YICHEN IND (01596) announced that on January 12, 2026, the seller entered into a share transfer agreement with the company. Under the terms and conditions of the agreement, the company conditionally agreed to acquire an equity stake representing 86.22% of the issued share capital of the target company, Hebei Chenxiang Electricity Sales Co., Ltd., for a consideration of RMB 135 million. Upon completion, the company will hold an 86.22% equity interest in the target company, making the target group—comprising the target company and its subsidiaries, which are primarily engaged in the power business—a subsidiary of the company, with its financial performance to be consolidated into the company's financial statements.

The company and its subsidiaries are principally engaged in the research and development, production, and sales of railway fastening system products, welding wire products, and railway sleeper products. As a manufacturing enterprise with extensive operational scale, the company considers a stable power supply to be crucial, as it helps ensure the uninterrupted operation of its production lines and other business functions. To this end, on November 1, 2023, the company entered into a high-voltage power supply and usage contract with Chenteng Electricity Sales. Chenteng Electricity Sales, as an authorized power supplier permitted to conduct power distribution and sales business within its approved operational area (which covers the company's premises), will supply electricity to the company for a three-year period from November 1, 2023, to October 31, 2026. By entering into the aforementioned power supply contract, the company can secure reliable electricity from its authorized supplier over a longer term.

Through the equity acquisition, the company will gain control over the target group, which includes its key operating subsidiary, Chenteng Electricity Sales. By directly controlling the authorized power supplier, the company will be better positioned to ensure the stability and continuity of its power supply and to optimize operational and compliance efficiencies. Beyond strengthening the company's energy security and streamlining its operations, as the power trading, supply, and construction businesses conducted by the target group's member companies continue to develop, the acquisition may also diversify and enrich the group's revenue sources in the long term. Most importantly, given that electricity is an essential foundation supporting all social and economic activities with relatively stable and strong demand, the group is expected to enhance and consolidate its financial flexibility.

In these ways, the group is anticipated to benefit from the synergies generated by the acquisition. The terms and conditions of the share transfer agreement were determined following fair negotiations between the seller and the company. Having considered the factors discussed in the preceding paragraphs, the directors (excluding the independent non-executive directors, who will express their views after considering the advice of the independent financial adviser) believe that the terms and conditions of the share transfer agreement are fair and reasonable, and in the overall interests of the shareholders. Furthermore, although the transactions contemplated under the agreement (including but not limited to the acquisition) are not part of the group's ordinary and usual course of business, they are conducted on normal commercial terms and are in the overall interests of the company and its shareholders.