Huazi Industry launches biotech subsidiary for industrial upgrade

Baotou Huazi Industry is establishing Baotou Henglu Biotechnology Co., Ltd., a wholly-owned subsidiary, with a registered capital of 10 million yuan. This investment, approved by the board on December 18, 2025, aligns with the company's "innovation-driven, diversified layout, and industrial upgrading" strategy. The new entity will develop new products like lightweight meal replacements and nutritional beverages, leveraging existing technologies and academic collaborations to extend Huazi Industry's value chain.

The new subsidiary will focus on health and biotechnology products, including developing skincare products using xanthan gum and convenient nutritional meal replacements from resistant dextrin. The investment will be financed through the company's own funds and is not expected to materially impact its financial position.

The establishment of Baotou Henglu Biotechnology Co., Ltd. is subject to market regulatory approval and faces risks from policy changes, economic conditions, and market competition. However, the company plans to mitigate these through strong internal controls and management expertise.