Gelonghui, April 25, China Xincheng (01278.HK) issued an announcement. On April 25, 2024, Hainan Xincheng, an indirect wholly-owned subsidiary of the company, signed a capital increase agreement and shareholder agreement with existing shareholders and target company Meidi Pension Services (Shanghai) Co., Ltd. Based on this, Hainan Xincheng conditionally agreed to acquire about 30% of the target company's shares by investing RMB 50 million into the target company.

The target company is a limited company established in China that mainly provides old-age services in China, including operating and managing pension equipment and community pension site selection, providing home care services, training for nursing staff, and management consulting services related to the elderly. As of the date of this announcement, the target companies held approximately 40%, 27%, 30% and 3% of the shares, respectively, by Mitei Japan, Seiichi Takahashi, Sanko Co., Ltd., and Yusu Corporation.

The target company is mainly engaged in providing old-age services in China. In 2023, the Chinese Government issued “Opinions on Promoting the Construction of a Basic Elderly Care Service System” to support and encourage social forces to participate in providing home community pension services in order to provide home-based community pension services in line with local conditions. According to population statistics released by the National Bureau of Statistics in 2023, at the end of 2022, the number of elderly people aged 65 and above in China reached 210 million, accounting for 14.9% of the total number. As China's aging population continues to increase, and the Chinese government's favorable policies, the board of directors believes that the pension industry has bright prospects in China, and the capital increase is also an action taken by the Group to strengthen corporate social responsibility in response to the national strategy.

The company is mainly engaged in the new urbanization business segment, investing in, developing and operating diversified national urbanization projects in China and industries that meet China's economic development prospects. The board of directors believes that the capital increase provides the Group with investment opportunities to develop the Chinese pension and health care market and explore the possibility of further investing in property and urban development and healthcare businesses related to these industries. Since the target company is in the middle of the pension industry, the board of directors believes that the target company has significant growth potential through vertical and horizontal expansion in the pension industry. Furthermore, the board of directors believes that the significant growth potential of the domestic pension market lies in the field of dementia care, and the growing market demand for this service has not been fully met. Therefore, the board of directors hopes to use the target company's expertise and experience and the reputation it has established in the Japanese pension market to seize upcoming market opportunities in this specific field. Furthermore, the board of directors also anticipates that the capital increase will have a synergy effect on the Group's business to improve people's livelihood investment. On the other hand, the target company will be able to further expand its business in China by leveraging the Group's existing extensive local business network and relationships with business partners.