Beijing Hanjian Heshan Pipe Industry Co., Ltd. Announcement of Response to Inquiry Letter on Information Disclosure Regarding the Preliminary Plan for Issuance of Shares and Cash Payment for Asset Acquisition

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Stock Code: 603616 Short Name: Han Jian Heshan Announcement No.: 2026-021

Beijing Han Jian Heshan Pipe Industry Co., Ltd.

Announcement on the reply to the inquiry letter regarding the disclosure of the preliminary plan for issuing shares and paying cash to acquire assets

The company’s board of directors and all directors guarantee that the content of this announcement does not contain any false records, misleading statements, or major omissions, and bear legal responsibility for its authenticity, accuracy, and completeness.

Beijing Han Jian Heshan Pipe Industry Co., Ltd. (hereinafter referred to as “the company” or “Han Jian Heshan”) received on February 3, 2026, the “Inquiry Letter on the Disclosure of the Preliminary Plan for Issuing Shares and Paying Cash to Purchase Assets” issued by the Management Department I of the Shanghai Stock Exchange listed company management (SSE Official Letter [2026] 0360) (hereinafter referred to as “the Inquiry Letter”). The company attaches great importance to this, organizing Zhongde Securities Co., Ltd. (hereinafter “Zhongde Securities” or “independent financial advisor”) and other relevant parties to carefully verify the related matters. Based on the requirements of the Inquiry Letter and the responses, the company has revised and supplemented the “Preliminary Plan for Issuance of Shares and Payment of Cash to Purchase Assets and Raise Supporting Funds” and its summary, marked in bold with a regular script. Unless otherwise specified, the abbreviations involved in this reply have the same meaning as those in the plan. The reply content is as follows:

Question 1: Regarding the significant fluctuations in the target company’s performance. Public information and the plan show that the target company achieved operating revenues of 777.3016 million yuan, 608.5658 million yuan, 400.8394 million yuan, and 385.6641 million yuan from 2022 to 2025, showing a decreasing trend year by year; net profits attributable to parent company were 101.2428 million yuan, 135.5979 million yuan, -0.7367 million yuan, and 100.5 million yuan, with performance fluctuating greatly and overall declining significantly.

Please explain: (1) the specific reasons for the continuous decline in revenue and large performance fluctuations in recent years, whether the performance differs significantly from industry peers and the reasonableness of such differences; (2) combined with the target company’s industry segmentation, competitive landscape, etc., disclose the target company’s market share, industry position, competitive advantages and disadvantages; (3) disclose the basic situation of the top five customers in the past three years, including but not limited to revenue proportion, cooperation duration, changes, related parties, etc., and clarify whether there are risks such as high customer concentration, dependence on a single customer, or major customer loss, and whether such situations are in line with industry norms; (4) based on the above, explain the reasons for the fluctuations in the target company’s performance, whether it has sustainable and stable profitability, and whether this acquisition will help improve the quality of the listed company.

Reply:

(1) Explanation of the reasons for the recent decline in revenue and performance fluctuations, and whether the performance significantly differs from industry peers and the reasonableness thereof:

1. Analysis of the reasons for the recent decline in revenue of the target company

The main products and services of the target company include polyetheretherketone (PEEK) intermediates, pesticides and pharmaceutical intermediates, and PEEK purification business. The PEEK intermediates include DFBP, DFDPM; the pesticide and pharmaceutical intermediates mainly include FPBA. Additionally, to effectively utilize capacity, the company sold more of its fluorobenzene in 2024. The revenue from main products/services from 2022 to 2025 is as follows:

(Unit: 10,000 yuan)

Note: Financial data for 2024-2025 are subject to audit by the company’s engaged accounting firm.

The decline in recent years is mainly due to the decrease in revenue from the PEEK intermediates business, detailed as follows:

In 2022, demand for PEEK was strong, but due to longer international trade and transportation delays and higher transportation uncertainties, the company’s overseas customers made large purchases, reserving high inventories. After 2023, due to declining end-market demand and inventory digestion, the main customers’ procurement volume decreased, leading to a drop in sales of PEEK intermediates. Meanwhile, to maintain competitive advantage, the company adopted active price competition strategies, lowering market prices.

In 2024, due to decreased sales volume and lower prices, revenue from PEEK intermediates declined; to better utilize capacity, the company actively sold fluorobenzene, increasing its revenue.

