LOPAL TECH (02465) has announced a significant capital increase plan for its subsidiary, Changzhou Lithium Source, involving a total investment of 1.4 billion yuan.
According to the company's official announcement dated August 18, 2026, LOPAL TECH, along with Changzhou Lithium Source and its shareholders, entered into a capital increase agreement. Under the terms of this agreement, LOPAL TECH will contribute 1.4 billion yuan to subscribe for approximately 195 million yuan of new registered capital in Changzhou Lithium Source. This subscription represents 17.86% of the total registered capital following the capital increase, with the remaining funds being allocated to the subsidiary's capital reserve. The other shareholders of Changzhou Lithium Source have agreed to waive their pre-emptive rights in connection with this capital increase.
Upon completion of the capital injection, and after accounting for the dilution effect on LOPAL TECH's existing shareholding, the net change in the company's stake in Changzhou Lithium Source will be approximately 6.81%. This will result in the ownership percentage rising from roughly 61.88% to 68.69%. Consequently, Changzhou Lithium Source will continue to operate as a subsidiary of LOPAL TECH, and its financial results will remain fully consolidated into the parent company's financial statements.
The board of directors believes that entering into this capital increase agreement aligns with the group's overall strategic development plan and long-term interests. This move enables the group to utilize the net proceeds from its private placement of A-shares in the manner disclosed in previous announcements and circulars. Following the completion of the capital increase, Changzhou Lithium Source's financial position and competitiveness are expected to be strengthened.
Why this investment matters now? The additional funding will better position Changzhou Lithium Source to support the group's business plans for developing two major cathode material projects. The first project involves constructing a production line for 110,000 tonnes of new high-performance phosphate-based cathode materials, while the second project entails building a production line for 85,000 tonnes of similar materials. These initiatives are central to LOPAL TECH's core operations.
The company specializes in green new energy core materials and maintains a dual-track industrial layout encompassing both new energy and traditional businesses. Its primary products include specialty chemicals for automotive use and lithium iron phosphate cathode materials. The new cathode material production lines will enable the group to further expand its production capacity, thereby allowing it to increase its market share. Both cathode projects align closely with the company's main business operations, comply with national industrial policies, and are consistent with industry development trends and the company's overall growth strategy. These projects are expected to generate substantial economic and social benefits.
Given these factors, providing further financial support to these cathode projects through this capital increase serves the best interests of both the company and its shareholders, reinforcing the group's commitment to sustainable growth in the new energy sector.