding the purpose of the acquisition, CPIC stated in the announcement that the transaction will comprehensively deepen the company's business integration in the wind power sector. By optimizing resource allocation, strengthening industrial chain coordination, and enhancing technology convergence and market expansion capabilities, CPIC aims to further solidify its strategic footprint in the new energy sector, providing robust support for the company's long-term strategy and the optimization and upgrading of its overall industrial structure.