Hong Yang-KY: (Supplementary Announcement) Announcement by Subsidiary Yangzhou Hongyang on Board of Directors' Resolution to Acquire Equity
Hong Yang-KY's subsidiary, Yangzhou Hongyang, announced on August 14, 2025, that its Board of Directors resolved to acquire 100% equity of Yangzhou Hongyu Electronic Technology Co., Ltd. from related party Ms. Fang Xinyi for RMB 88.18 million.
📋 Article Processing Timeline
- 📰 Published: August 14, 2025 at 09:00
- 🔍 Collected: May 5, 2026 at 08:00 (6335h 0m after Published)
- 🤖 AI Analyzed: May 5, 2026 at 08:09 (9 min after Collected)
1. Type of merger and acquisition (e.g., merger, spin-off, acquisition, or share transfer):
Acquisition
2. Date of occurrence of the event: 2025/08/14
3. Name of participating M&A company (e.g., other merged company, newly established spun-off company, name of the company whose shares are acquired or transferred):
Yangzhou Hongyu Electronic Technology Co., Ltd.
4. Counterparty to the transaction (e.g., other merged company, transferred to another company in a spin-off, transaction counterparty for shares acquired or transferred):
Fang Xinyi (100% shareholder of Hongyu Electronic Technology Co., Ltd.)
5. Is the transaction counterparty a related party: Yes
6. Relationship between the transaction counterparty and the company (e.g., investee company in which the company holds XX% of shares), and explanation of the reason for selecting a related enterprise or related party as the target for acquisition or transfer of other company's shares and whether it does not affect shareholder interests:
The transaction counterparty is a director of the company (100% shareholder of Hongyu Electronic Technology Co., Ltd.);
The reason for selecting a related party as the acquisition target is that the company holds the land and buildings of the production base, which can eliminate the risk of lease interruption in the future. Furthermore, the transaction price was set with reference to expert opinions, and it is assessed that it can reduce rental expenses and stabilize operations in the long term, thus having no significant adverse impact on shareholder interests.
7. Purpose and conditions of the M&A, including reasons for M&A, consideration conditions, and payment timing (Note 7):
To effectively reduce or eliminate the risk of production interruption and consider the needs for the company's sustainable development, Yangzhou Hongyang, a subsidiary of the company, intends to purchase 100% equity of Hongyu Electronic from related party Ms. Fang Xinyi and dissolve the company after the equity transfer.
The Board of Directors of Yangzhou Hongyang Technology Development Co., Ltd., a subsidiary of the company, resolved to purchase shares at a price not exceeding RMB 90 million; it intends to negotiate with Ms. Fang Xinyi to use the demolition compensation as a down payment and contract signing amount, and to pay the equity acquisition price in installments using its own funds, with the balance to be paid in installments over five years;
And relevant operations will be executed after reporting to the Board of Directors of the head office on August 26, 2025, and resolution by an extraordinary shareholders' meeting convened on September 15, 2025.
Based on the above relevant resolution conditions, the supervisor representative of Yangzhou Hongyang Technology Development Co., Ltd., a subsidiary of the company, signed the capital contribution transfer agreement with related party Ms. Fang Xinyi on September 18, 2025, for a total price of RMB 88.18 million.
The first installment totals RMB 55 million, to be paid from the remaining demolition compensation funds obtained by Huisai Town; after the first installment is completed, subsequent payments will be made in installments, amortized equally over five years starting from the following month, with interest calculated at an annual rate of 2.5% to be paid concurrently.
8. Expected benefits after the M&A:
Eliminating the risk of production interruption is the main benefit of this transaction. After this transaction is approved, the company will acquire the land use rights of approximately 60 mu originally owned by Hongyu Electronic and the ownership of its approximately 60,000 square meters of buildings. Through legal ownership, the company can avoid the risk of production interruption due to various factors such as lease expiration or the landlord selling land or buildings.
Furthermore, after acquisition, monthly rental expenses can be reduced. After a five-year payment extension period, no rental expenses will be incurred, which will have a positive impact on the company's long-term sustainable operations.
9. Impact of the M&A on net asset value per share and earnings per share:
The M&A has synergy effects such as rent reduction. In the short term, there will be no significant impact on net asset value per share and earnings per share.
However, after incorporating its annual profit and loss, it is estimated that net asset value per share and earnings per share will decrease by approximately RMB 0.04.
In the long term, with operational development, it should have a positive impact on the company.
