Haitian Co., Ltd. Announcement: Victory in lawsuit! Expected compensation exceeds 100 million yuan!

On April 1, Haitian Shares (603759) released the latest progress announcement regarding a lawsuit involving its subsidiary: the court of first instance ruled in its favor, and it is expected to be awarded compensation of RMB 115 million.

Tracing back to July 2025, Haitian Shares’ wholly owned subsidiary Chengdu Tianfu New Area Haitian Water Co., Ltd. (hereinafter referred to as “Tianfu Haitian”) filed a lawsuit with the People’s Court of the Chengdu Tianfu New Area after failing to reach an agreement with the Sichuan Tianfu New Area Agriculture and Rural Affairs Bureau and the Sichuan Tianfu New Area Management Committee (hereinafter referred to as “Sichuan Tianfu New Area Management Committee”) regarding the withdrawal compensation proposal for the exclusive concession right of the Huayang No. 1 Wastewater Treatment Plant (Phase II) in Shuangliu County, and the case was accepted.

According to the latest announcement, on March 31 of this year, Haitian Shares received an administrative judgment from the court, with the court of first instance making the following rulings:

1. It is confirmed that the Sichuan Tianfu New Area Management Committee’s《Decision to Terminate the “Shuangliu County Huayang No. 1 Wastewater Treatment Plant (Phase II) Engineering—Construction—Operation—Transfer Exclusive Concession Right Contract” and Its Supplementary Agreements and Withdraw the Exclusive Concession Right》made on December 31, 2024 was unlawful.

2. The《Sichuan Tianfu New Area Management Committee’s Decision to Withdraw the Exclusive Concession Right Compensation Proposal for the Huayang No. 1 Wastewater Treatment Plant (Phase II)》made by the defendant, the Sichuan Tianfu New Area Management Committee, on May 30, 2025 is revoked.

3. Within sixty days from the date this judgment becomes effective, the defendant, the Sichuan Tianfu New Area Management Committee, shall pay the plaintiff, Tianfu Haitian, a compensation amount of RMB 115 million.

4. All other claims filed by the plaintiff, Tianfu Haitian, are dismissed. In addition, the case acceptance fee of RMB 50 shall be borne by the defendant, the Sichuan Tianfu New Area Management Committee.

In response, Haitian Shares stated that, given that this judgment is a judgment of the court of first instance and the case is still within the appeal period, there is uncertainty as to whether this judgment is final. The specific impact of this case on the current-period profit or subsequent-period profits of the listed company cannot be assessed at this time. The final impact amount will be subject to subsequent progress and the results after confirmation by an accounting firm audit, and will be disclosed in the periodic report.

It should be noted that Haitian Shares listed on the Main Board of the SSE on March 2021, and is the first A-share listed company in the Sichuan Tianfu New Area (hereinafter referred to as “Tianfu New Area”). Haitian Shares’ periodic reports show that Sichuan Haitian Investment Co., Ltd. holds 268 million shares of Haitian Shares, representing a 57.99% stake, and is the controlling shareholder of the listed company. The actual controller of Haitian Shares is Fei Gongquan.

In March 2011, Haitian Shares won the bid through an open tender process for the BOT exclusive concession right for the Huayang No. 1 Wastewater Treatment Plant (Phase II) project in Shuangliu County. In the same June, Haitian Shares established Tianfu Haitian and signed the relevant “Exclusive Concession Right Contract” with the People’s Government of Shuangliu County. Tianfu Haitian was granted the exclusive concession right for the Huayang No. 1 Wastewater Plant Phase II concession project.

After the establishment of Tianfu New Area, the above wastewater plant was located within the scope of the new area. In May 2019, Tianfu Haitian and the Tianfu New Area Management Committee signed a “Supplementary Agreement,” under which the Tianfu New Area Management Committee would perform all rights and obligations of the government party in the above concession project. Pursuant to the “Exclusive Concession Right Contract,” the exclusive concession period for the above project officially commenced operation on July 6, 2015 and totals 25 years.

Advancing to November 2024, the Sichuan Tianfu New Area Huayang Water Purification Plant project (hereinafter referred to as the “Huayang Water Purification Plant Project”) constructed by Chengdu Tiantou Environmental Construction officially entered operation. This project has the same geographical location, the same treatment processes, and the same effluent water quality as the Phase II wastewater concession project involved in the above case. On the 29th of the same month, Tianfu Haitian received a “Notice” delivered by the Tianfu New Area Management Committee, informing that it intended to terminate the “Exclusive Concession Right Contract” and reclaim the exclusive concession right.

On December 31, 2024, the Tianfu New Area Management Committee issued an “Administrative Decision,” deciding to terminate the “Exclusive Concession Right Contract” and the “Supplementary Agreement” effective January 1, 2025, reclaim the exclusive concession right held by Tianfu Haitian, and provide compensation in accordance with the law. At that time, the exclusive concession period remaining for the project held by Tianfu Haitian was approximately 15.5 years.

Based on prior announcements, Tianfu Haitian and the Sichuan Tianfu New Area Agriculture and Rural Affairs Bureau and the Tianfu New Area Management Committee failed to reach an agreement on the compensation amount.

As of the disclosure date of the April 1 announcement, the cumulative amount involved in all other lawsuits and arbitrations of Haitian Shares and its controlling subsidiaries that have not yet been disclosed is RMB 30.4828 million, accounting for 1.11% of the company’s audited net assets for fiscal year 2024. In addition, Haitian Shares and its controlling subsidiaries have no other lawsuits or arbitrations that should be disclosed but have not been disclosed.

Proofread by: Liu Xingying