Kinglai Hygienic Materials' grandchild company leases assets to related party

Kunshan Kinglai Hygienic Materials announced its wholly-owned grandchild company, Lion Hygienic Materials (Malaysia) Sdn. Bhd., will lease assets to Innoaxis Technologies Sdn. Bhd., a related party.

The leased assets, totaling 7,901.80m² of factory buildings and internal equipment in Johor Bahru, Malaysia, will generate an annual rental income of 7,407,400 yuan. The lease term commences on January 1, 2026, with annual renewals, and payments are due annually.

Innoaxis, controlled by Kunshan Kinglai Hygienic Materials shareholders Li Baihua and Li Baitai, was established to undertake orders and produce for a US-based semiconductor equipment client. The transaction, classified as a connected transaction, has been approved by the company's audit committee, independent directors, and board of directors, with related parties abstaining from voting. The pricing aligns with market rental rates for similar properties, ensuring fairness and no harm to shareholder interests.

This asset lease is expected to enhance the company's profitability and optimize the utilization of idle assets. The board confirmed that the transaction adheres to relevant regulations and does not impact the company's independence.