10. Type of M&A consideration and source of funds:
The first installment of RMB 55 million will be paid from the remaining demolition compensation funds; after the first installment is completed, subsequent payments will be made in installments using self-owned funds, amortized equally over five years starting from the following month, with interest calculated at an annual rate of 2.5% to be paid concurrently.
11. Share exchange ratio and its calculation basis:
Not applicable
12. Is there an unreasonable opinion issued by an accountant, lawyer, or securities underwriter for this transaction: No
13. Name of accounting firm, law firm, or securities underwriter:
Yangzhou Hanrui Certified Public Accountants (General Partnership)
14. Name of accountant or lawyer:
Qin Yongjun, Chang Zhihui
15. Certificate number of accountant or lawyer's practice license:
Approval for establishment number: Su Cai Hui [2012] No. 37
Accounting firm number: 32100036
16. Content of independent expert's opinion on the reasonableness of the share exchange ratio, cash or other property distributed to shareholders in this M&A (I. Including the methods, principles or calculation methods adopted for determining the public tender offer price and comparison with internationally customary market value method, cost method, and discounted cash flow method. II. Comparison of the financial status, profitability, and P/E ratio of the acquired company with listed comparable companies. III. If the public tender offer price refers to an appraisal report from an appraisal institution, the content and conclusions of the appraisal report should be explained. IV. If the acquirer's financing repayment plan uses the assets or shares of the acquired company or the surviving company after the merger as collateral, the impact assessment on the financial and business soundness of the acquired company or the surviving company after the merger should be explained) (Note 7):
1. Since the various assets and liabilities of the appraised company can be reasonably identified according to accounting policies and business operations, etc., appropriate and specific appraisal methods can be selected for the characteristics of each asset and liability during the appraisal, and the operational conditions for implementing these appraisal methods are available, an asset-based approach can be chosen for this appraisal. Based on the purpose of this appraisal, the characteristics of the appraised object, and the applicable conditions of the appraisal method, the asset-based approach is chosen for the appraisal.
2. The appraised company has been established for 10 years since November 3, 2014. Its main operating revenue comes from rental income for providing its own land and factory to Yangzhou Hongyang, with no other substantial operations. Therefore, it cannot be compared with the financial status, profitability, and P/E ratio of listed comparable companies.
3. This case does not belong to a public tender offer, and an appraisal report was still commissioned from Yangzhou Branch of Bowen Real Estate Appraisal and Costing Group Co., Ltd.
4. Although the acquirer obtained bank financing using the real estate of the acquired company as collateral during the acquisition process, all relevant borrowings were repaid from the acquirer's own funds and did not use the funds of the acquired company or the surviving company after the merger. Therefore, it does not affect its financial and business soundness. Furthermore, since the acquired company will be dissolved later, this financing guarantee will not affect the surviving company after the merger.
Keywords: Material Information
Acquisition
2. Date of occurrence of the event: 2025/08/14
3. Name of participating M&A company (e.g., other merged company, newly established spun-off company, name of the company whose shares are acquired or transferred):
Yangzhou Hongyu Electronic Technology Co., Ltd.
4. Counterparty to the transaction (e.g., other merged company, transferred to another company in a spin-off, transaction counterparty for shares acquired or transferred):
Fang Xinyi (100% shareholder of Hongyu Electronic Technology Co., Ltd.)
5. Is the transaction counterparty a related party: Yes
6. Relationship between the transaction counterparty and the company (e.g., investee company in which the company holds XX% of shares), and explanation of the reason for selecting a related enterprise or related party as the target for acquisition or transfer of other company's shares and whether it does not affect shareholder interests:
The transaction counterparty is a director of the company (100% shareholder of Hongyu Electronic Technology Co., Ltd.);
The reason for selecting a related party as the acquisition target is that the company holds the land and buildings of the production base, which can eliminate the risk of lease interruption in the future. Furthermore, the transaction price was set with reference to expert opinions, and it is assessed that it can reduce rental expenses and stabilize operations in the long term, thus having no significant adverse impact on shareholder interests.
7. Purpose and conditions of the M&A, including reasons for M&A, consideration conditions, and payment timing (Note 7):
To effectively reduce or eliminate the risk of production interruption and consider the needs for the company's sustainable development, Yangzhou Hongyang, a subsidiary of the company, intends to purchase 100% equity of Hongyu Electronic from related party Ms. Fang Xinyi and dissolve the company after the equity transfer.
The Board of Directors of Yangzhou Hongyang Technology Development Co., Ltd., a subsidiary of the company, resolved to purchase shares at a price not exceeding RMB 90 million; it intends to negotiate with Ms. Fang Xinyi to use the demolition compensation as a down payment and contract signing amount, and to pay the equity acquisition price in installments using its own funds, with the balance to be paid in installments over five years;
And relevant operations will be executed after reporting to the Board of Directors of the head office on August 26, 2025, and resolution by an extraordinary shareholders' meeting convened on September 15, 2025.
