Huayang Controlling Shareholder to Sell 28.3% Stake to Jiuzhou Group for RMB 5.66 Billion

After the market close on August 21, Huayang Group disclosed that its controlling shareholder, Huizhou Huayue Investment Co. , Ltd. , signed a share transfer agreement with Sichuan Jiuzhou Investment Holdings Group Co. Under the agreement, Huayue Investment will transfer 149 million unrestricted tradable shares, representing 28.3% of the listed company's total share capital, to Jiuzhou Group at RMB 38.1011 per share, for a total consideration of approximately RMB 5.66 billion. The company received notice from its controlling shareholder on August 17 and was suspended from trading from the open on August 18; the shares will resume trading on August 24. The transferee, Jiuzhou Group, is a large state-owned high-tech enterprise group registered in Mianyang, Sichuan, focusing on electronic systems equipment, communications and intelligent manufacturing, and software and data intelligence. Its controlling shareholder is the State-owned Assets Supervision and Administration Commission of Mianyang. Huayang Group is a domestic automotive electronics enterprise whose main businesses cover automotive electronics and precision die-casting. In the first quarter of 2026, Huayang Group recorded revenue of RMB 3.096 billion and net profit attributable to shareholders of RMB 166 million; in the first half of the year, revenue rose to RMB 6.923 billion and attributable net profit reached RMB 401 million. The total consideration will be paid in three tranches: the first tranche of 40%, approximately RMB 2.264 billion; the second tranche of 30%, approximately RMB 1.698 billion, payable after the shares complete registration of ownership transfer; and the third tranche of 30%, approximately RMB 1.698 billion, payable after the board and management reshuffle is completed. Jiuzhou Group has undertaken not to transfer the shares acquired for 60 months from the completion of the transfer registration, not to pledge them for 36 months, and to use its own funds or legally self-raised funds, with self-owned funds accounting for no less than 50% of the total. The former controlling shareholder Huayue Investment and eight actual controllers including Zou Ganrong made performance commitments: Huayang Group's attributable net profit in 2026 will be no less than RMB 860 million; the cumulative total for 2026 and 2027 will be no less than RMB 1.8 billion; and the cumulative total for 2026 through 2028 will be no less than RMB 2.8 billion. The listed company's attributable net profit in 2025 was approximately RMB 782 million. If the performance commitments are not met, compensation will be made in cash, with the maximum compensation not exceeding 50% of the total consideration. Huayue Investment must pledge shares worth RMB 2.8 billion to Jiuzhou Group. Upon completion of the transaction, Huayang Group's board will consist of nine directors. Jiuzhou Group has the right to nominate six directors, including four non-independent and two independent directors, while Huayue Investment will nominate three. The transaction still requires shareholder approval, regulatory approval from the state-owned assets supervision authority, antitrust review, compliance confirmation from the Shenzhen Stock Exchange, and share registration procedures, among other steps. There is significant uncertainty as to whether the transaction can ultimately be completed.