Zhejiang Qianjiang Biochemical Co., Ltd (SHSE:600796) enter into a letter of intent to acquire stakes in Zhejiang Haiyun Environmental Protection Co., Ltd., Haining Capital Water Co., Ltd., Haining SK Water Co., Ltd. and Haining Lvdong Haiyun Environmental Energy Co., Ltd. from Haining Water Investment Group Co., Ltd. and Yunnan Water Investment Co., Limited (SEHK:6839) for CNY 2.1 billion on December 31, 2020. Under the terms of the transaction, Zhejiang Qianjiang Biochemical Co., Ltd will pay cash and issue shares. Zhejiang Qianjiang Biochemical Co., Ltd will acquire 51% stake in Zhejiang Haiyun Environmental Protection Co., Ltd. and 40% stake in Haining Capital Water Co., Ltd., Haining SK Water Co., Ltd. and Haining Lvdong Haiyun Environmental Energy Co., Ltd. from Haining Water Investment Group Co., Ltd. Zhejiang Qianjiang Biochemical Co., Ltd will also acquire 49% stake in Zhejiang Haiyun Environmental Protection Co., Ltd. from Yunnan Water Investment Co., Limited. Zhejiang Qianjiang Biochemical Co., Ltd entered into the framework agreement to acquire 100% stake in Zhejiang Haiyun Environmental Protection Co., Ltd., 40% stake in Haining Capital Water Co., Ltd., 40% stake in Haining SK Water Co., Ltd. And 40% stake in Haining Lvdong Haiyun Environmental Energy Co., Ltd. from Haining Water Investment Group Co., Ltd. and Yunnan Water Investment Co., Limited on January 15, 2021. Zhejiang Qianjiang Biochemical Co., Ltd agreed to acquire stakes in Zhejiang Haiyun Environmental Protection Co., Ltd., Haining Capital Water Co., Ltd., Haining SK Water Co., Ltd. and Haining Lvdong Haiyun Environmental Energy Co., Ltd. from Haining Water Investment Group Co., Ltd. and Yunnan Water Investment Co., Limited for CNY 2.1 billion on June 6, 2021. The consideration will be settled by Zhejiang Qianjiang Biochemical Co., Ltd through the issuance of the consideration shares. The parties agreed that the Issue price of the consideration shares is approximately CNY 4.43 per consideration share. Based on the consideration and the issue price, the total number of the consideration shares is approximately 470 million representing approximately 61.2% of the equity interest of Zhejiang Qianjiang Biochemical Co., Ltd as enlarged by the issuance upon completion of the transactions (assuming there will be no other change in the registered capital of Qianjiang Biochemical). Upon completion of the transactions, Zhejiang Qianjiang Biochemical Co., Ltd will cease to hold any equity interest in Zhejiang Haiyun Environmental Protection and will hold approximately 22.6% stake in Qianjiang Biochemical (assuming there will be no other change in the registered capital of Qianjiang Biochemical). Besides, Zhejiang Haiyun Environmental Protection has been profit-making in the past two financial years, the Board therefore concurs with the view of the Independent Valuer to exclude companies with operating losses. The transaction is subject to Regulatory Commission and Board of Directors of Zhejiang Qianjiang Biochemical approval. The transaction was approved by the board of directors of Zhejiang Qianjiang Biochemical on the seventh meeting of the ninth Board of Directors held on June 6, 2021. The transaction was approved by the Zhejiang State-owned Assets Supervision and Administration Commission on June 21, 2021. On June 23, 2021, transaction is approved by shareholders of Zhejiang Qianjiang Biochemical. As of December 7, 2021, Zhejiang Qianjiang Biochemical Co., Ltd received the Regarding Approval of Zhejiang Qianjiang Biochemical issued by the China Securities Regulatory Commission on December 6, 2021. Reply to Issue Shares to Purchase Assets and Raise Supporting Funds from Haining Water Affairs Investment Group.

Wu Xiajuan, Gao Shibo, Ding Xu, Qi Yufei, Wang Yunrui, Feng Ziqiang, Yang Weihao, Tang Yuanbei, Bi Zhicong, and Cheng Yachen of CITIC Securities Co., Ltd. acted as financial advisors; Li Bo, Sun Yushun, and Shen Lu of AllBright Law Offices acted as legal advisors; and Huang Jiacai and Zhou Yang of Pan-China Certified Public Accountants acted as accountants to Zhejiang Qianjiang Biochemical Co., Ltd.