In 2025, with the expansion of PEEK application fields and the gradual elimination of inventory pressure among major customers, procurement recovered, leading to increased sales of PEEK intermediates; revenue from FPBA and PEEK purification remained stable. The company focused on core businesses such as PEEK intermediates, FPBA, and PEEK purification, reducing sales of fluorobenzene.

2. Specific reasons for performance fluctuations

In recent years, the company’s revenue has continued to decline, and performance has fluctuated. The main items on the profit and loss statement from 2022 to 2025 are as follows:

(Unit: 10,000 yuan)

In 2022 and 2023, net profits were 101.2428 million yuan and 135.5979 million yuan, respectively, at relatively high levels. The increase in 2023 was mainly due to lower material costs, improved gross profit margin, and the reversal of impairment provisions related to related-party borrowings.

In 2024, net profit dropped significantly by 136.3346 million yuan compared to 2023, mainly due to decreased gross profit, investment losses, and significant credit impairment losses; in 2025, net profit increased again, mainly due to recovery in the PEEK market and narrower investment and credit impairment losses.

As mentioned, revenue declined in 2024, and aggressive price competition and lower market prices led to declines in revenue and gross profit margin; since 2025, as the market warmed, gross profit margin decline narrowed.

In 2020, the company invested 32.5 million yuan in Panjin Weiyingxing High-Performance Materials Co., Ltd. (later renamed VIGOS (Panjin) High-Performance Materials Co., Ltd., hereinafter “Panjin VIGOS”), and lent 65 million yuan to it. Since Panjin VIGOS has not yet fully started production, the company has recognized investment income (loss) and credit impairment losses, which are major reasons for performance fluctuations.

3. Differences in operational performance trends compared to industry peers

The company’s main business involves R&D, production, and sales of aromatic products, including PEEK intermediates, pesticide and pharmaceutical intermediates, and PEEK purification. Currently, there are no listed companies with fully overlapping business fields.

Xinhan New Materials (301076.SZ) produces specialty engineering plastics, photoinitiators, cosmetic raw materials, etc., with core raw materials for specialty engineering plastics accounting for about 40%-60% of revenue. Xinhan’s business overlaps with PEEK intermediates. Currently, no listed company discloses revenue from FPBA or PEEK purification.

The revenue and net profit trends of Xinhan New Materials and the target company are as follows:

(Unit: 10,000 yuan)

Data source: periodic reports disclosed by listed companies.

In terms of PEEK intermediates revenue:

• In 2023, the target company’s revenue decreased, while Xinhan New Materials’ increased, mainly because in 2022, demand was strong, and overseas customers increased procurement, leading to high inventory; after 2023, inventory digestion and demand decline caused sales to fall, and prices were lowered. Xinhan’s IPO project for DFBP entered trial production in February 2023, increasing sales and revenue.

• In 2024, both the target company and Xinhan New Materials saw declines; in the first half of 2025, both saw growth, with similar trends.

Net profit: Both are chemical companies with PEEK intermediates as major businesses, but due to differences in other business segments, financing capacity, investments, and borrowings, their net profit levels differ reasonably.

(2) Combining industry segmentation, competitive landscape, etc., disclose the target company’s market share, position, competitive advantages and disadvantages:

1. Industry segmentation, landscape, market share, and position

• Industry: According to the “National Economic Industry Classification Standard” (GB/T 4754-2017), the target company belongs to “Manufacture of chemical raw materials and chemical products (C26)”, specifically “Manufacture of organic chemical raw materials (C2614)”. It is a high-tech enterprise focusing on aromatic products, with products widely used in high-performance polymers, pharmaceuticals, and pesticides. Its PEEK intermediates capacity is 4,900 tons/year.

• Competition: The main products are PEEK intermediates like DFBP, DFDPM. Most PEEK producers purchase DFBP externally; only a few like VIGOS can produce DFBP independently. Domestic demand for PEEK intermediates is expanding due to localization, with strong supply chain stickiness and risk resistance. Emerging markets like India and Southeast Asia have increased capacity, but due to long qualification cycles, downstream customers prefer established suppliers, making new entrants’ market penetration difficult. Environmental regulations and higher added value of downstream products limit upstream self-production of DFBP. The company’s products are recognized in the industry, with stable supply.

