SHENGUAN HLDGS (00829) has announced that on August 13, 2026, its indirect wholly-owned subsidiary, Inner Mongolia Shengguan Biotechnology Co., Ltd. (Shengguan Biotech), entered into a framework investment agreement with the Helingeer County People's Government regarding a potential investment in a collagen food production project (the Project) located within the Inner Mongolia Helingeer Dairy Industry Development Zone.
According to the investment agreement, Shengguan Biotech plans to build and operate the collagen food production facility in the Helingeer Dairy Industry Development Zone. The Project's primary business scope includes the preparation of collagen raw materials, food processing, and the production and sale of edible collagen casing products and collagen-based foods. The total estimated investment for the Project is RMB 90 million (the Investment Amount).
The proposed site for the Project is an industrial plot (Class I industrial land) located on the north side of Haoyuan North Street within the Helingeer Dairy Industry Development Zone, covering an area of approximately 219 mu (subject to the actual land area transferred). The proposed site must have a vertical (north-south) length of no less than 530 meters and a horizontal (east-west) length of no less than 275 meters. The acquisition of the land use rights (the Acquisition) is contingent upon: (i) Shengguan Biotech participating in the bidding/auction process for the land's land use rights; (ii) Shengguan Biotech winning the bid; and (iii) the Company fully complying with all applicable disclosure and/or shareholder approval requirements under the Listing Rules. Following a successful bid, Shengguan Biotech will need to enter into a separate "State-owned Construction Land Use Rights Transfer Contract" with the relevant natural resources authority.
The Group is primarily engaged in the manufacture and sale of edible collagen casings, collagen foods, collagen skincare products, and high-molecular-weight collagen medical biomaterials. The Board believes that the land to be acquired possesses unique geographical and resource advantages, which hold significant strategic investment value for the Group. The primary reasons and benefits are outlined as follows:
Boosting Mid-to-Large Diameter Casing Production Capacity: The Project will significantly enhance the Group's production capacity and scale for mid-to-large diameter collagen casings, further enriching and optimizing the existing product structure. This strongly aligns with current market consumption upgrade trends, effectively enhancing the Group's core competitiveness and injecting strong momentum for long-term, stable development.
Proximity to High-Quality Raw Material Supply Chain: The land is located adjacent to the main production area for high-quality cattle hides. This ensures a stable, long-term supply of core raw materials while significantly reducing logistics and transportation costs. This will improve the Group's finished product quality, operational efficiency, and cost competitiveness.
Empowering Global Strategic Layout: The Project will complement the Group's existing production bases, optimizing production capacity allocation to deepen national market coverage and enhance overall supply chain efficiency. Simultaneously, leveraging regional advantages, the Project will fully support the Group in expanding into new overseas markets, advancing the business towards an international strategic upgrade.
Further Collaboration with Local Government: Through the Project, the Group expects to fully leverage local industrial integration advantages and policy support, creating favorable conditions for the construction and subsequent operation of the new production base. The Board believes that entering into the investment agreement aligns with the Group's development strategy and is in the overall interests of the Company and its shareholders.