[Open Source Beijing Stock Exchange Strategy Topic] Beijing Stock Exchange Mergers and Acquisitions: Shengye Electric's Layout of the "Substrate-Metalization-Capacitor" Industry Chain Integration No.17

（Source: Zhuhai Bin, on the National Equities Exchange and Quotations (NEEQ)）

• The Beijing Stock Exchange is the first-choice venue for M&A and restructuring among small and medium-sized enterprises, with 50 major M&A and restructuring events announced to date

From the new “State Council Nine Articles” to the “Six M&A Rules,” starting in 2024, the M&A and restructuring market has seen many positive signals. Industrial integration and cross-border acquisitions have injected new momentum into industrial development. On October 29, 2025, the Party Committee Office of the Beijing Municipal Committee of the Communist Party of China for Financial Affairs formulated the “Opinions of Beijing Municipality on Supporting M&A Restructuring to Promote the High-Quality Development of Listed Companies.” The Opinions cover six core contents, and in particular mention giving full play to the role of securities trading venues as the main battlefield for M&A restructuring. The Opinions support the Beijing Stock Exchange and the National Equities Exchange and Quotations Company Limited (NEEQ) in leveraging their advantages in serving innovative small and medium-sized enterprises as their main base, becoming the first choice for M&A and restructuring transactions by small and medium-sized enterprises, and gradually expanding their influence. We believe that the Beijing Stock Exchange, which serves innovative small and medium-sized enterprises, can seize M&A opportunities in a timely manner. In terms of the trend direction of company M&A on the Beijing Stock Exchange, key areas to focus on are: (1) integrating high-quality resources within the same group; (2) extension acquisitions in industries of new quality productive forces; and (3) “strengthen the chain and supplement the chain” expansion-map-style acquisitions. As of February 8, 2026, the Beijing Stock Exchange has seen 50 major investment M&A and restructuring events in total.

• “Base film materials—metallized film—film capacitors”: Shengye Electric purchases Huajia New Materials from Dongcai Technology

On January 23, 2026, Shengye Electric announced that, based on business development needs, to further integrate key upstream industry resources, improve supply-chain保障 levels, ensure controllability of key metallized film evaporation and deposition technologies, and accelerate the development of new products in high-end frontier fields based on core materials, the company initially plans to purchase 51.0189% of the equity of Henan Huajia New Materials Technology Co., Ltd. for RMB 112.2416 million. Through this transaction, the parties will obtain control of Huajia New Materials, and Huajia New Materials will be included in the company’s consolidated financial statements.

Huajia New Materials is a national high-tech enterprise, a national key “specialized, refined, distinctive, and innovative” (specialized and innovative “little giant”) enterprise, a national small and medium-sized technology enterprise, and a member enterprise of the China Electronic Components Industry Association. Huajia New Materials’ main business is the R&D, production, and sales of metallized polypropylene film for capacitors. Its technological foundation is strong, with outstanding research and innovation. Its products perform well in consistency, surface resistance ®, breakdown voltage (withstand voltage), dissipation factor (容衰值), qualified rate, and other aspects, making it one of the representative companies in China’s metallized film evaporation and deposition field. Currently, in metallized film capacitor fields such as wind power and photovoltaic power generation, energy storage, and new energy vehicles, it holds a strong market position and is an important supplier for multiple first-tier capacitor manufacturers such as Shengye Electric.

Metallized film is produced by heating high-purity metal into a molten state in a vacuum environment, evaporating and depositing it onto the surface of a BOPP base film, and then obtaining a composite material used to manufacture film capacitors after winding, slitting, and testing. It is the core raw material required for manufacturing film capacitors and accounts for about 40–50% of the film capacitor cost. Its process and quality directly affect the electrical characteristics and service life of film capacitors. In recent years, film capacitors have been in the stage of industrialization breakthroughs and tackling key technological issues across many frontier fields. This transaction will further promote the company’s integrated development of film, which is beneficial for enhancing its ability to develop frontier products—starting from core raw materials to build excellent product quality—and further increase the company’s long-term development momentum. At the same time, Huajia New Materials has strong profitability, an excellent industry reputation, and a long-term, stable customer base. This transaction will help further improve the comprehensive strength and profitability level of the listed company. In addition, from the perspective of long-term strategic layout and company management, increasing metallized film production capacity and technical level, and independently mastering high-end metallized coating technologies, will help enhance the company’s ability to control raw material costs, improve market competitiveness and profit levels, ensure supply-chain safety, and guarantee the stability of production and operations.

