Wuhan Youji Holdings Ltd. (2881) released a circular outlining plans for major and connected transactions. The proposal involves establishing a non-wholly owned subsidiary (the “Target Company”) and entering into construction and leaseback arrangements with a state-owned enterprise to build production facilities. The Extraordinary General Meeting is scheduled for 20 March 2026 to approve the transactions.

According to the announcement, the Target Company’s initial registered capital is set at RMB119.20 million. Wuhan Youji will contribute RMB63.23 million, of which RMB50.00 million will be in the form of intellectual property valued according to a professional assessment. Wuhan Guangyao, a separate entity, will provide RMB50.00 million of intellectual property. Other shareholders, including management and strategic partners, will contribute in cash for the remainder.

The overall plan boosts Wuhan Youji’s research and development in photochemical oxidation technology, targeting a 15,000-ton-per-year production facility for high-value organic compounds. An accompanying construction and leaseback agreement limits building and land acquisition costs to RMB106.00 million during a one-year construction period. Afterward, the Target Company will lease the facility for a term of up to seven years, with annual rent tied to the prevailing market rate. Wuhan Youji will guarantee the lease obligations, but all minority shareholders must pledge their Target Company equity as security.

Upon completion, the Target Company’s financial results will be consolidated into Wuhan Youji’s statements, with the intellectual property-based valuation viewed as a key component of the deal. Shareholders are advised to review the terms, as the transactions constitute major and connected transactions under Hong Kong’s Listing Rules.