Hengxin Life Plans to Invest 501 Million Yuan to Build Green Biodegradable Products Production Base, Consolidate Two Projects and Utilize 213 Million Yuan in Raised Funds

Hefei Hengxin Life Technology Co., Ltd. (Stock Code: 301501, Stock Name: Hengxin Life) announced on March 17 that it plans to change some of its fundraising projects and use oversubscribed funds to invest in the “Green Degradable Products Production Base Project.” The company plans a total investment of 501 million yuan to build the new base, of which 142.1394 million yuan (including interest income and financial gains) from the original fundraising and 70.9801 million yuan (including interest income and financial gains) from oversubscribed funds will be used, totaling 213.1195 million yuan from the raised funds. This matter is subject to approval at the company’s first extraordinary general meeting in 2026.

Basic Information and Current Use of Raised Funds

Hengxin Life completed its initial public offering in March 2025, issuing 25.5 million shares at 39.92 yuan per share, raising a total of 1,017.96 million yuan. After deducting issuance costs, the net raised funds amounted to 898.91 million yuan.

As of February 28, 2026, the company’s use of raised funds is as follows:

The announcement shows that the original plans for the 85 million yuan “Intelligent Upgrade and Transformation Project” and the 55.62 million yuan “R&D Technology Center Project” had not yet been invested as of the announcement date, with remaining balances (including interest income and financial gains) of 85.94 million yuan and 56.20 million yuan, respectively.

Overview and Investment Plan of the New Project

The new fundraising project, “Green Degradable Products Production Base Project,” will be implemented by the company’s wholly-owned subsidiary Anhui Hengxin Environmental Protection New Materials Co., Ltd. The construction site is located in Shuangfeng Economic Development Zone, Changfeng County, Hefei City, Anhui Province, with a construction period of three years. The project will include new factories and R&D centers, mainly producing biodegradable plastic transparent cups, lids, knives, forks, spoons, stirring sticks, straws, and other products, along with supporting R&D centers and intelligent logistics and warehousing systems.

The total investment is 501 million yuan. Besides the 213.1195 million yuan from the raised funds, the shortfall will be covered by the company’s own or self-raised funds. According to feasibility analysis, the project’s after-tax internal rate of return is expected to be 12.51%, with a static payback period of 8.65 years.

Reasons for Project Change and Feasibility Analysis

The company states that the change in fundraising projects is mainly due to increased downstream customer demand leading to insufficient capacity of existing biodegradable plastic products. To expand production scale, resolve capacity bottlenecks, and achieve scale effects, the company has decided to integrate the construction content of the original “Intelligent Upgrade and Transformation Project” and “R&D Technology Center Project” into the new project, building supporting R&D centers and intelligent logistics and warehousing systems.

The announcement highlights several aspects of the project’s feasibility:

Broad Market Prospects: With ongoing global “plastic restriction” and “plastic ban” policies, bio-based biodegradable materials replacing traditional plastics is an inevitable trend. The draft of the “14th Five-Year Plan” explicitly proposes accelerating the comprehensive green transformation of economic and social development, providing policy support for the development of bio-based biodegradable materials such as PLA and PHA.

Strong R&D Capabilities: As one of the early domestic companies engaged in the research, development, and production of PLA and PHA biodegradable products, the company has mastered core technology for PLA particle modification, established strict production standards, overcome multiple technical challenges, and achieved industry-leading product quality. The company also holds honors such as National High-Tech Enterprise and Anhui Province “Specialized, Refined, Special, and New” Small and Medium-sized Enterprise.

Customer and Supply Chain Advantages: The company has accumulated a rich resource of well-known domestic and international clients and has established long-term stable cooperation with several mainstream raw material suppliers of PLA and PHA domestically, ensuring continuous and stable raw material supply and competitive procurement prices.

Review Procedures and Risk Warning

This matter has been reviewed by the company’s 2nd Board of Directors, 10th Meeting, and is subject to approval at the general meeting. Huazhan Securities, the sponsor, issued a verification opinion, stating that this change aligns with the company’s overall development strategy and operational plan, will not have a significant adverse effect on normal operations, and does not harm the interests of the company or all shareholders, especially minority shareholders. No objections are raised to this matter.

The company also reminds investors that during the implementation of the new project, there may be significant risks such as macroeconomic environment changes, industry policies, and market demand fluctuations, which could make it difficult to absorb the additional capacity. Investors are advised to be cautious. The company will continue to monitor macroeconomic trends and industry policies, leverage its competitive advantages, actively expand product application scenarios, and promote the smooth implementation of the project.

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