GUANGDONG INV: Water investment plans to acquire equity in two target companies for approximately 227 million yuan

According to the announcement from Guangdong Investment (00270), on October 28, 2025, Water Investment (buyer) (a wholly-owned subsidiary of the company) entered into an equity transfer agreement (Yangjiang) with Guangdong Water Holdings (seller) (a wholly-owned subsidiary of Guangdong Holdings). Under this agreement, Water Investment agrees to purchase 51% of the total equity of the target company (Yangjiang Guangdong Water Qingyuan Environmental Protection Co., Ltd.) from Guangdong Water Holdings for a consideration of RMB 156 million, to be paid in cash; and Water Holdings (buyer) (a wholly-owned subsidiary of the company) entered into an equity transfer agreement (Shantou) with Guangdong Water Holdings (seller) (a wholly-owned subsidiary of Guangdong Holdings). Under this agreement, Water Holdings agrees to purchase 2% of the total equity of the target company (Shantou Guangdong Water Co., Ltd.) from Guangdong Water Holdings for a consideration of RMB 70.8764 million, to be paid in cash.

Following the physical distribution of the shares of Guangdong Land that the group held previously in January 2025, Guangdong Land is no longer a subsidiary of the company, allowing the group to further focus its efforts and resources on developing and expanding its water resource business.

Water Holdings is the core entity of the group, primarily engaged in water treatment and supply business in China. The target company (Yangjiang) is mainly involved in the sewage interception and drainage pipeline renovation project for water resource projects in Yangjiang City, Guangdong Province, China. The target company (Shantou) is mainly engaged in the production and supply of tap water. These proposed acquisitions will enhance the scale and market influence of the group's water resource business, with the production capacity of treated water increasing from 11,184,700 tons/day (as of September 30, 2025) to 12,104,700 tons/day, an increase of 8.2%. Therefore, these proposed acquisitions align with the company's long-term goal of further strengthening its "water resource as the core business" development.

After the completion of the transaction, the target companies will become subsidiaries of the company. These strategic acquisitions allow the group to gain control over the target companies, enabling more practical and effective control over their management, operations, and development direction. The group will then be able to coordinate and fully utilize the scale, strength, and influence of its member companies to achieve the synergistic value of the target companies. Following the notices issued by the Guangzhou Development and Reform Commission regarding the reform of tap water prices in the central urban area, the Shenzhen Development and Reform Commission regarding the adjustment and policy optimization of tap water prices, and the Dongguan Development and Reform Commission regarding the further improvement of the tap water price formation mechanism, there have been signs of water price increases in some cities in Guangdong Province (such as Guangzhou, Shenzhen, and Dongguan). The addition of these target companies will provide the group with a more favorable position in pricing negotiations.

Through the legal control of the equity of these target companies, the group will also be able to optimize its capital structure and balance sheet to improve its return on investment and provide more options for obtaining loans and/or reducing borrowing costs.

In addition, the company believes that the addition of these target companies will create synergies with the existing business of Water Holdings Group in terms of brand building, cost efficiency, and operational efficiency improvement. As the overall capability of Water Holdings Group in water treatment and related engineering construction improves, the company believes that the group's competitiveness in expanding water treatment and supply business, bidding for water engineering and construction projects will be further strengthened Enhancing the scale and market influence of the group's water resources business will drive revenue growth for the Water Holdings Group, thereby boosting the group's revenue and profitability