Core Viewpoint - The company, Derun Electronics, plans to transfer its 18% stake in Liuzhou Shuangfei Automotive Electrical Parts Manufacturing Co., Ltd. to Tianjin Tongli and Ying 16th Equity Investment Fund for 135 million yuan, following a strategic decision to focus on its core business and optimize resource allocation [2][3]. Company Summary - Derun Electronics will no longer hold any equity in Liuzhou Shuangfei after the transaction, which is part of a broader strategy to enhance its core competitiveness in high-speed connector products [2][3]. - The company previously acquired a 60% stake in Liuzhou Shuangfei in 2016, but the operational performance did not meet expectations, leading to a strategic reevaluation and the decision to divest its remaining shares [2][3]. - The automotive wiring harness industry has become increasingly competitive, with Liuzhou Shuangfei facing significant operational challenges, including abnormal order fluctuations from key domestic clients and pressure to reduce costs [3]. Industry Summary - The automotive wiring harness sector is experiencing intense competition, with Liuzhou Shuangfei's overseas market expansion hindered and substantial losses reported in the first half of the year compared to the previous year [3]. - The company anticipates that the operational performance of Liuzhou Shuangfei will remain under pressure for the remainder of the year, with no substantial improvement expected [3]. - The strategic divestment aligns with the company's focus on its main business and aims to facilitate sustainable and healthy development through optimized resource allocation [3].

Transaction Overview - Shenzhen Derun Electronics Co., Ltd. plans to transfer its 18% stake in Liuzhou Shuangfei Automotive Electrical Parts Manufacturing Co., Ltd. to Tianjin Tongli for a consideration of 135 million yuan [1] - The transaction was approved by the company's board with a unanimous vote and does not require shareholder approval [1][2] - After the transaction, the company will no longer hold any equity in Liuzhou Shuangfei [1] Counterparty Information - Tianjin Tongli is a limited partnership established on December 16, 2022, with a registered capital of 1.01 million yuan, which is expected to be increased to 139.16 million yuan [2][3] - The managing partner is Yuanzhi Private Fund Management (Shanghai) Co., Ltd., which has managed assets exceeding 2 billion yuan [3] Financial Performance of Liuzhou Shuangfei - As of June 30, 2025, Liuzhou Shuangfei reported total assets of approximately 1.81 billion yuan and total liabilities of about 964.64 million yuan [6][8] - The company experienced a significant loss of approximately 61.12 million yuan in the first half of 2025, compared to a profit of 23.15 million yuan for the entire year of 2024 [8] Rationale for the Transaction - The decision to divest the stake is part of the company's strategic planning and operational development needs, aiming to focus on its core business of high-speed transmission connectors [9][12] - The automotive wiring harness industry has faced intense competition, and Liuzhou Shuangfei has encountered operational challenges, including customer order fluctuations and pricing pressures [7][9] Impact of the Transaction - The transaction is expected to optimize the company's business structure and resource allocation, enhancing its core competitiveness [12] - The funds from the sale will be used to alleviate financial pressure and support ongoing strategic investments [12]

Group 1 - The company plans to continue using part of the idle raised funds to temporarily supplement working capital, ensuring compliance with relevant laws and regulations [5][6] - The total amount raised from the non-public offering was approximately RMB 1.67 billion, with a net amount of approximately RMB 1.64 billion after deducting issuance costs [1] - As of June 30, 2025, the company has utilized approximately RMB 1.39 billion of the raised funds, including RMB 472 million for working capital and RMB 568 million for the high-speed connector construction project [2][3] Group 2 - The company has a remaining balance of approximately RMB 1.19 million in the special account for raised funds, with a discrepancy of approximately RMB 270 million between the expected balance and the actual balance [3] - The company has previously used RMB 300 million of idle raised funds for working capital, with RMB 280 million already repaid [4] - The company plans to save approximately RMB 7.5 million in financial costs by using part of the raised funds for working capital, based on the one-year LPR interest rate [5] Group 3 - The board of directors and the supervisory board have approved the continued use of idle raised funds for working capital, following necessary procedures [6] - The company has committed to returning the used funds to the special account before the expiration of the 12-month period [5][6] - The company emphasizes that the funds will not be used for stock trading or other non-compliant activities [5]