On July 23, GeLongHui reported that Dongguan Development (000828.SZ) released a report on the implementation of capital reduction and significant asset restructuring of its controlling subsidiary. In this trade, the listed company intends to decrease the registered capital of its controlling subsidiary, the first-line construction company, that it holds. After the capital reduction is completed, the listed company will no longer directly or indirectly hold the equity of the first-line construction company, which will no longer be included in the consolidated financial statements of the listed company.

According to the relevant agreements of this trade, the transaction price is paid by the first-line construction company in cash, including the capital reduction price and capital cost compensation for the actual input funds. Among them, the capital reduction price is 3,709.392 million yuan, and the capital cost compensation for the actual input funds is 261.7606 million yuan, totaling 3,971.1526 million yuan.

To solve the funding source for the capital reduction price and capital cost compensation mentioned above, the government intends to increase the capital contribution of the first-line construction company using monetary funds based on the registered capital of the first-line construction company as of the evaluation reference date, on behalf of Gui Invest. At the same time, to avoid disputes caused by different capital reduction prices corresponding to different registered capitals, the first-line construction company intends to simultaneously implement capital reserve transfer and registered capital increase with the above-mentioned capital increase. That is, according to the actual input capital of all shareholders of the first-line construction company as of the evaluation reference date, which exceeds the registered capital and is included in the capital reserve, all corresponding amounts will be converted to the registered capital of each party. After completing the increase in registered capital through the capital reserve transfer, the listed company will depart from the first-line construction company in accordance with relevant laws and regulations based on the above transaction price.

Given that the main source of funds for the transaction price comes from the government's investment on behalf of Gui Invest, and after the completion of this trade, Gui Invest will hold the 100% equity of the first-line construction company. Therefore, based on the principle of caution, the counterparty of this transaction is Gui Invest.