Shanxi Heyang Pharmaceutical Ltd entered into an agreement to acquire 95% stake in Shanxi Puheng Pharmaceutical Co., Ltd from Apeloa Pharmaceutical Co.,Ltd (SZSE:000739) for CNY 38 million on May 18, 2023. Under terms of consideration, Within 30 days from the effective date of this agreement, Heyang Pharmaceutical shall pay CNY 30.4 million to the company by cash transfer; 20% of the equity transfer price i.e CNY 7.6 million will be paid by transfer. After the completion of this transfer, Heyang Pharmaceutical will directly hold 95% of the equity of Shanxi Puheng, and the company will directly hold 5% of the equity of Shanxi Puheng.

As of March 31, 2023, Shanxi Puheng Pharmaceutical had total assets and net assets as CNY 32.7 million each. This transaction will not cause related transactions and horizontal competition, there will be no changes in the company's high-level personnel, and there will be no follow-up personnel placement and other issues. This transaction is expected to increase the company's 2023 profit by about CNY 7.8 million, and will not have a major impact on the company's financial status.

The equity transfer funds will be mainly used for the company's project investment and construction and supplementary production working capital.