According to the announcement by Cherish Sun International (01094) on August 21, 2024, its wholly-owned subsidiary, Cherish Sun New Energy, has entered into Cooperation Agreement I and Cooperation Agreement II with Jiangyin Elephant and Jiangxi Huigu, respectively, to establish Joint Venture Company I and Joint Venture Company II.

According to the terms of the cooperation agreements, the registered capital of Joint Venture Company I and Joint Venture Company II will be RMB 0.13 billion yuan. Cherish Sun New Energy will inject RMB 24.7 million yuan (equivalent to approximately HKD 26.9724 million) into each joint venture company, accounting for approximately 19.0% of the registered capital of each joint venture company. Jiangyin Elephant and Jiangxi Huigu will each inject the remaining registered capital of RMB 0.105 billion yuan (equivalent to approximately HKD 0.115 billion) into Joint Venture Company I and Joint Venture Company II, accounting for approximately 81.0% of the registered capital of each joint venture company. Therefore, Cherish Sun New Energy will only be a minority shareholder in each joint venture company, and the financial performance of the joint venture companies will not be consolidated into the financial statements of Cherish Sun International.

The main business of the joint venture companies is to provide supercomputing services to customers in various industries in China; and to generate and supply electricity through solar power generation facilities constructed and controlled by the joint venture companies in their respective regions, serving as a source of green energy. Supercomputing services are dedicated to meeting the high-performance computing needs of various customers in areas such as artificial intelligence, scientific and/or engineering computation, and audio/video processing.

The Group is actively seeking to expand its existing information technology services in a sustainable manner. The recent introduction of new economic policies by the central government presents a great opportunity, as the Group is an experienced player in the information technology industry and has a deep understanding of the trends and future development of the industry. The Group has been dedicated to researching and exploring supercomputing services, as supercomputing services are directly related to and widely applied in emerging businesses including artificial intelligence, cloud computing, big data processing and management, and are a cornerstone of the development of the 'future industries'. On the other hand, as supercomputing relies heavily on energy, the increasing utilization and popularity of computing services also leads to a growing demand for new energy supply to meet the increasing consumption of green and clean energy, which aligns with the Chinese government's goal of reducing carbon emissions. Solar energy, as one of the main sources of green energy, plays an increasingly important role in providing clean energy to supercomputing and data processing centers.

As the Group has been involved in solar power generation projects and providing services in the past few years, adopting the engineering, procurement, and construction (EPC) business model extensively in such projects, the management of the Group believes that investing in the joint venture companies (whose main business scope is as described above) can not only enhance the level of information technology services the Group provides, but also bring synergies to the Group as it may introduce more EPC opportunities, particularly in solar power generation projects.

The management of the Group believes that overall, in order to embrace the upcoming era of development in the 'future industries' and the changes in China's macroeconomic structure and environment and achieve prosperous development, the Group must make self-adjustments and seize opportunities. The directors believe that by investing in the joint venture companies as a minority shareholder, the Group has a good opportunity to achieve two goals in the promising and rapidly developing information technology and new energy industries, namely, enhancing its level of information technology services and expanding the market share in the new energy (such as solar energy) industry that the Group has been participating in through providing EPC services.