Security Code: 603950 Security Abbreviation: Changyuan Donggu Announcement No.: 2021-012

Xiangyang Changyuan Donggu Industrial Co., Ltd.

Regarding the Company’s intention to enter into an agreement with the Management Committee of Shiyan Industrial New Zone

Announcement of the Signing of the Project Investment Contract

Special Note:

1. Xiangyang Changyuan Donggu Industrial Co., Ltd. (hereinafter referred to as the “Company” or “Party B”) intends to sign a Project Investment Contract (hereinafter referred to as the “Investment Contract”) with the Management Committee of Shiyan Industrial New Zone (hereinafter referred to as “Party A”). The estimated total investment for the project is approximately RMB 600 million. The proposed total investment amount represents the planned investment; subsequently, the Company may make adjustments based on specific factors such as fundraising, land acquisition, and supportive policies. There is a risk that the Company’s actual investment amount may differ from the project’s investment plan. The actual investment amount shall prevail; investors are advised to note this risk.

2. The project land involved in the investment contract to be signed must be acquired in accordance with current national laws and regulations and standard land-use procedures, through tendering, auction, or public listing. There is uncertainty as to whether the land use right can be successfully bid for, the final transaction price of the land use right, and the timing of its acquisition.

3. The investment contract signed this time does not have a material impact on the company’s operating revenue, net profit, or other production and operational metrics for 2021, and its effect on the company’s future long-term operating performance remains uncertain.

I. Investment Overview

1. Basic Information on the Investment

The company plans to sign a Project Investment Contract with the Management Committee of Shiyan Industrial New Zone. It intends to build an automotive engine block and cylinder head, along with related component, project on a site west of Dongli Road in Zone B of the Shiyan Industrial New Zone (adjacent to Dongfeng Commercial Vehicle Company’s powertrain plant). The total investment for the project is approximately RMB 600 million, to be funded from the company’s own or self-raised capital.

2. At the 18th meeting of the Company’s Third Board of Directors, the proposal was approved with 11 votes in favor, 0 against, and 0 abstentions; likewise, at the 15th meeting of the Third Supervisory Board, it was approved with 3 votes in favor, 0 against, and 0 abstentions. Proposal Regarding the Proposed Signing of a Project Investment Contract with the Management Committee of Shiyan Industrial New Zone 》 In accordance with the Company’s Articles of Association and the Shanghai Stock Exchange Listing Rules, this external investment, after being approved by the Board of Directors, must also be submitted to the company’s shareholders’ meeting for consideration.

3 The company’s board of directors has authorized management to enter into contracts and, within the aforementioned monetary limits, establish a wholly owned subsidiary and participate in land “tendering, auction, and listing” activities, as well as handle other related follow-up implementation matters.

4 The signing of the Project Investment Contract does not constitute a related-party transaction, nor does it constitute a major asset restructuring as defined in the Measures for the Administration of Major Asset Restructuring of Listed Companies.

II. Basic Information About the Other Party to the Contract

1 Name: Management Committee of Shiyan Industrial New Area

2 , Nature: Local government agency

3 Relationship with the company: No affiliation exists.

III. Main Contents of the Contract:

Party A: Management Committee of Shiyan Industrial New Area

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

1 Basic Information About the Project

(1) Party B’s investment project: an automotive engine block, cylinder head, and component project. The primary activities include the production and sale of automotive engine blocks, cylinder heads, and connecting rods, as well as the construction of supporting facilities such as factory buildings, office space, and R&D facilities.

(2) Within 60 days of signing the investment contract, Party B shall register a new independent legal entity (a wholly owned subsidiary) in Zhangwan District, Shiyan City, and shall operate and pay taxes in Zhangwan District in accordance with the law for no less than 15 years.

2 Project land:

The project is located on the west side of Dongli Road in Zone B of the Shiyan Industrial New Area (adjacent to the Dongfeng Commercial Vehicle Company Powertrain Plant), with a total land area of approximately 150 mu, subject to the actual redline boundaries.

3 Investment intensity and requirements:

(1) Party B’s total project investment is approximately RMB 600 million, of which fixed asset investment amounts to RMB 300 million.

(2) Party B’s new company project must comply with statutory infrastructure construction procedures for project filing, quality and safety supervision, and construction permit applications; conduct environmental impact assessments as required and actively fulfill ecological and environmental protection obligations; carry out construction in accordance with the “three simultaneities” requirements for work safety; and assume responsibility for all fire safety and other safety incidents that occur.

(3) Within two years of the new company’s project being completed and put into operation, Party B’s tax contribution intensity shall reach RMB 170,000 per mu per year.

4. The terms of the contract to be signed in this instance are still under negotiation and remain subject to uncertainty; the final terms shall be governed by the Project Investment Contract duly executed by both parties.

IV. Impact on the Company

The company this time with The Project Investment Contract of the Shiyan Industrial New Zone Management Committee will effectively increase the company’s production capacity and improve production efficiency, aligning with the company’s overall strategic plan, supporting its long-term development, and further enhancing the market share of its products.

The performance of this contract will not affect the company’s operational independence, and the company will not become dependent on Party A as a result of fulfilling this contract. The implementation and construction of this project will require a certain period of time and will not have a material impact on the company’s operating results for 2021.

V. Risk Warning

1 The funding for this project will come from the company’s own capital or self-raised funds. There is uncertainty as to whether these funds can be secured on schedule. Moreover, changes in financing arrangements, credit policies, and the ease of accessing financing channels during the investment and construction phases may expose the company to certain financial risks related to liquidity.

2 This project investment is based on the company’s strategic development needs and its assessment of industry market prospects; however, uncertainties exist regarding industry trends, market conditions, and the operational team’s ability to expand business, all of which may adversely affect the realization of future operating results.

3 The acquisition of the project site still requires adherence to the prescribed “tendering, auction, and listing” procedures under relevant regulations, introducing a degree of uncertainty. Furthermore, this project involves various approval matters related to project initiation, environmental protection, planning, construction permitting, environmental impact assessment, and safety assessment, all of which must be approved by the competent authorities, thereby entailing additional uncertainties.

4 The project investment amount, investment intensity, tax figures, and other metrics in the investment contract are all planned or estimated values. During the project’s construction, various uncertainties may arise, creating significant uncertainty as to whether the commencement of construction, completion, and formal production can be achieved within the timeframes stipulated in the contract. Additionally, future changes in market conditions will also introduce uncertainty into the realization of revenue and tax receipts. It is expected that, in the short term, this project will not have a material impact on the company’s operating performance.

5 The provisions in this contract regarding output value, tax contributions, and similar matters do not constitute the company’s forecasts of future performance, nor do they amount to any performance commitments to investors. The company hereby solemnly advises investors to invest rationally and to be mindful of investment risks.

VI. Reference Documents

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

2 Resolution of the Fifteenth Meeting of the Third Session of the Company’s Supervisory Board.

This is hereby announced.

Xiangyang Changyuan Donggu Industrial Co., Ltd.

Board of Directors

2021 March 23