Based on the above relevant resolution conditions, the supervisor representative of Yangzhou Hongyang Technology Development Co., Ltd., a subsidiary of the company, signed the capital contribution transfer agreement with related party Ms. Fang Xinyi on September 18, 2025, for a total price of RMB 88.18 million.
The first installment totals RMB 55 million, to be paid from the remaining demolition compensation funds obtained by Huisai Town; after the first installment is completed, subsequent payments will be made in installments, amortized equally over five years starting from the following month, with interest calculated at an annual rate of 2.5% to be paid concurrently.
8. Expected benefits after the M&A:
Eliminating the risk of production interruption is the main benefit of this transaction. After this transaction is approved, the company will acquire the land use rights of approximately 60 mu originally owned by Hongyu Electronic and the ownership of its approximately 60,000 square meters of buildings. Through legal ownership, the company can avoid the risk of production interruption due to various factors such as lease expiration or the landlord selling land or buildings.
Furthermore, after acquisition, monthly rental expenses can be reduced. After a five-year payment extension period, no rental expenses will be incurred, which will have a positive impact on the company's long-term sustainable operations.
9. Impact of the M&A on net asset value per share and earnings per share:
The M&A has synergy effects such as rent reduction. In the short term, there will be no significant impact on net asset value per share and earnings per share.
However, after incorporating its annual profit and loss, it is estimated that net asset value per share and earnings per share will decrease by approximately RMB 0.04.
In the long term, with operational development, it should have a positive impact on the company.
10. Type of M&A consideration and source of funds:
The first installment of RMB 55 million will be paid from the remaining demolition compensation funds; after the first installment is completed, subsequent payments will be made in installments using self-owned funds, amortized equally over five years starting from the following month, with interest calculated at an annual rate of 2.5% to be paid concurrently.
11. Share exchange ratio and its calculation basis:
Not applicable
12. Is there an unreasonable opinion issued by an accountant, lawyer, or securities underwriter for this transaction: No
13. Name of accounting firm, law firm, or securities underwriter:
Yangzhou Hanrui Certified Public Accountants (General Partnership)
14. Name of accountant or lawyer:
Qin Yongjun, Chang Zhihui
15. Certificate number of accountant or lawyer's practice license:
Approval for establishment number: Su Cai Hui [2012] No. 37
Accounting firm number: 32100036
16. Content of independent expert's opinion on the reasonableness of the share exchange ratio, cash or other property distributed to shareholders in this M&A (I. Including the methods, principles or calculation methods adopted for determining the public tender offer price and comparison with internationally customary market value method, cost method, and discounted cash flow method. II. Comparison of the financial status, profitability, and P/E ratio of the acquired company with listed comparable companies. III. If the public tender offer price refers to an appraisal report from an appraisal institution, the content and conclusions of the appraisal report should be explained. IV. If the acquirer's financing repayment plan uses the assets or shares of the acquired company or the surviving company after the merger as collateral, the impact assessment on the financial and business soundness of the acquired company or the surviving company after the merger should be explained) (Note 7):
1. Since the various assets and liabilities of the appraised company can be reasonably identified according to accounting policies and business operations, etc., appropriate and specific appraisal methods can be selected for the characteristics of each asset and liability during the appraisal, and the operational conditions for implementing these appraisal methods are available, an asset-based approach can be chosen for this appraisal. Based on the purpose of this appraisal, the characteristics of the appraised object, and the applicable conditions of the appraisal method, the asset-based approach is chosen for the appraisal.
2. The appraised company has been established for 10 years since November 3, 2014. Its main operating revenue comes from rental income for providing its own land and factory to Yangzhou Hongyang, with no other substantial operations. Therefore, it cannot be compared with the financial status, profitability, and P/E ratio of listed comparable companies.
3. This case does not belong to a public tender offer, and an appraisal report was still commissioned from Yangzhou Branch of Bowen Real Estate Appraisal and Costing Group Co., Ltd.
4. Although the acquirer obtained bank financing using the real estate of the acquired company as collateral during the acquisition process, all relevant borrowings were repaid from the acquirer's own funds and did not use the funds of the acquired company or the surviving company after the merger. Therefore, it does not affect its financial and business soundness. Furthermore, since the acquired company will be dissolved later, this financing guarantee will not affect the surviving company after the merger.
Keywords: Material Information