Zhejiang Zhenyuan Share (000705.SZ) plans to introduce a leading pharmaceutical commercial enterprise as a new shareholder for Zhenyuan Medicine, raising funds of no less than approximately 1.2 billion yuan.

Announcement of Zhejiang Zhenyuan Share (000705.SZ): The company plans to increase its capital and expand its shareholding in its wholly-owned subsidiary, Shaoxing Zhenyuan Pharmaceutical Business Co., Ltd. (referred to as "Zhenyuan Pharmaceutical"), through public listing at the Shaoxing Branch of Zhejiang Property Exchange Co., Ltd (Zhejiang Property Exchange) with May 31, 2024 as the base date. A leading pharmaceutical commercial enterprise will be introduced as a strategic investor, raising no less than 119.8618235 million yuan in cash. The subscription price for the capital increase shall not be less than 1.439517 yuan per RMB 1 of registered capital, with 83.265306 million yuan of the funds raised going towards Zhenyuan Pharmaceutical's registered capital, and the remaining funds going into Zhenyuan Pharmaceutical's capital reserve. The company will waive its preemptive rights in this capital increase and expansion. After the capital increase is completed, Zhenyuan Pharmaceutical's registered capital will be changed to 163 million yuan, with the strategic investor holding a 51% stake in Zhenyuan Pharmaceutical, and the company holding a 49% stake. Zhenyuan Pharmaceutical will no longer be included in the company's consolidated financial statements. The announcement states that as the operating platform for the company's pharmaceutical wholesale business, the public listing of Zhenyuan Pharmaceutical for capital increase and expansion, with the company waiving its preemptive rights, is a prudent decision based on the current operating conditions and long-term development strategy of the company. This capital increase and expansion of Zhenyuan Pharmaceutical is beneficial to further optimize resource allocation, reduce capital occupation, promote business structure transformation, and enhance the company's profitability and core competitiveness.