Shanghai Hile Bio-Technology (603718.SH) plans to sell 76.07% of the shares of its subsidiary, Yangling Jinhai, to its controlling shareholder, focusing on the core business of "personnel insurance".

Shanghai Hile Bio-Technology (603718.SH) announced that the company intends to sell 76.07% equity of its holding subsidiary, Yangling Jinhai Biotechnology Co., Ltd. (referred to as "Yangling Jinhai" or the "target company"), to its controlling shareholder Shanghai Haoyuan Entrepreneurship Investment Development Co., Ltd. (referred to as "Shanghai Haoyuan"). The audited shareholders' equity of Yangling Jinhai as of August 31, 2024 was RMB -201.6444 million, and the evaluated shareholders' equity value was RMB -34.6196 million. Therefore, the equity transfer price for this transaction is RMB 1. As a prerequisite for this transaction, Shanghai Haoyuan should repay all debts owed by Yangling Jinhai to the company (as of the date of this announcement, Yangling Jinhai owed the company a total of RMB 244,577,211.47 including the interest on bank loans applied by the company for "borrowing up, utilizing down"). The company will recover all loans to Yangling Jinhai and repay the relevant bank loans. It is reported that the only product of Yangling Jinhai is Foot-and-Mouth Disease vaccine. Although the Foot-and-Mouth Disease vaccine is currently the largest single product in the domestic veterinary biological products industry, in recent years, due to external factors such as the African Swine Fever epidemic, the entire "animal welfare" development is facing difficulties, and the industry's prosperity has declined. On the other hand, as a mandatory immunization vaccine, the market for Foot-and-Mouth Disease vaccine is mainly based on government procurement. However, according to the "National Animal Disease Mandatory Immunization Guidelines (2022-2025)" released in 2022, government tender procurement of mandatory immunization vaccines will gradually cease by the end of 2025, leading to significant changes in the market structure. Yangling Jinhai has been continuously losing money since its establishment, with a single product and the subsequent difficulty in improving performance, severely affecting the company's operating performance. Yangling Jinhai has been in a loss-making state since its establishment, with a net loss of over RMB 250 million in the past five years. After the completion of this transaction, the company will no longer directly hold the equity of Yangling Jinhai, and Yangling Jinhai will no longer be included in the company's consolidated financial statements, meaning that the company has completely withdrawn from the veterinary biological products industry, and its main business has achieved a transformation and upgrade from "animal welfare" to "human protection". The company will focus on the "human protection" main business in the future, continuously improve its core competitiveness, and enhance its profitability.