CHONGQING IRON (01053) announced that on May 27, 2026, the board approved the company's entry into a capital increase agreement with relevant parties including Baowu Environmental Technology, China Baowu, and its subsidiaries. According to the agreement, the existing 16 shareholders of Baowu Water will act as capital contributors, using their respective equity stakes in Baowu Water to increase capital in Baowu Environmental Technology. Specifically, CHONGQING IRON intends to contribute its 1.61% stake in Baowu Water as consideration for the capital increase in Baowu Environmental Technology.

Upon completion of the capital increase, CHONGQING IRON will hold a 0.53% equity interest in Baowu Environmental Technology and will no longer hold any equity in Baowu Water. Following this transaction, the registered capital of Baowu Environmental Technology will increase from RMB 711.5522 million to RMB 1,044.2152 million. With the exception of Bayi Iron & Steel, all other existing shareholders of Baowu Water will become shareholders of Baowu Environmental Technology. Post-transaction, Baowu Environmental Technology will hold a 96.48% stake in Baowu Water, while Bayi Iron & Steel will retain the remaining 3.52% stake.

Through this asset consolidation, Baowu Environmental Technology aims to establish a "1+X" business layout, creating an integrated green industrial platform for comprehensive environmental management covering solid waste, wastewater, and exhaust gas. This move is expected to enhance the future equity value of CHONGQING IRON's holding in Baowu Environmental Technology and further help the company reduce its comprehensive environmental management costs.

By using its Baowu Water equity to increase capital in Baowu Environmental Technology, CHONGQING IRON will cease accounting for its Baowu Water stake as a financial asset measured at fair value through other comprehensive income. Instead, it will continue to account for its Baowu Environmental Technology equity under the same measurement category. The capital increase will not result in any changes to the scope of the company's consolidated financial statements.

The consideration for this capital increase is CHONGQING IRON's equity in Baowu Water, in exchange for corresponding equity in Baowu Environmental Technology. Therefore, the transaction does not involve the company receiving any cash proceeds, nor will it record any profit or loss from the capital increase. It is noted that the industry involved is significantly influenced by macro-policy adjustments. Potential future tightening of industrial policies or heightened regulatory requirements may adversely affect the target company's operations and investment returns.