YICHEN IND(01596) plans to acquire equity interests in the power business.

YICHEN IND(01596) Announcement: On January 12, 2026, the seller and our company entered into a share transfer agreement, and our company conditionally agreed to purchase shares in accordance with the terms and conditions of the share transfer agreement, acquiring 86.22% of the issued share capital of the target company Hebei Chenxiang Power Sales Co., Ltd. for a price of RMB 135 million. Upon completion, our company will hold 86.22% of the target company's shares, making the Target Group (composed of the target company and its subsidiaries, mainly engaged in the electricity business) a subsidiary of our company, and its financial performance will be consolidated into our company's financial statements. Our company and its subsidiaries are primarily involved in research, production, and sales of railway fastening system products, welding wire products, and railway sleeper products. As a manufacturing enterprise with a wide operating scale, our company considers stable power supply crucial to ensure the uninterrupted operation of our production lines and other business functions. Therefore, on November 1, 2023, our company entered into a high-voltage power supply contract with Chen Teng Power Sales, which will supply power to our company for three years from November 1, 2023, to October 31, 2026. Through this power supply contract, our company can obtain reliable power supply from the authorized power supplier for a longer period of time. Through the acquisition of shares, our company can gain control over the Target Group (including the main operating subsidiary Chen Teng Power Sales). By directly controlling the authorized power supplier, our company will be able to ensure the stability and continuity of power supply more effectively, optimize operational and compliance efficiency. In addition to strengthening our energy security and streamlining our operations, the acquisition may diversify and enrich the group's sources of income as the Target Group's member companies develop their electricity trading, supply, and construction businesses. Importantly, as electricity is a basic necessity supporting all social and economic activities with relatively stable and high demand, the group is expected to enhance and consolidate its financial flexibility. Through this approach, the group is expected to benefit from the synergies generated by the acquisition. The terms and conditions of the share transfer agreement were agreed upon after fair negotiations between the seller and our company. Taking into account the factors discussed in the preceding paragraphs, the directors (excluding independent non-executive directors, who will provide their opinions after considering the advice of independent financial advisers) believe that the terms and conditions of the share transfer agreement are fair and reasonable, and are in the overall interests of the shareholders. Although the transactions proposed under it (including but not limited to the acquisition) are not conducted in the normal course of business of the group, they are conducted on commercial terms and are in the overall interests of our company and shareholders.