After completion of this transaction, Shengye Electric will become the controlling shareholder of Huajia New Materials. Other shareholders of Huajia New Materials also include Sichuan Dongcai Technology Group Co., Ltd. and the management of Huajia New Materials. Shengye Electric is a film capacitor manufacturing and production company and is also one of the application companies downstream of Huajia New Materials. Dongcai Technology (601208.SH) mainly produces products including BOPP base film materials, and is one of the base film manufacturers in the upstream of Huajia New Materials. Through this transaction, the parties are committed to building an integrated cooperation across the entire industry chain of “base film materials—metallized films—film capacitors,” which is expected to achieve relatively strong synergy.

Meanwhile, Huajia New Materials has also achieved significant results in product development and business layout in key frontier fields such as ultra-high-voltage flexible DC transmission. It is currently conducting in-depth joint development with many representative customers, and is expected to gradually break through technology barriers held by overseas manufacturers and achieve domestic substitution. In terms of technological innovation, Huajia New Materials is focusing on the R&D of dual-sided metallized film products. After future mass production, compared with current products, it is expected to significantly reduce costs and improve performance, thereby promoting the upgrade and development of the film capacitor industry.

Huajia New Materials achieved operating revenue of RMB 200.0 million in 2024, and net profit of RMB 20.886 million.

Performance Commitment

The performance commitment period is fiscal years 2026, 2027, and 2028. The management and shareholders of Huajia New Materials commit that: the cumulative net profit achieved by the target company during the performance commitment period shall not be less than RMB 66.00 million; the net profit of the target company audited for fiscal year 2026 shall not be less than RMB 20.00 million; the net profit of the target company audited for fiscal year 2027 shall not be less than RMB 22.00 million; and the net profit of the target company audited for fiscal year 2028 shall not be less than RMB 24.00 million.

Shengye Electric adheres to implementing a dual-engine driving strategy for the film capacitor industry and power quality governance industry. In the film capacitor industry, a “vertical integration” strategy is implemented: completing industrial layout for drawing film and coating film in core film materials, thereby strengthening industrial competitive barriers. In the power quality governance industry, a “smart brain” strategy is implemented: using intelligent controller technologies to provide power quality governance solutions, expanding product categories and pushing into the medium-voltage power quality governance field; the goal is to make key breakthroughs in the high-voltage flexible DC capacitor market and the medium-voltage power quality product market.

In 2026, the company will focus on growth in the household appliances sector, the power quality sector, and the new energy sector; breakthroughs will be achieved in high-voltage flexible DC capacitors and medium-voltage power quality products.

For overseas expansion, the Thailand manufacturing base has started Phase II construction, and production capacity and business scope will expand in parallel, covering core markets such as India, Southeast Asia, Europe and the United States. Based on this, Thailand will achieve a comprehensive upgrade from a regional manufacturing base to a global operational and business management core hub.

On January 23, 2026, Shengye Electric announced an investment and construction project for the capacitor production base construction project. Project investment amount: no more than RMB 500 million (the final investment amount shall be based on actual investment during project construction); construction period: no more than 36 months.

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Important Announcement

Important Announcement: Kadde Quartz’s controlling shareholder changes to Jiangfeng Electronics

For this biennial period (2026.1.26~2026.2.8), the key announcements worth attention mainly include: Kadde Quartz’s controlling shareholder will change to Jiangfeng Electronics. The price of this shares transfer is RMB 38.17 per share, and the total consideration for the shares transfer is RMB 590.7047 million. Changhong Energy releases its performance express report; the attributable net profit is RMB 249 million, up 26.06% year on year. Wuxin Sui Zhuang adds a person acting in concert as controlling shareholder. Guoyi Bidding’s original controlling shareholder Yuexin Assets’ equity in Guoyi Bidding (32.409% of total share capital) is transferred to Guangxin Group free of charge.

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Risk

Risk of M&A failure, risk of restructuring and integration, risk of data statistics errors

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