Funeng Shares to Transfer 100% Stake in Loss-Making Textile Unit to Parent

Funeng Co. , Ltd. plans to transfer its 100% equity in wholly-owned subsidiary Fujian Funeng Nanfang Health Materials Co. to its indirect controlling shareholder Fujian Energy and Petrochemical Group through a negotiated transfer. Upon completion of the transaction, the textile business will exit the company's consolidated financial statements.

In 2014, the former Fujian Nanfang was restructured by injecting power assets via share issuance, forming a dual business structure of 'power and textile'. Subsequently, the listed company continued to acquire high-quality power assets, expanding its clean energy footprint. The textile segment has been under prolonged pressure due to industry cycles and demand fluctuations.

Funeng Nanfang, established in 2014 as the platform for the textile segment, primarily produces medical protective materials, non-woven fabrics, and textile products. The company has been loss-making since 2021: a loss of more than 100 million yuan in 2021, a loss of over 50 million yuan in 2022, and losses remained high in 2023 and 2024. In 2025, it recorded a net loss of 72.36 million yuan, with the non-recurring items loss expanding to 82.35 million yuan. In the first quarter of 2026, the net loss was 13.45 million yuan, and internal adjustments failed to reverse the loss trend.

The transferee, Fujian Energy and Petrochemical Group, is wholly owned by the Fujian State-owned Assets Supervision and Administration Commission, and indirectly controls the listed company through its wholly-owned subsidiary Funeng Group. The transaction is structured as a negotiated transfer, with the equity consideration valued based on a valuation date of July 31, 2026.

The company held an interim board meeting on July 28, where the proposal was unanimously approved after the abstention of related directors. The independent directors issued prior consent opinions. The company has not conducted any similar related-party equity disposal transactions in the past 12 months.

In recent years, Funeng Co. has been intensifying its clean energy deployment, advancing offshore wind power, onshore wind power technological upgrades, pumped storage hydro, and large-scale combined heat and power projects, with plans to build a comprehensive energy system encompassing wind, solar, thermal, gas, nuclear and storage.

Upon completion of the transfer, Funeng Co. will transform from a company with both power and textile operations into a pure integrated energy listed platform.