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On January 4, Guoen Co., Ltd. issued the "Announcement of Qingdao Guoen Technology Co., Ltd. on the Transfer of Part of the Equity and Capital Increase of Zhejiang Yisu New Material Technology Co., Ltd.", and the company signed the "Capital Increase Agreement" with Qingdao Yisu Investment Partnership (Limited Partnership) (hereinafter referred to as "Qingdao Yisu") and Zhejiang Free Trade Zone Diyi Equity Investment Partnership (Limited Partnership) (hereinafter referred to as "Diyi Investment"), and the registered capital of Zhejiang Yisu increased from 30,000 yuan to 60,000 yuan. Among them, Guoen Co., Ltd. increased its capital by 123 million yuan to Zhejiang Yisu, Qingdao Yisu increased its capital by 120 million yuan to Zhejiang Yisu, and Diyi Investment increased its capital to Zhejiang Yisu by 57 million yuan. After the completion of this capital increase, Guoen shares hold 70% of the equity of Zhejiang Yisu.

Zhejiang Yisu is located in the marine industry agglomeration area of Zhoushan City, Zhejiang, adjacent to the East China Sea and close to the Yangtze River estuary, with good resources and location advantages. It is building a polystyrene project with an annual output of 1 million tons, covering an area of 200 acres, and is the world's largest polystyrene monomer production plant, with an annual output value of more than 12 billion yuan after reaching production. Zhejiang Yisu project adopts the world's polystyrene production technology - continuous bulk polymerization method, and at the same time introduces equipment from world-class equipment manufacturers such as Shimadzu of Japan to ensure that the quality of the products produced is excellent, and effectively make up for the huge demand gap in the domestic and foreign markets.

After this capital increase, the original Zhejiang Yisu is building a polystyrene project with an annual output of 1 million tons, and the first phase will complete a polystyrene plant with an annual output of 600,000 tons, of which the annual output of general polystyrene (GPPS) is 400,000 tons, and the annual output of high-impact polystyrene (HIPS) is 200,000 tons. Production is expected to start at the end of June 2022. In the next two phases, the annual output will be adjusted from 600,000 tons to 400,000 tons (200,000 tons each for general-purpose polystyrene GPPS and high-impact polystyrene HIPS).

This foreign investment is based on another strategic layout completed by the company in October 2021 on the basis of the capital increase and share expansion of Jiangsu Guoheng New Material Technology Co., Ltd. (hereinafter referred to as "Jiangsu Guoheng") through its wholly-owned subsidiary, Shandong Guoen Chemical Co., Ltd. (hereinafter referred to as "Guoen Chemical").

After the company's subsidiary, Guoen Chemical, took control of Jiangsu Guoheng, acquired the original "Jiangsu Xusheng Petrochemical Co., Ltd." located in "No. 18 Yougang Road, Yangzhou Chemical Industrial Park" industrial real estate by judicial auction, and undertook the layout of a polypropylene (PP) resin production line with an annual output of 200,000 tons.

The company's strategic investment in Zhejiang Yisu and Jiangsu Guoheng is an important part of the company's implementation of the vertical integration strategy of integrating the large chemical industry and the large health industry. Through the longitudinal extension of polystyrene (GPPS, PS) and polypropylene (PP) resins upstream of modified materials, the company will complete the integrated production layout of modified materials such as home appliances, small household appliances, power tools, automobiles, building decoration and decoration materials through polystyrene materials in the future, and at the same time, realize the integrated production of cost reduction in the fields of light display materials, light diffusion plates, films, sheet materials and BOPS packaging materials. Through the production of polypropylene (PP) resin materials, the integrated production of meltblown non-woven materials, degradable materials, pre-coated, BOPP capacitive films and other materials will be effectively realized, and the continuous fiber polypropylene modified materials in the fields of automobiles, home appliances, wind power and other fields will realize the integration of territorial production. It will effectively reduce product costs and enhance market competitiveness.

The vertical integration of the above products will greatly enrich the company's product matrix, enhance the company's competitive advantage in the field of new materials, and enhance the company's profitability and brand awareness. In particular, through the integration of resources and the opening of the whole industry chain, the company will have the dual advantages of technology and cost while obtaining the scale benefits of the platform in the future, which will effectively consolidate the company's industry position and enhance the company's overall competitiveness and anti-risk ability in the future.