On August 13, Gelonghui (002565.SZ) announced that in order to speed up the promotion of the company's layout in new tobacco areas such as heating and non-combustion, The company's holding subsidiary Shanghai Luxin Electronic Technology Co., Ltd. ("Shanghai Luxin" or "Party B") and the Management Committee of Hainan Yangpu Economic Development Zone ("Yangpu Management Committee" or "Party A") signed an investment agreement on the annual production of 200 million heating and unburnt awakening rods on August 13, 2020. Shanghai Luxin plans to invest and build 200 million heating and unburnt awakening rods manufacturing projects in Yangpu Economic Development Zone, with a total investment of about 200 million yuan, and the funding source is Shanghai Luxin's own or self-raised funds.

In the first phase of the project, five heating non-combustible wake-up rod production lines will be built; in the second phase, 8 heating non-burning wake-up rod production lines will be installed; in the third phase, 15 heating non-combustible wake-up rod production lines will be installed, and at the same time, a new global business settlement headquarters in Yangpu, Hainan will be built. The products of the project are mainly sold to China, East Asia, Southeast Asia and Central Asia. The total investment of the project is about 200 million yuan, of which the investment in the first phase is about 50 million yuan. After the completion of the first phase, the annual sales income is 150 million yuan, and the annual tax revenue is 10 million yuan. The output value, tax revenue and other data generated by the project are included in the statistical caliber of Yangpu Economic Development Zone.

The first phase of the project leases a standard factory building with an area of about 2000 square meters and an annual output of 200 million heated non-combustible wake-up rods. After reaching the output of the first phase of the project and reaching the economic targets of the first phase, Party B may apply to Party A to start the second phase of construction. The second phase of the project reserves about 42 mu of land, which is located on the north side of Yangpu Building, the south side of Qingyang Road and the west side of Refining and Chemical Apartments. The land area actually delivered by Party A shall be subject to the second phase feasibility study report submitted by Party B and the approval of relevant functional departments. If Party B does not apply to start the second phase of construction three years after the first phase of the project is put into production, Party A will cancel the reserved land.

The company has made the layout of the whole industry chain in the aspects of production, sales, channels and brands at home and abroad, and will continue to actively carry out the research and development, production and sales of new tobacco products on the basis of strictly abiding by the relevant national laws and regulations in the future. to build a core industrial chain composed of R & D and production, marketing and supply chain. The investment and construction of the project by the holding subsidiary in Yangpu Economic Development Zone can give full play to the region's advantages in location, port and policy, enrich the variety and quantity of new tobacco products, further enhance the company's market share in the new tobacco field, and strive to become a new performance growth point of the company in the future. As the construction of the project has not been officially started, and there are greater uncertainties in policy supervision, market demand and promotion in the future, it is expected that the overall revenue and profits of the company will not be greatly affected during the implementation period of the project.