China HK Power (00931.HK) announced that the company and the management committee of Yixing Economic and Technological Development Zone under the Yixing Municipal Government have signed a strategic cooperation framework agreement to jointly set up a limited liability company through joint investment.

The joint venture will establish a China HK Power headquarters production base and R&D center ("project") in the Yixing Economic and Technological Development Zone, committed to the development of energy green low-carbon transition and smart energy system construction, with the goal of becoming a leading and globally influential smart low-carbon energy industry base and research and development center in the country. The project itself will also be built according to the zero-carbon demonstration project.

The group mainly engages in natural gas and new energy businesses. The group's wholly-owned subsidiary, Aut Energy Technology (Wuxi) Co., Ltd., is engaged in innovative energy technology products in the Yixing area, and provides target companies with comprehensive energy use solutions through its IDH smart distributed heating platform and ICE smart comprehensive energy system, thereby helping target companies save energy.

The group's existing factory building in Yixing covers an area of about 20 mu, mainly leased by the municipal government. The board of directors believes that the existing factory building area is not sufficient for the group's long-term development in Yixing, so through the framework agreement, it can seek larger factory building land with the help of the government for future development. The old and new factory buildings will be used simultaneously after the new factory building is completed.

The board of directors believes that through the newly established joint venture, different capital and new customer networks can be introduced, accelerating the development of the group's new energy business in Yixing, thereby expanding its business scale and maximizing the group's profitability.

In addition, according to the [2023] No. 5 Policy Opinions on Promoting the Construction of Major Industrial Projects issued by the Yixing Municipal Government, in support of the development of the energy-saving and environmentally friendly industry, the joint venture can receive a maximum reward of 10% of the total investment in equipment construction calculated by the government, greatly reducing the group's capital expenditure and strengthening the group's profitability.