SYNTRUST GK (08629) plans to increase its capital by 93.3 million yuan to obtain 51% equity of the Guangdong Water Engineering Testing in Maoming City.

On April 16, 2025, SYNTRUST GK (08629) announced that the company, Nan Yue Maoming, and the target company (Maoming Guangdong Water Engineering Testing Co., Ltd.) had entered into a capital increase agreement. According to this agreement, the company conditionally agreed to subscribe to 51% of the target company's expanded registered capital for a total consideration of RMB 9.33 million. Upon completion, the target company's registered capital will be owned by the company and Nan Yue Maoming at 51% and 49%, respectively. The target company will become a non-wholly owned subsidiary of the company, and the financial performance of the target company will be consolidated into the group's financial statements. The target company has been providing water engineering testing and inspection services in Maoming City since January 2005. The target company is authorized to provide two types of construction project testing and inspection services, including but not limited to geological survey, highway and water engineering testing and inspection services, covering a total of 265 parameters. As of the date of this announcement, the target company has a team of 24 employees, with 12 employees qualified to perform water engineering testing and inspection services. The promulgation of new management measures (including but not limited to the "Highway Water Transport Engineering Quality Inspection Management Measures" (Ministry of Transport Decree No. 9 of 2023) and the "Special Management Measures for Central Budgeted Water Conservancy Investment" (Development and Reform Agriculural Economic Reg [2024] 1761)) has brought new growth opportunities to the water engineering testing and inspection market. Therefore, the directors believe that the proposed capital increase is an opportunity for the company to further expand and enhance its testing and inspection service capabilities, expand its service scope, and participate in related testing and inspection projects. The target company has shown good growth potential. Based on the audited financial statements of the target company, the target company's revenue for the fiscal year 2024 increased by 167.6% to RMB 8.773 million from RMB 3.279 million in the fiscal year 2023. In addition, the target company achieved after-tax net profit for two consecutive years, with after-tax net profit increasing by 2,076.3% from RMB 0.118 million in the fiscal year 2023 to RMB 2.568 million in the fiscal year 2024. Given the growth potential of the target company, the directors believe that the proposed capital increase will enhance the company's profitability. The proposed capital increase will allow the company to further expand its business network and customer base in the western part of Guangdong Province, in line with the company's future plans. Furthermore, considering that the target company is in a development stage, and the proposed capital increase will provide new funds for the target company's business development, the company has decided to subscribe to new registered capital instead of acquiring the equity of the target company from Nan Yue Maoming.