CHONGQING M&E (02722) has announced the signing of a capital increase agreement. On May 22, 2026, the agreement was entered into by the parent company, CHONGQING M&E, the target company Chongqing Chengfei New Materials (a non-wholly owned subsidiary of the company), Chongqing General Industry, and Tibet Xuhuo. Under the agreement, the parent company will inject a total cash consideration of RMB 270 million into the target company at a price of RMB 1.1929 per share. Of this amount, RMB 226.34 million will be allocated to the target company's new registered capital, with the remaining RMB 43.66 million designated as capital reserve.
Upon completion of the capital increase, the parent company, CHONGQING M&E, Chongqing General Industry, and Tibet Xuhuo will hold approximately 20.2297%, 51.3733%, 27.1363%, and 1.2607% equity stakes in the target company, respectively. Prior to the transaction, CHONGQING M&E directly held a 64.40% stake in the target company and indirectly held a 34.02% stake through Chongqing General Industry, resulting in a combined holding of approximately 98.42%. Post-transaction, the company's direct stake will be 51.3733%, with an indirect stake of 27.1363% held through Chongqing General Industry, bringing the total effective holding to approximately 78.5096%. Consequently, the target company will remain a controlled subsidiary of CHONGQING M&E and will continue to be consolidated within the company's financial statements.
The parent company possesses significant capabilities in industrial chain integration, strong brand influence, and high recognition within the industry. Following the capital injection, as a direct shareholder, the parent company is expected to leverage its industry standing to assist the target company in further expanding its market channels, solidifying customer trust and partnerships, fully realizing internal synergies, and comprehensively enhancing the core competitiveness of CHONGQING M&E.
During the "15th Five-Year Plan" period, the company will focus on the high-end equipment, new materials, and new energy sectors while advancing investment and merger and acquisition activities. By not participating in this capital increase, CHONGQING M&E can more effectively optimize the allocation of its capital and resources, concentrating investments in key areas and M&A opportunities that align more closely with the "15th Five-Year Plan" and the company's strategic direction.
After the capital increase is completed, the target company will remain a controlled subsidiary of CHONGQING M&E, and its financial performance will continue to be consolidated. The capital increase and the deemed disposal will not impact the company's business development or profitability. The legitimate rights and interests of the company and its shareholders will not be impaired. These transactions are in the long-term interests of both the company and its shareholders.
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