Gelonghui June 23 (Dongyuan Renzhi Service (02352.HK) announcementOn June 23, 2022, Chongqing Dongyuan (the company's direct wholly-owned subsidiary), Sichuan Donglan and Zhejiang Zhongdu all entered into the Zhejiang Zhongdu acquisition agreement, according to which Chongqing Dongyuan has conditionally agreed to the acquisition. Sichuan Donglan has conditionally agreed to sell the 100% stake in Zhejiang Zhongdu at a consideration of RMB 79.5 million.
Zhejiang Zhongdu Co., Ltd. was established in China in 2000. Immediately before the Zhejiang Zhongdu acquisition, it was wholly owned by Sichuan Donglan, an independent third party. Zhejiang Zhongdu, headquartered in Hangzhou, Zhejiang Province, China, is mainly engaged in providing property management services, including but not limited to domestic services, cleaning, washing and disinfection services and construction management services.
As at March 31, 2022, the total construction area of Zhongdu in Zhejiang Province is about 4.8 million square meters, including 25 residential property projects and 12 non-residential property projects. for example, schools, government buildings, commercial properties and conference centers in Hangzhou, Jiangshan and Wenzhou, Zhejiang Province, China. Zhejiang Zhongdu's income for the year ended December 31, 2021 is about 86.2 million yuan. For the year ended December 31, 2021, Zhejiang recorded a net profit margin of about 7.2%. As at the date of the announcement, to the best of the Directors' knowledge, knowledge and belief having made all reasonable enquiries, there are no existing encumbrances and no significant borrowings in Zhejiang.
The board of directors is pleased to announce that on June 23, 2022, Chongqing Dongyuan (the company's direct wholly-owned subsidiary), Sichuan Donglan and Zhang entered into a Hunan Jindian acquisition agreement with Hunan Jindian, on the basis of which Chongqing Dongyuan has conditionally agreed to acquire. Sichuan Donglan has conditionally agreed to sell 80 per cent of Hunan Jindian at a consideration of RMB 61.7 million.
Hunan Jindian is a limited company established in China in 2002. Immediately before the Hunan Jindian acquisition, it was owned by Sichuan Donglan and Zhang, both of which are independent third parties, 80% and 20% respectively. Headquartered in Changsha, Hunan Province, China, Hunan Jindian is mainly engaged in providing property management services, including but not limited to cleaning, washing and disinfection services, furniture installation and maintenance services and computer and office equipment maintenance services.
As at March 31, 2022, the total construction area of Hunan Jindian is about 7.7 million square meters, including 41 non-residential property projects. for example, schools, hospitals, banks, government buildings, parks, commercial properties in Wuhan City, Hubei Province, China; Changsha City, Hunan Province, Zhuzhou City, Ningxiang City, Xiangtan City, etc.
Taking into account the overall performance and qualifications of Zhejiang Zhongdu and Hunan Jindian, and based on the actual market conditions, the Group considers that it will be advantageous to enter into the acquisition agreement earlier. There is a high degree of overlap between the Group project and the Zhejiang Zhongdu and Hunan Jindian projects in the business area, which is conducive to integrating the advantages of all parties, reducing operating costs, improving management efficiency and improving the profitability of future overlapping business areas. The acquisition will also further enhance the Group's influence and competitiveness in the market, which will be conducive to its long-term steady growth and create better returns for shareholders. The Directors consider that the acquisition is a good opportunity for the Group to expand its geographical coverage and service scope.