XUANWU CLOUD plans to transfer part of its equity in Xuantong Technology. The chairman will invest 20 million, and the group will focus on core business segments

According to the news from Zhitong Finance APP, XUANWU CLOUD (02392) announced that on October 20, 2025 (after trading hours), the company, its executive director and chairman Mr. Chen Yonghui, the seller (the company's wholly-owned subsidiary Guangzhou Xuantao Smart Cloud Technology Co., Ltd.), the target company (Guangzhou Xuantong Technology Co., Ltd.), Xuantong Tongda, and Xuantong Tonghe entered into a capital increase agreement and equity transfer agreement, pursuant to which, (i) Mr. Chen Yonghui agreed to inject RMB 20 million into the target company as its new registered capital; (ii) the seller agreed to sell approximately 16.67% and 20.00% of the total registered capital of the target company to Xuantong Tongda and Xuantong Tonghe for RMB 5 million and RMB 6 million, respectively. Upon completion, the registered capital of the target company will increase from RMB 30 million to RMB 50 million, of which (i) Mr. Chen Yonghui will hold 40.0%; (ii) the seller will hold 20.0%; (iii) Xuantong Tongda will hold 10.0%; (iv) Xuantong Tonghe will hold 12.0%; and (v) other shareholders will hold 18.0%. After completion, the financial performance of the target company will no longer be included in the group's consolidated financial statements, and the target company will become Mr. Chen's associate. It is reported that the target company's main business is providing cloud services. As of the date of this announcement, it is an indirect non-wholly-owned subsidiary of the company, with 70% equity held by the seller. The announcement stated that Mr. Chen Yonghui's acquisition of the target company is mainly based on strategic, operational, and financial considerations. Since its establishment in January 2024, the target company has been in a state of loss, adversely affecting the overall financial performance of the group. Continuing to inject funds into the target company will further strain the group's resources, negatively impacting the group's image in the capital market and making it difficult to safeguard shareholder interests. Transferring the target company to Mr. Chen Yonghui will allow the group to enhance capital efficiency by reallocating resources to business areas with greater growth potential and higher investment returns. After reassessing the overall business layout and development strategy of the group, the group has decided to focus on core business segments with stronger competitiveness and long-term growth prospects. In line with this strategic adjustment, the group plans to gradually cease self-operated cloud sales, which is the main business of the target company. It is expected that reallocating capital to other more profitable business areas will generate higher returns and enhance overall shareholder value. Therefore, the group has decided not to participate in further capital increases for the target company, which aligns with the group's goals of transformation, upgrading, and sustainable development