[Caihua Social News] Goldlion Group (00533.HK) announced that on January 13, 2022, the company's indirect wholly-owned subsidiary Goldlion far East entered into an investment agreement with Guangzhou Committee, according to which (I) Goldlion far East conditionally agreed that when the project company (Guangzhou Goldlion Electronic Commerce Co., Ltd.), the company's indirect wholly-owned subsidiary, acquired the land use right of the project land. Invest not less than 330 million yuan (equivalent to about HK $403 million) in the project through the project company And (ii) Guangzhou Committee has conditionally agreed to assist Goldlion in the implementation of the project in the far East.

According to the investment agreement, the project land is a modern logistics storage land in Guangzhou Airport Economic Zone, covering a total area of about 66 mu, which will be used for the project.

The project can be confirmed only if the project company successfully obtains the land use right of the project land. The project involves the establishment of a comprehensive headquarters for international trade and consumption in the development zone, the management and operation of offline stores and online e-commerce, centralized procurement of domestic goods, regional headquarters settlement services and modern intelligent distribution services.

According to the investment agreement, Goldlion far East promised to increase the registered capital of the project company to 165 million yuan (about 201 million Hong Kong dollars). Goldlion far East must inject US $15 million (equivalent to about HK $117 million) (60 per cent of the project company's registered capital) into the project company by December 20, 2021. The capital injection was completed on December 13, 2021. Goldlion also promised to ensure that the project would be completed within five years after the Guangzhou Committee handed over the project land.

The Group has been engaged in clothing distribution business in China for many years, and the related business needs efficient logistics, warehousing and supply chain management functions. However, as the Group's original warehouse in Guangzhou staff Village could not meet the growing business needs of e-commerce, the Group rented an external logistics center to operate in 2018 and converted the village property into an investment property. However, due to the constraints of leases and supporting facilities, the Group has been actively looking for sites for self-construction of logistics centres and supply chain facilities to build modern, intelligent and digital warehousing and logistics distribution venues, so as to expand the space for business development and reduce the current cost of renting logistics centres.

Upon completion of the project, the Group also plans to set up business functions such as commodity distribution, market procurement, product design and exhibition on the site, which will help enhance operational efficiency and save operating expenses for these business functions.

In addition, the project land is located in the Airport Economic Zone of Guangzhou Baiyun International Airport and is Guangdong-Hong Kong-Macau Greater Bay Area's shipping hub. The project will help the Group to enhance logistics efficiency and reduce operating costs in the future.