Shanghai Fenghwa Group Co., Ltd (SHSE:600615) signed an letter of intent to acquire not less than 51% stake in Guangzhou Wanon Electric & Machine Co., Ltd from Loncin Motor Co., Ltd. (SHSE:603766) on August 3, 2020. On August 17, 2020, Shanghai Fenghwa Group Co., Ltd signed an agreement to acquire 100% in Guangzhou Wanon Electric & Machine Co., Ltd. from Loncin Motor Co., Ltd. and Guangzhou Chaoneng Investment Group Co., Ltd. The sellers will sell 90% and 10% stakes respectively. Under the terms of transaction, payment is made in cash and other relevant terms and condition shall be determined through negotiation and signing formal transaction document. As per the agreement signed, the mode of payment is cash and A ordinary shares. The cash portion is funded from non-public issuance of shares to Loncin Motor Co., Ltd. and for Guangzhou Chaoneng Investment Group Co., Ltd. For the year ended December 31, 2019, Guangzhou Wanon Electric & Machine Co., Ltd reported total assets of CNY 1.1 billion, net assets of CNY 605.2 million, operating revenues of CNY 1.2 billion and net profit of CNY 101.9 million. The deal requires approval from shareholders of Loncin Motor Co., Ltd., second approval from its Board of Directors and China Securities Regulatory Commission. The deal is subject to approval by Board and shareholders of Shanghai Fenghwa Group Co., Ltd, shareholders of Guangzhou Wanon Electric & Machine Co., Ltd. On August 17, 2020, the Board of Directors of Loncin Motor Co., Ltd. approved the deal. The transaction has been approved by the shareholders meeting of the target company.

Shanghai Fenghwa Group Co., Ltd (SHSE:600615) cancelled the acquisition of not less than 51% stake in Guangzhou Wanon Electric & Machine Co., Ltd from Loncin Motor Co., Ltd. (SHSE:603766) on December 8, 2020. After the signing of the agreement, although all parties to the agreement continued to advance the relevant work of the transaction as agreed upon, as the core terms related to the transaction could not be agreed upon, all parties to the transaction believed that the purpose of the transaction has been difficult to achieve, and it is no longer appropriate to continue the transaction. The twelfth meeting of the fourth Directorate of Loncin Motor approved the proposal on terminating the agreement on December 8, 2020.