Founded in 1998, SiTong New Materials is a national high-tech enterprise specializing in research, development, manufacturing and sales of functional intermediate alloy new materials such as metal grain refinement, metallographic modification, metal purification, element addition, etc. It is one of the largest manufacturers of functional intermediate alloy new materials in China and the first listed company in the industry. Since its listing, the company has made full use of the capital market platform to constantly seek opportunities for industrial mergers and acquisitions and industrial integration, and achieved leapfrog development of the enterprise.

On December 20, 2018, the company issued shares to purchase assets and raised matching funds and related party transactions were officially approved by the China Securities Regulatory Commission.

In this transaction, the Company acquired 100% of the shares of Tianjin Lizhong Group Co., Ltd. (hereinafter referred to as "Lizhong Shares") by issuing shares, and the transaction consideration was RMB 2.55 billion. As a leading aluminum alloy wheel manufacturer in China at present, Lizhong is one of the high-quality assets controlled by the actual controller of the company. It has advanced manufacturing technology, digital information management system and well equipped automatic production line, and its industrial position and profitability are extraordinary.

At the same time, in order to improve the efficiency of reorganization and enhance the sustainable operation ability of the listed company after reorganization, the company raised matching funds from no more than 5 qualified specific objects through non-public offering of shares in the form of inquiry at the same time of this major asset reorganization, and the actual amount raised was 516 million yuan. The raised supporting funds will be specifically used to invest in projects with an annual output of 4 million light-weight cast spinning aluminum alloy wheels and 1 million sets of high-strength aluminum suspension parts for automobiles, as well as to invest in the reconstruction of Industry 4.0 intelligent factories.

After the completion of this transaction, SiTong New Materials can quickly enter the aluminum alloy wheel manufacturing industry with the help of the target company, improve the business scale and profitability of the listed company, and enhance the risk resistance of the listed company. Moreover, in the field of aluminum alloy wheel processing, the intermediate alloy can significantly improve the mechanical properties of metals, improve the appearance quality of surface treatment, improve the use value and yield of materials, reduce the weight of aluminum alloy wheels. The business of Sitong New Materials and Lizhong Shares can play a synergistic role, further promoting the rapid development of listed companies. The two sides will also form a comprehensive competitive advantage integrating R&D, process and customer resources, do a good job in expanding and strengthening the aluminum alloy deep processing industry chain, and create greater benefits for shareholders.