2. Competitive advantages and disadvantages

• Advantages:

  ① Customer resource advantage: The company’s downstream customers are mainly PEEK producers. It has become a core supplier for major global PEEK producers like VIGOS and Evonik, maintaining leading market share. Long-term cooperation with top companies ensures future growth.

  ② Supply chain advantage: Over ten years of R&D in aromatic compounds, the company has established a complete industrial chain from basic raw materials to DFBP, enhancing product quality and cost competitiveness.

  ③ Brand and quality: The company has strong brand, product quality, technology, and customer resource advantages, with leading capacity and quality, recognized by clients like VIGOS, Solvay, Evonik, Bayer, BASF, etc.

  ④ Safety and environmental advantages: The company emphasizes safety and environmental protection, with certifications and strict management systems, ensuring sustainable production.

• Disadvantages:

  ① Limited financing channels: Industry requires continuous capital investment; the company mainly relies on self-finance and bank loans, with limited capital strength.

  ② Smaller scale compared to international peers: Although domestically advanced, it still lags behind top global chemical companies in scale and R&D.

(3) Disclosure of the basic situation of the top five customers over the past three years, including revenue proportion, cooperation duration, changes, related parties, etc., and whether there are risks of high customer concentration, dependence on a single customer, or major customer loss:

1. Basic info of top five customers (2023-2025):

(Unit: 10,000 yuan)

Note: Data are consolidated under the same control, disclosed by the parent or main transaction entity.

2. Customer concentration and industry norms:

In 2023-2025, the top five customers accounted for 78.11%, 55.07%, and 68.12% of main business revenue, respectively. Xinhan’s top five customers accounted for 59.34% and 39.04% in 2023 and 2024.

The company’s customer concentration is slightly higher than Xinhan’s, mainly due to business structure differences. The target mainly engages in pharmaceutical intermediates, while Xinhan focuses on photoinitiators and cosmetic raw materials. Xinhan’s IPO prospectus states that sales to Solvay account for over 50% of certain product categories, indicating high customer concentration, which is industry-typical.

3. Risks of high customer dependence or major customer loss:

The company’s main customers for PEEK intermediates, purification, and intermediates related to pesticides and pharmaceuticals have strong technical and supply chain synergy, and maintain long-term relationships with major global and domestic chemical companies, such as VIGOS, Solvay, Evonik, Bayer, BASF, etc. Customer stickiness is high, and the risk of major customer loss is low.

In summary, the company’s sales to the top five customers are high but within industry norms; no single customer accounts for over 50%, and dependence is low. Long-term cooperation with well-known clients reduces risk.

(4) Based on the above, explain the reasons for performance fluctuations, whether the company has sustainable profitability, and whether this acquisition will improve the company’s quality:

Market demand and competition caused sales and prices of main products to decline in 2024, leading to revenue decline. As the PEEK application field expands and inventory pressure among major customers eases, sales and revenue recovered in 2025. The company’s joint venture with global leading PEEK producer VIGOS, and related investments and borrowings, caused some fluctuations, but these are aimed at expanding downstream business and strengthening customer relationships, which are beneficial long-term. The decline in DFBP prices will reduce downstream production costs and promote new application expansion.

The company focuses on R&D and industrialization of PEEK intermediates, pesticides, pharmaceutical intermediates, and purification, with advanced technology and strong customer base, making it a leading supplier. Its complete supply chain, technological edge, and high customer loyalty are competitive advantages. The high concentration of customers is typical in the industry. The company maintains long-term relationships with major clients, with low risk of customer loss.

The company’s long-term supply agreements with Evonik, Solvay, and stable cooperation with Bayer, BASF, and others support future growth. The company has stable profitability, and this acquisition will enhance the company’s sustainable operation and quality.

Question 2: Regarding the transaction plan. As of the third quarter of 2025, the company’s cash and cash equivalents are only 68 million yuan. The plan proposes issuing shares and paying cash to acquire 99.9978% of Liaoning Xingfu New Materials Co., Ltd. (the target company), and raising supporting funds. The raised funds are intended for cash payment, intermediary fees, and taxes. Among the transaction counterparties, Chen Xuhui, Gao Xianghan, and Guo Zhenwei have signed “unified action agreements,” controlling 52.51% of the target company’s shares directly or indirectly. Other counterparties include several partnership firms.

