According to the announcement of China Tangshang (00674) from Zhitong Finance APP, on April 1, 2023, Puning Huachuang Wenshi Industrial Development Co., Ltd. ("Puning Huachuang"), a wholly-owned subsidiary of the company, signed a non-legally binding letter of intent ("LOI") with Shenzhen Huatongchuangcai New Material Co., Ltd. ("Shenzhen Huatong"). Shenzhen Huatong is a company authorized exclusively to coordinate and find potential investors for the urban renewal project ("the Project") in Xintan Village, Liusha East Street, Puning City, Guangdong Province.

According to the LOI, Puning Huachuang Wenshi expressed interest in investing in the Project and agreed to pay a total of RMB 0.4 billion as a deposit ("Deposit") to ensure the investment and cooperation opportunities of the Project. Puning Huachuang Wenshi is required to pay RMB 0.3 billion (cumulative) before December 31, 2023, and RMB 0.4 billion (cumulative) before December 31, 2024, as a Deposit. As of the year ended March 31, 2024, approximately RMB 0.313 billion in Deposits has been paid in several installments to the bank account of Shenzhen Huatong. As of the date of this announcement, the Group has paid a total of approximately RMB 0.362 billion to Shenzhen Huatong as Deposits.

According to the terms of the LOI, Puning Huachuang Wenshi has the right to further decide whether to invest. If Puning Huachuang Wenshi decides not to invest in the Project or if the planned terms and financial data of the Project have not obtained government approval within 3 years from the date of the LOI, the Deposit will be unsecured, interest-free, and repayable unconditionally upon request. If Puning Huachuang Wenshi decides to invest in the Project, the Deposit will be converted into project investment capital and will be used for project development.

It is reported that the Project is located in Xintan Village, Liusha East Street, Puning City, Guangdong Province, China. The total area of the Project is approximately 53,000 square meters. The Project aims to develop into a comprehensive complex integrating residences, commercial spaces, community facilities, tourism, and entertainment, with a design reflecting the culture of Chaozhou. The initial development period of the Project is from 2020 to 2035, spanning about 15 years. The Project has drafted preliminary urban renewal plans, terms, and financial data, but is still in communication with the government to obtain further details on plans and terms. As of the date of this announcement, the company has not received government approval or entered into any legally binding agreements regarding the Project.

The Group is mainly engaged in property development business in China. Due to the sluggish Chinese real estate market in recent years, the Group has struggled to find good and profitable property development opportunities in China. Based on discussions with Shenzhen Huatong and market information on the Project, the Group's management believes that the Project, located in the central area of Puning City, is a super-large urban renewal project strongly supported by the local government. It is expected that the Project will generate potential returns, and the Group should seize the opportunity to invest in the Project.

Due to the potentially significant investment amount involved in the Project, including the demolition of existing buildings, relocation of current residents, and construction of new residential areas and other structures, a deposit is required to demonstrate investors' firm intention to participate in the Project. As of the date of this announcement, the company is waiting for the government to release relevant data on the Project and has not entered into any legally binding agreements regarding the Project. The company will decide whether to participate in the Project after obtaining data and government approval. Given the long development period and scale of the Project, it is expected to take longer. Although the Deposit has been paid by the Group, if the company decides not to participate in the Project, the Deposit can be fully refunded upon request.