China Water Affairs Group Limited (855) released a supplemental announcement regarding its renewal of continuing connected transactions under a framework agreement. According to the announcement, the existing annual caps were originally determined in early 2023 based on expectations of an economic rebound and a possible business spin-off that did not materialize. This, combined with a downturn in Mainland China’s property market, contributed to a decrease in the utilization rate of the existing annual caps.

The announcement highlights that actual transaction amounts, which peaked at approximately RMB40.00 million in FY2024, declined to about RMB12.00 million in FY2026 (calculated from a six-month figure of RMB5.87 million). Despite the recent downtrend, the company remains optimistic about the long-term prospects of its pipeline direct drinking water segment, citing supportive government policies such as initiatives to reduce single-use plastic.

With an eye on potential market recovery, the company set the proposed annual caps at RMB40.00 million for each of the next three years. The announcement notes that this figure equals the highest annual transaction amount of the past three years and allows headroom for expansion, given historical growth rates. The company’s board considers the new annual caps fair and reasonable and in the interest of shareholders.