Shanghai Petrochemical Co., Ltd. (00338) announced that its board of directors reviewed and approved on December 29, 2025, a plan for its wholly-owned subsidiary, Carbon Fiber Company, to simultaneously increase its registered capital by RMB 6 billion through a combination of a non-public agreement capital increase and a public listing.

The pricing for this capital increase will be based on an assessed value completed in accordance with relevant state-owned asset supervision regulations, and will be finalized in conjunction with the results of the public listing.

Subject to approval by the competent state-owned assets authority, Sinopec Corp. intends to subscribe to the capital increase in Carbon Fiber Company via a non-public agreement, investing up to RMB 3 billion to subscribe for new registered capital, at the same price per share as other strategic investors identified through the public listing.

Upon completion of this capital increase, Sinopec Corp.'s equity stake in Carbon Fiber Company will not exceed 25%.

The remaining portion of the planned capital increase, up to RMB 3 billion, will be offered for subscription by other strategic investors through a public listing.

This capital increase initiative aims to attract no more than three prospective strategic investors, comprising no more than two industrial investors and one financial investor.

Prospective strategic investors must be enterprise legal persons duly established and validly existing under the laws of Mainland China (excluding Hong Kong, Macao, and Taiwan), possess sound financial conditions, payment capabilities, and commercial credibility, support Carbon Fiber Company's strategic plan, business philosophy, and corporate governance structure, and meet other eligibility criteria specified in the public listing announcement.

Carbon Fiber Company reserves the right to adjust the investment amount and shareholding ratio for strategic investors, with the final terms to be governed by the Capital Increase Agreement executed by all parties.

Following the completion of this capital increase, the Company will continue to hold no less than a 50% equity interest in Carbon Fiber Company, which will remain a subsidiary and continue to be consolidated within the Company's financial statements.

The Company's carbon fiber business aligns with its resource endowment, demonstrates a clear development trend, is built upon a solid foundation of prior exploration, and possesses the conditions necessary for fostering new quality productive forces.

This capital increase integrates industrial cooperation with capital operations, aiming to facilitate the restructuring, capital injection, and high-quality development of the carbon fiber business, which is conducive to achieving a high-end breakthrough in the new materials industry and building a cooperative and win-win system centered on industrial synergy.

Sinopec Corp.'s participation in this capital increase can leverage its substantial financial strength to rapidly promote the scaled production of Carbon Fiber Company's projects and accelerate industrial chain integration.

By utilizing Sinopec Corp.'s own robust R&D capabilities and engineering experience, it can effectively enhance the efficiency of carbon fiber technology development and achieve breakthroughs in high-end product offerings.

From a market perspective, this move helps expand the application of high-performance carbon fiber in high-growth sectors such as new energy and aerospace, seizing the initiative in green development.

Concurrently, optimizing Carbon Fiber Company's equity structure through the introduction of capital and strategic partners can further enhance the enterprise's market competitiveness, assisting the Company in establishing a strategic foothold in the new materials sector and supporting the nation's long-term carbon neutrality goals.

The total funds raised from this capital increase will be used for project R&D and production launch at Carbon Fiber Company, enhancing its production capacity and industrial competitiveness.

The portion of the funds raised that exceeds the amount of new registered capital will be recorded as capital reserve of Carbon Fiber Company, to be shared collectively by its new and existing shareholders.