Zhitong Finance App News, Denghui Holdings (01692) issued an announcement. On May 10, 2024, Denghui (Huizhou) (an indirect wholly-owned subsidiary of the company) (as the tenant) and Dongbao (Huizhou) (a related person of the Company) (as the owner) entered into a lease agreement 1 for the rental property 1 to renew the existing lease agreement and rental property 2, which will expire on December 31, 2024, for a period of three years from January 1, 2025 to December 31, 2027, with a total monthly rent of RMB 1.172,700; and Dongbao (Huizhou) (as the owner) Just Leasing Property 2 entered into a tenancy agreement 2 for a period of six months from July 1, 2024 to December 31, 2024, with a monthly rent of RMB 67,200. On the same day, Denghui (Huizhou) (as a tenant) also signed a lease agreement 3 with Dongbaoda Electronics (Huizhou) (an affiliate of the Company) (as the owner) for a period of 3 years and 6 months from July 1, 2024 to December 31, 2027, with a monthly rent of RMB 202,600.

The Group currently carries out R&D, procurement, production and quality assurance functions at Property 1 (including eight buildings). Property 1 is equipped with various machines to meet the needs of different stages of the production process.

As the Group's production capacity has increased in recent years, it needs additional space for management dormitories, warehouses, hydropower and other plant supporting facilities (such as substations and water pump rooms). As a result, the total construction area leased to the Group under the Lease Agreement 1 will increase to about 90,200 square meters, including an additional 5171.01 square meters (i.e. Property 2), which is adjacent to Property 1.

Due to the increase in the Group's production capacity in recent years, the Group intends to use Property 3 to set up a product showroom, exhibition hall and conference room, which is expected to help enhance the company's corporate image. The Group is also planning to relocate its subsidiary offices (including marketing and finance departments) and R&D center from Property 1 to Property 3 to accommodate additional staff. The Group also intends to relocate a number of production lines from Property 1 to Property 3 to provide convenience and space for the Group's existing manufacturing plant located in Property 1 to implement production automation plans.

To this end, the Group has entered into a six-month lease agreement 2 as a transitional arrangement, and has concluded a three-year and six-month lease agreement 3, so that the Group can occupy and use Property 2 and Property 3 on July 1, 2024 without having to wait for the expiration of the existing lease agreement. The Group has also entered into a lease agreement 1 to lease Property 1 and Property 2 for an additional three years from January 1, 2025. Therefore, the total lease period for Property 2 and Property 3 will be 3 years and 6 months, as management intends to unify all expiration dates of all lease agreements so that independent shareholders can approve their renewal at the same shareholders' meeting at a later date.

If the Group needs to rent additional space from Dongbao (Huizhou) and Dongbaoda Electronics (Huizhou) in order to expand production facilities in the future. The directors and independent non-executive directors believe that these properties, as the Group's production base, are essential to the Group's operations. The reason is that these properties are conveniently located and have a complete infrastructure and supply chain. On the one hand, the Group can easily procure raw materials and recruit employees for production, and on the other hand, they export manufactured products to overseas customers through shipping or other means of transportation