Security Code: 603950 Security Abbreviation: Changyuan Donggu Announcement No.: 2020-021

Xiangyang Changyuan Donggu Industrial Co., Ltd.

Announcement Regarding the Management of Securities Investments

Important Note:

• Xiangyang Changyuan Donggu Industrial Co., Ltd. (hereinafter referred to as the “Company”) intends to manage its own idle funds through securities investments, with an initial limit not exceeding RMB 200 million; within this limit, the funds may be reused on a revolving basis.
• The scope of this securities investment management primarily includes subscriptions for new shares, subscriptions for publicly and privately issued shares by listed companies, and equity investments in companies planning to go public; government bonds, corporate bonds (including convertible bonds); listed securities (including H-shares); private equity fund investments; and other investment activities permitted by laws, regulations, and the rules of the Shanghai Stock Exchange.

On October 30, 2020, the sixteenth meeting of the third session of the Company’s Board of Directors and the thirteenth meeting of the third session of the Supervisory Board reviewed and approved the “Proposal on the Management of the Company’s Securities Investments.” The relevant details are hereby announced as follows:

I. Overview of Securities Investment Management

(1) The Purpose of Securities Investment Management

In line with the company’s development strategy, and with the aim of broadening investment channels, enhancing capital efficiency, and increasing asset returns—while ensuring that the normal operations of the company and its subsidiaries are not disrupted and risks remain effectively controlled—the company plans to manage investments in securities using its own idle funds.

(II) Investment Management Quota

The initial investment shall not exceed RMB 200 million, and within this limit, the funds may be reused on a revolving basis.

(3) Scope of Investment Management

The scope of this securities investment management primarily includes IPOs (new share subscriptions), additional offerings and rights issues by listed companies, equity investments in pre-IPO companies, government bonds, corporate bonds (including convertible bonds), listed securities and their derivatives (including stocks, funds, and bonds), futures, entrusted wealth management (including bank wealth management products, trust product investments, and reverse repurchase agreements on government bonds), private equity fund investments, and other investment activities approved by the Shanghai Stock Exchange.

(4) Investment Management Term

Within 12 months from the date of approval by the Board of Directors, the Company’s management is authorized to organize and implement the plan in detail.

(5) Sources of Assets Used for Investment Management

The assets used for this securities investment management are the company’s and its controlled subsidiaries’ own idle funds.

(6) Decision-making procedures

On October 30, 2020, the Company convened the sixteenth meeting of the third session of the Board of Directors and the thirteenth meeting of the third session of the Supervisory Board, at which the “Proposal on the Management of the Company’s Securities Investments” was reviewed and approved. The initial authorization for this securities investment management shall not exceed RMB 200 million, representing 9.28% of the Company’s latest audited net assets attributable to owners of the parent company. In accordance with the relevant provisions of the Company Law, the Shanghai Stock Exchange Listing Rules, and the Articles of Association, submission to the shareholders’ meeting for deliberation is not required.

II. Investment Risks and Risk Control

(1) Investment Risks

The company may face the following risks in its securities investments: The securities market is significantly influenced by macroeconomic conditions, fiscal and monetary policies, economic cycles, interest rates, inflation, and credit factors, meaning such investments are subject to market volatility; in addition, operational risks associated with relevant personnel may arise.

(II) Risk Mitigation Measures

(1) Formulate the Company’s “Securities Investment Management System” to clearly define the decision-making, execution, and control procedures for securities investments, thereby effectively preventing and controlling investment risks.

(2) The company will strengthen its analysis and research of the securities market and, in light of market developments, promptly adjust its investment strategies and scale.

(3) Diligently implement relevant internal management systems and regularly report to the company’s board of directors on the status of the company’s securities investment management.

III. Impact on the Company

The Company’s management of securities investments using its own idle funds is conducted on the premise of ensuring the normal operation of its production and business activities and maintaining controllable risks. It is expected to preserve and enhance the value of the assets; however, there remains a risk of loss. The Company will appropriately allocate and utilize the relevant assets, improve capital efficiency, and mitigate securities investment risks so as not to adversely affect its normal production and operating activities.

IV. Opinion of the Independent Directors

1 Currently, the company is operating normally and maintains a sound financial structure. The initial investment management allocation for managing its own idle funds does not exceed 10% of the most recent audited net asset value, which supports the implementation of the company’s development strategy and enhances the efficiency of asset utilization. There are no circumstances that would harm the interests of the company or all shareholders, particularly minority shareholders. Furthermore, the assets used originate from the company’s and its controlled subsidiaries’ own idle funds, which are legally and compliantly sourced and will not affect the normal operation of the company’s business.

2 The investment decision-making process for this transaction is lawful and compliant, in accordance with applicable laws, regulations, and normative documents. The company has established a “Securities Investment Management System” that strengthens investment risk management and control, thereby effectively safeguarding asset security. The independent directors unanimously agreed to conduct securities investment activities in compliance with the “Securities Investment Management System.”

V. Opinion of the Supervisory Board

The Company’s management of securities investments, in line with its operational conditions and development strategy, helps improve asset utilization efficiency. The initial investment limit shall not exceed 10% of the most recent audited net assets, and the investment scale is moderate, ensuring no adverse impact on the normal operation of the Company’s business. The decision-making process for this matter is lawful and compliant, in accordance with applicable laws, regulations, and normative documents, and there are no circumstances that would harm the interests of the Company or all shareholders, particularly small and medium-sized shareholders. We approve the Company’s current securities investment management activities.

This is hereby announced.

Xiangyang Changyuan Donggu Industrial Co., Ltd.

Board of Directors

2020 October 31 of the year