Please explain: (1) the specific arrangements for cash payment, and if the supporting funds fall short, whether the company’s debt repayment and operations will be adversely affected; (2) whether there are related-party or other arrangements among the counterparties, and whether the issuance of shares might affect control stability or constitute a major asset reorganization under relevant regulations. The independent financial advisor should verify and give clear opinions.

Reply:

(1) Specific arrangements for cash payment and impact if funds fall short:

• As of the date of this reply, the transaction agreement and valuation are not finalized; the final transaction price will be based on an asset valuation report by an approved valuation agency, negotiated by the parties. The specific payment plan has not been determined yet. After completion of due diligence and valuation, the company will sign a supplementary agreement to confirm the transaction price and plan, disclosed in the restructuring report.

• Valuation assumptions: The valuation of Xingfu New Materials over the past three years is provided. Preliminary discussions suggest a valuation of approximately 1.12 billion yuan, lower than recent valuations, due to market and future prospects considerations. Final valuation will be confirmed after valuation work.

• Payment arrangements: The company plans to pay part of the consideration via share issuance (75%) and cash (25%) for Chen Xuhui, Gao Xianghan, Guo Zhenwei, and Fuxing Tongchuang; other counterparties will be paid 100% via share issuance. The estimated cash payment is about 147 million yuan.

• If supporting funds are insufficient, the company will use its own funds or raise loans:

  • As of September 30, 2025, the company’s cash is about 67.94 million yuan. It will use part of this for payment, considering minimum cash reserves.

  • The company has good banking relationships and can obtain acquisition loans, which are within regulatory limits (not exceeding 70% of the transaction price). This ensures timely payment.

• Overall, if funds are insufficient, the company will supplement with self-raised or borrowed funds, which will not adversely affect its debt repayment or operations.

(2) Impact on control and related-party arrangements:

• Before the transaction, Chen Xuhui, Gao Xianghan, and Guo Zhenwei hold 29.87%, 4.53%, and 7.24% of the target company, respectively, with a “unified action agreement” to maintain control. They also have long-term control over Xingfu New Materials.

• After the transaction, these parties are expected to cease holding the target company’s shares, but their control over the listed company is analyzed:

  • Chen Xuhui and Gao Xianghan are spouses, and their combined shareholding in the listed company is about 10.75%, close to the controlling stake.

  • Guo Zhenwei and Fuxing Tongchuang are also related, with combined holdings around 5.66%.

  • Even combined, their total shareholding is about 16.41%, still below the 50% threshold, and the company’s control remains with the existing controlling shareholder, so no change in control or risk of reorganization under relevant regulations.

• The “unified action agreement” only covers Xingfu New Materials and does not extend beyond, so control stability is maintained.

(3) Independent financial advisor verification:

• The advisor has reviewed relevant agreements, company financials, and shareholder structures, confirming that the arrangements do not threaten control stability or constitute a major reorganization.

(3) Insider information management. The company’s stock was suspended on January 21, 2026, for this transaction, and resumed trading on February 4, 2026, after disclosure. The stock price hit the daily limit on January 20, 2026.

Please explain: (1) the specific process of this acquisition, including key steps, progress, important dates, and personnel involved; (2) verify whether insiders have leaked information early; (3) ensure the insider list is accurate and complete. The independent financial advisor should verify and give opinions.

Reply:

(1) The process of the acquisition:

• As of the first disclosure date (February 3, 2026), the company’s planning process included:

[Details of the process, key steps, and personnel involved are to be provided here.]

(2) Insider information confidentiality:

• The company strictly implements confidentiality measures, limiting personnel involved, and has registered insiders according to laws and regulations, including the Securities Law, Information Disclosure Management Measures, and Insider Registration System.

• During the planning period, the company restricted access to sensitive information, informed personnel to keep it confidential, and submitted insider lists and transaction progress memos to the exchange.

• The company’s internal checks on insider trading during the period (from July 20, 2025, to January 20, 2026) show no evidence of early leaks or insider trading.

(3) The company and related parties have strictly followed relevant regulations, and the insider list submitted to the exchange is accurate and complete.

(4) The independent financial advisor’s verification:

• The advisor has reviewed relevant confidentiality measures, insider lists, and transaction process documents, confirming that the company has taken necessary steps to prevent leaks, and no early disclosure has been found.

This concludes the translation.