CHINA PARTYTIME (01532) subsidiary intends to sell all the equity of Zhejiang Zhongpai for approximately 80 million yuan.

CHINA PARTYTIME (01532) announces that on November 19, 2024, the seller Party Culture Group (an indirect wholly-owned subsidiary of the company) (as the seller) entered into a share transfer agreement with the buyer (as the buyer) and the target company Zhejiang Zhongpai. Under the share transfer agreement, the seller conditionally agrees to sell, and the buyer conditionally agrees to purchase the sale capital (equivalent to all the shares of the target company) for a price of RMB 80 million. Upon completion, the company will no longer hold any shares in the target company. As of the date of this announcement, the target company is a direct wholly-owned subsidiary of the seller, mainly engaged in holding properties and leasing factory premises. Several portions of land and properties held by the target company are primarily used as manufacturing and production facilities for the group's wig, clothing, and other business divisions. To further enhance our production efficiency and expand cooperation between companies in the industry's supply chain, we have begun subleasing part of our properties to companies in related industries to better utilize the group's assets. Given the increasing trend of property vacancies or low utilization rates in recent times, the company has been regularly reviewing investment projects and seeking other opportunities for passive rental income. Considering the rising production costs in Yiwu City, Zhejiang Province, China (such as wage increases and difficulties in recruiting labor), the group plans to gradually relocate the production lines of the wig, clothing, and other business divisions to another existing manufacturing and production facility located in Yichun City, Jiangxi Province, China (relocation plan) to improve our overall production efficiency and reduce production costs. As of the date of this announcement, the group has obtained the Construction Engineering Planning Permit issued by the Yichun City Natural Resources Bureau, confirming that the proposed project complies with land spatial planning and land use control requirements. Therefore, the group plans to construct a three-story factory building with a total area of approximately 20,500 square meters in Yichun City. It is expected that the group will incur construction costs of approximately RMB 86.2 million. Considering that the group will implement the relocation plan and need to prepare construction funds in the coming years, and the land and properties held by the target company will be vacant after the completion of the relocation plan, the board believes that these lands and properties will eventually be realized or leased. Due to the sluggish property market in China and the lower-than-expected demand for the land and properties held by the target company (including these properties), and the property market in China leaning more towards a buyer's market, the board believes that there may be significant sales pressure on real estate in the short term. Therefore, the board believes that retaining the land and properties held by the target company has no potential for appreciation, and now seems to be the appropriate time to realize these lands and properties. As of June 30, 2024, the total amount of bank borrowings of the group is approximately RMB 18 million, all of which will mature within the next 12 months and be payable by the group. Therefore, the board believes that the sale of assets can provide the group with funds to implement the relocation plan and repay some of the group's debts, and better allocate resources to develop its existing business. The net proceeds from the sale will bring positive contributions to the group's cash flow. Therefore, the board believes that the sale of assets can improve the group's working capital and overall financial position.