First Tractor Company Limited announced a substantial raise in the 2026 annual cap for continuing connected transactions under its Research and Development Services Agreement with controlling shareholder YTO Group Corporation. The ceiling will rise to RMB270 million, up RMB45 million from the previously approved RMB225 million.

The framework agreement, signed on 29 October 2024, covers technical research, consultation, testing and patent support for tractors, agricultural machinery and diesel engines. It runs from 1 January 2025 to 31 December 2027. Other contractual terms remain unchanged.

Management cited accelerating demand for larger, intelligent and green farm equipment—especially power-shift, hybrid-power and continuously variable transmission tractors—as the driver for higher R&D spending. First Tractor’s R&D expenses have climbed steadily to RMB549 million in 2025 from RMB461 million in 2023, underscoring its push into high-end machinery.

During the first three months of 2026, related-party R&D fees totaled RMB28.09 million, representing 12.48% of the revised cap. The company expects the enlarged limit to accommodate intensified R&D activity without breaching Listing Rules thresholds.

Because all applicable percentage ratios for the revised cap exceed 0.1% but remain below 5%, the transactions are subject only to reporting, annual review and announcement obligations under Chapter 14A of the Hong Kong Listing Rules; independent shareholders’ approval is not required.

Internal controls include quarterly price benchmarking, cost-plus reviews and monitoring of cap utilisation. The board approved the revision on 28 April 2026; five directors who also serve on YTO’s board abstained from voting. Independent non-executive directors concurred that the new cap is fair, reasonable and in the interests of shareholders.