On June 6, Huitong Co., Ltd. announced that it plans to transfer its 33.8889% equity stake in the associate company, Puli Si Biotechnology Co., Ltd. (hereinafter referred to as “Puli Si”), to its related party, Eighth Element Environmental Technology Co., Ltd. Upon completion of the transfer, the company will no longer hold any equity interest in Puli Si.

　　Pliith announced in May that its production launch was now in the final countdown. Under these circumstances, the listed company nevertheless chose to sell its equity stake in the company.

　　Proposed sale of the equity interest held in Puli Si.

　　According to an announcement by Huitong Co., Ltd., the book value of all equity interests held by Puli Si’s shareholders was RMB 377 million, while the appraised value stood at RMB 394 million, reflecting an appraisal appreciation rate of 4.38%. In this transaction, the listed company transferred a 33.8889% stake in Puli Si for RMB 133 million.

　　In April 2021, Huitong Shares announced that it had entered into relevant agreements with the Management Committee of the Sanshan Economic Development Zone in Wuhu, Anhui, and Hefei Langrun Asset Management Co., Ltd. Under these agreements, the Sanshan Management Committee will bring in Huitong Shares and Langrun Asset to establish a project company within the Sanshan Economic Development Zone, which will undertake a polylactic acid (PLA) production project with an annual capacity of 350,000 tons. Langrun Asset is the second-largest shareholder of Huitong Shares, and its controlling shareholder is an individual named Xiaolin.

　　In May 2021, Pliith was officially established. Huaitong Co., Ltd. contributed RMB 122 million in cash, acquiring a 33.8889% stake and becoming the company’s largest single shareholder. Pliith plans to invest RMB 8.6 billion to build a polylactic acid (PLA) production facility with an annual capacity of 350,000 tons. The first phase will require an investment of RMB 2 billion to construct a 50,000-ton-per-year PLA plant, while the second phase will total RMB 6.6 billion to develop a 300,000-ton-per-year PLA project.

　　Reason for selling the equity stake

　　Regarding the investment to establish Puli Si, Huitong Shares stated at the time that polylactic acid, as a bio-based biodegradable material, is one of the upstream raw materials for the company’s existing products and exhibits synergy with its core business. This investment aligns with market development trends, is consistent with the company’s strategic plan, and will help the company strengthen its presence in the upstream segment of the value chain.

　　Regarding the sale of its stake in Puli Si, Huitong Shares stated that it was “in consideration of focusing on the development of its core business and recovering capital.”

　　The new shareholder has deep ties with Huitong Shares.

　　The Eighth Element, which has now acquired the PuliSi equity held by Huitong Shares, is likewise controlled by an individual, Xiao Lin (who serves as the company’s legal representative).

　　Xiaolin has deep ties to Huitong Shares. In addition to being an indirect shareholder holding more than 5% of the company, he also collaborated for many years with He Qianchang, the actual controller of Huitong Shares. From December 1995 to January 2000, Xiaolin worked at Midea Group as a financing manager and an investment manager; from June 2008 to November 2016, he served as chairman of Huitong Limited, the predecessor of the listed company.

　　Pliith’s production launch is now in the countdown phase.

　　According to the initial disclosure by Huitong Co., Ltd., the construction period for the first phase of the Pliith project was three years.

　　However, an article published on PuliSi’s official WeChat account on August 25 last year revealed that the company’s Phase I project—a smart factory with an annual capacity of 75,000 tons of lactic acid and 50,000 tons of polylactic acid—officially broke ground in Wuhu City, Anhui Province, in 2021, with planned commercial production scheduled for the first quarter of 2023.

　　In mid-May this year, Pris published an article on its official WeChat account marking the start of the production countdown.

　　The PuliSi R&D team is led by Academician Chen Xuesi, a leading expert in the field of biodegradable polymer materials. The team boasts extensive experience in industrialization and application development and possesses core technologies spanning the entire polylactic acid value chain.

　　The technical team, led by Academician Chen Xuesi and Researcher Bian Xinchao, is the only domestic research group with extensive experience in the large-scale industrial production of PLA. The team comprises 25 members, including 7 senior-title professionals and 20 PhD holders, all of whom possess many years of research expertise in the industrial-scale synthesis and modification of polylactic acid. It is one of the few teams in China that masters the entire polylactic acid value chain.