CRCC High-Tech Equipment Corporation Limited (CRCCE) has signed a new Products and Services Procurement Framework Agreement with its controlling shareholder China Railway Construction Corporation Limited (CRCC) on 26 May 2026. The three-year agreement, effective from 1 January 2027 to 31 December 2029, extends the existing arrangement that expires at end-2026.

Under the renewed framework, CRCCE and its subsidiaries will continue to source materials and equipment, construction and maintenance services, asset and equipment leasing, and railway line usage from CRCC and its associates. Annual transaction caps are set at RMB50.00 million for each of the years 2027, 2028 and 2029, representing a combined ceiling of RMB150.00 million. The proposed caps are substantially lower than the current framework’s cap of RMB160.00 million per year for 2024-2026.

Historical utilisation has been modest relative to existing limits: RMB36.39 million in 2024 and RMB61.93 million in 2025, with RMB2.05 million recorded for the first quarter of 2026. The company attributes the 2025 spike chiefly to a one-off inventory purchase of RMB49.70 million from CRCC Financial Leasing Co., Ltd., and expects demand for connected-party procurement to “decline and stabilise” over the next contract cycle.

Pricing will follow a market-oriented hierarchy. Where comparable market prices exist, CRCCE will benchmark at least two independent third-party quotes to ensure terms from CRCC are no less favourable. For tailored products or services lacking market comparables, cost-plus pricing will apply, capped at a 15% mark-up—identical to rates offered to independent customers.

CRCCE has outlined multilayered internal controls, including mandatory competitive tendering, multidisciplinary contract reviews, real-time cap monitoring by the finance department, annual audits by the company’s auditor, and oversight from the audit committee. Directors connected to CRCC abstained from voting on the agreement, and independent non-executive directors concurred that the terms are fair and in the interests of all shareholders.

Given CRCC’s 65% stake in CRCCE, the transactions are classified as continuing connected transactions under Hong Kong Listing Rules. With the highest applicable percentage ratio below 5% and above 0.1%, the arrangement requires announcement and annual review but is exempt from independent shareholders’ approval.