China Pet Holdings Co., Ltd. Plans to Increase Capital by 147 Million Yuan in Wholly-owned Subsidiary to Accelerate 60,000-ton Pet Dry Food Project

This newspaper reports Yantai Zhongchong Food Co., Ltd. (Stock code: 002891, referred to as “Zhongchong Co.”) announced on March 23 that the company’s 24th meeting of the 4th Board of Directors approved a proposal to use 147 million yuan of raised funds to increase capital in its wholly owned subsidiary, Yantai Jashi Agricultural Technology Co., Ltd. (“Jashi Agriculture”), to implement the “Annual Production of 60,000 Tons of High-Quality Pet Dry Food Project.” After this capital increase, Jashi Agriculture’s registered capital will rise from 3 million yuan to 1.5 billion yuan.

Background of the Fundraising Use

The announcement shows that Zhongchong Co. issued 7.69 million convertible bonds publicly in October 2022, with a net raised amount of 755 million yuan, used for the construction of multiple pet food production lines and to supplement working capital. The “Annual Production of 60,000 Tons of High-Quality Pet Dry Food Project” was originally planned to invest 284 million yuan, with 230 million yuan of the raised funds intended for it, later adjusted to a total investment of 230 million yuan. In December 2025, the company decided to change the project’s implementation entity to Jashi Agriculture and adjusted the implementation location.

Basic Information of the Capital Increase Target

Jashi Agriculture was established in July 2022 and is a wholly owned subsidiary controlled 100% by Zhongchong Co. Its business scope includes agricultural scientific research, sales of agricultural and sideline products, and processing of raw materials related to pet food. Financial data shows that as of February 28, 2026, the company’s total liabilities were 82.93 million yuan, with net assets of 2.03 million yuan; from January to February 2026, net profit was -0.13 million yuan.

Progress of the Funded Projects

Zhongchong Co.'s current capital increase aims to ensure the smooth implementation of the “Annual Production of 60,000 Tons of High-Quality Pet Dry Food Project.” This project is an important measure for the company to expand pet dry food capacity and optimize product structure. The company stated that this capital increase complies with the use plan for the raised funds, with no disguised change in the use of the funds, and is beneficial for the company’s long-term strategic development.

External Investment Summary

After this capital increase, the company’s external investments over the past twelve months have exceeded 10% of its latest audited net assets. Over the past year, Zhongchong Co. has been active in industry chain integration, including:

Sponsor’s Opinion

The company’s sponsor, Lianchu Securities, stated that the current capital increase has completed necessary approval procedures, complies with relevant laws and regulations, and meets the company’s operational needs. It will not have a substantial impact on the implementation of the fundraising projects, nor will it covertly change the use of the raised funds or harm shareholders’ interests. They have no objection to this matter.

Zhongchong Co. emphasizes that the capital increase target, Jashi Agriculture, is a wholly owned subsidiary, over which the company has control of production and operations, and financial risks are manageable. The company and Jashi Agriculture have signed fund supervision agreements with the sponsor and commercial banks, and will strictly adhere to relevant regulations in using the raised funds.

This capital increase falls within the authority of the company’s Board of Directors and does not require shareholder approval.

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