Stock Code: 603950 Stock Abbreviation: Changyuan Donggu Announcement No.: 2021-004

Xiangyang Changyuan Donggu Industrial Co., Ltd.

Regarding the Company's Intention to Sign an Agreement with Xiangzhou District People's Government of Xiangyang City

Announcement on Signing the "Investment Agreement"

Special Notice:

1. Xiangyang Changyuan Donggu Industrial Co., Ltd. (hereinafter referred to as the "Company" or "Party B") intends to sign the "Investment Agreement" (hereinafter referred to as the "Investment Agreement") with the Xiangzhou District People's Government of Xiangyang City (hereinafter referred to as "Party A"), with an estimated total project investment of approximately RMB 300 million. The total amount of this proposed investment is the planned investment amount. The Company may adjust it later based on specific conditions such as fund-raising, land acquisition, and support policies. There is a risk of discrepancy between the Company's actual investment amount and the project investment plan, and the actual investment amount shall prevail. Investors are advised to pay attention to the risks.

2. The project land involved in this proposed investment agreement needs to be handled in accordance with current national laws and regulations and normal land use procedures, and obtained through public bidding, auction, or listing transfer. There is uncertainty regarding whether the land use rights can be successfully acquired, the final transaction price of the land use rights, and the acquisition time.

3. This signed investment agreement does not constitute a significant impact on the Company's operating income, net profit, and other production and operations for the year 2021, and its impact on the Company's long-term operating performance in the future is uncertain.

I. Investment Overview

1. Basic Information of the Investment

The Company plans to sign an "Investment Agreement" with the Xiangzhou District People's Government of Xiangyang City. The Company intends to invest in the expansion of an engine cylinder block and cylinder head manufacturing project in Xiangzhou District, Xiangyang City. The total project investment is approximately RMB 300 million, and the source of funds will be the Company's own funds or self-raised funds.

2. The 17th meeting of the Company's third Board of Directors approved with 11 votes in favor, 0 against, and 0 abstentions, and the 14th meeting of the third Board of Supervisors approved with 3 votes in favor, 0 against, and 0 abstentions, the following resolution: < Regarding the proposal to sign an "Investment Agreement" with the Xiangzhou District People's Government. According to the "Articles of Association" and the "Rules Governing the Listing of Stocks on the Shanghai Stock Exchange", this foreign investment matter falls within the approval authority of the Board of Directors and does not need to be submitted to the Company's General Meeting of Shareholders for deliberation.

3 The Company's Board of Directors authorizes the Company's management to sign the agreement, establish a wholly-owned subsidiary within the aforementioned amount, and participate in subsequent specific implementation matters such as land "bidding, auction, and listing" work.

4 The signing of this "Investment Agreement" does not constitute a related party transaction, nor does it constitute a major asset reorganization as stipulated in the "Measures for the Administration of Major Asset Reorganizations of Listed Companies".

II. Basic Information of the Counterparty

1 Name: Xiangzhou District People's Government of Xiangyang City

2 Nature: Local Government Institution

3 Relationship with the Company: No related party relationship with the Company

III. Main Contents of the Agreement:

Party A: Xiangzhou District People's Government of Xiangyang City

Party B: Xiangyang Changyuan Donggu Industrial Co., Ltd.

1 Basic Information of the Project

(1) Project invested and constructed by Party B: Engine Cylinder Block and Cylinder Head Manufacturing Project.

(2) Party B must register a new independent legal entity company (wholly-owned subsidiary) in Xiangzhou District within 3 months after signing the investment agreement, and legally operate and pay taxes in Xiangzhou District for no less than 15 years.

2 Project Land Use:

The project is located in Xiangzhou Electromechanical Industrial Park, adjacent to the south plot of Changyuan Donggu factory area. The land is industrial land, with an area controlled within 90 mu (the specific location and land area shall be subject to the red line map issued by the natural resources and planning department).

3 Investment Intensity and Requirements:

(1) Party B's project total investment is approximately RMB 300 million, and Party B is responsible for and bears the cost of land leveling for the project site.

(2) The project must be completed and put into production within 18 months after obtaining construction land and meeting the conditions for commencement. The fixed asset investment for the project must be no less than RMB 200 million within two years after the commencement of construction.

(3) Starting from the year following the completion and commissioning of the project, the new company shall pay production and operation taxes to Party A of no less than RMB 13.5 million.

4. The content of this proposed agreement is still under discussion and remains uncertain. The final content shall be subject to the "Investment Agreement" formally signed by both parties.

IV. Impact on the Company

The Company's current engagement with the Xiangzhou District People's Government of Xiangyang City to sign the "Investment Agreement" will effectively increase the Company's production capacity and improve production efficiency, which aligns with the Company's overall strategic layout, contributes to the Company's long-term development, and further enhances the market share of the Company's products.

The performance of this agreement will not affect the independence of the Company's business, nor will the Company become dependent on Party A due to the performance of this agreement. The implementation and construction of this project require a certain period, and will not have a significant impact on the Company's operating performance for the year 2021.

V. Risk Warning

1 The funding source for this project investment is own funds or self-raised funds, and there is uncertainty as to whether the funds can be in place on time. Fundraising during the investment and construction process, changes in credit policies, and the smoothness of financing channels will expose the Company to certain financial risks.

2 This project investment is based on the Company's strategic development needs and judgment of the industry market outlook, but there are certain uncertainties in industry development trends, market changes, and the business development capabilities of the management team, which will have an uncertain impact on the realization of future operating benefits.

3 The acquisition of project land still needs to follow the "bidding, auction, and listing" transfer procedures in accordance with relevant regulations, which involves a certain degree of uncertainty. This project involves various approval matters such as project establishment, environmental protection, planning, construction permits, environmental impact assessment, and safety assessment, and also requires approval from relevant competent authorities, which presents a certain degree of uncertainty.

4 The project investment amount, investment intensity, and tax figures in the investment agreement are all planned or estimated figures. Various uncertainties may arise during the project construction process, leading to significant uncertainty regarding whether the project's commencement, completion, and official commissioning can be achieved within the timeframe stipulated in the agreement. Furthermore, changes in future market conditions will also impact the realization of revenue and taxes. It is anticipated that this project will not have a significant impact on the company's operating performance in the short term.

5 The clauses in this agreement concerning output value and tax contributions do not represent the company's prediction of future performance, nor do they constitute a performance commitment to investors. The company solemnly advises investors to invest rationally and be aware of investment risks.

VI. Documents for Inspection

1 Resolution of the Seventeenth Meeting of the Third Board of Directors of the Company;

2 Resolution of the Fourteenth Meeting of the Third Supervisory Board of the Company.

This announcement.

Xiangyang Changyuan Donggu Industrial Co., Ltd.

Board of Directors

2021 March 10