SinoHytec Terminates a Fuel Cell Testing Project

Recently, Beijing SinoHytec Co., Ltd. (hereinafter referred to as "SinoHytec") issued the "Announcement on Terminating the Fundraising Investment Project for Issuing Shares to Specified Objects Through Simplified Procedures."

The announcement stated that SinoHytec held a meeting to review and approve the "Proposal on Terminating the Fundraising Investment Project for Issuing Shares to Specified Objects Through Simplified Procedures," agreeing to terminate the fundraising investment project "Fuel Cell Comprehensive Testing and Evaluation Center Project."

The project was originally planned to be implemented by SinoHytec Power Technology Co., Ltd., a wholly-owned subsidiary of the company, in Zhangjiakou, Hebei. It aimed to establish a comprehensive testing and evaluation center integrating parts-level, subsystem-level, system-level, and vehicle-level testing to optimize the company's core product indicators and enhance its forward product development capabilities. The project was originally planned with a total investment of 220 million yuan, of which 150 million yuan was intended to be funded through the raised capital, with a construction period of 31 months.

SinoHytec pointed out that the "Fuel Cell Comprehensive Testing and Evaluation Center Project" was formulated based on factors such as the market environment, industry development trends, and the company's actual situation at that time. Although the company had conducted thorough research and demonstration when initiating the project, significant changes had occurred in both the market environment and industry development during the implementation of the fundraising investment project. In line with the principles of rational layout of R&D testing capabilities and efficient use of raised funds, the company decided not to continue expanding its construction investment in the "Fuel Cell Comprehensive Testing and Evaluation Center Project." The specific reasons are as follows:

The currently established testing capabilities basically meet the core R&D testing needs. During the construction of the fundraising investment project, the company prioritized enhancing its testing capabilities for core indicators such as the reliability, durability, dynamic characteristics, and low-temperature environmental adaptability of fuel cell systems. The currently established comprehensive R&D testing center can effectively support the company's independent testing of product performance in various core aspects.

This is due to the need for optimal allocation of limited R&D resources. As the fuel cell industry is not yet fully mature, enterprises within the industry, including the company, generally face profitability challenges. Therefore, the company has maintained a cautious attitude throughout the project construction process, closely tracking market and industry dynamics, and combining them with its own R&D layout and operational status. By introducing major R&D testing equipment, establishing a comprehensive testing system, and formulating calibration and testing standards based on existing testing capabilities, the company has prioritized strengthening the testing capabilities for core performance indicators of fuel cell systems, such as reliability, durability, dynamic characteristics, and low-temperature environmental adaptability. However, due to the combined effects of multiple factors, including the macroeconomic environment and subsidy policies over the past two years, the overall prosperity of the fuel cell market has declined, and the company's operational pressures have continued to rise. Consequently, the company has adjusted its overall R&D layout accordingly, further concentrating limited R&D resources on product performance optimization and cost control. Given that the existing testing capabilities have largely met the core R&D testing needs, continuing to invest in the construction of the comprehensive testing and evaluation center as originally planned does not align with the company's current development needs. Therefore, the company has made corresponding adjustments.

The continuous improvement of third-party testing capabilities has also provided favorable conditions for adjusting the project investment plan. On one hand, in recent years, there has been a considerable increase in the number of testing institutions within the industry that are representative and possess comprehensive testing capabilities for fuel cell systems. On the other hand, industry standards for core fuel cell parts have also been successively introduced, providing a unified benchmark for industry quality evaluation. Considering that the improvement of external testing resources and standards has effectively met the multi-level testing and evaluation needs of the fuel cell industry, ranging from materials, components, parts, systems to complete vehicles, the company, after comprehensive consideration of factors such as investment costs, believes that there is a low necessity to continue with the construction.

In summary, after a comprehensive assessment of factors such as the objective economic environment, industry development trends, and the company's current operating conditions, SinoHytec has prudently decided to terminate the "Fuel Cell Comprehensive Testing and Evaluation Center Project".