The board of Yuk Wing Group (ASX: 01536) has announced that on June 12, 2026, its wholly-owned subsidiary, Shangbiao Co., Ltd., entered into an agreement to acquire a 65% equity interest in Anhui Runsheng Power Technology Co., Ltd. from Mr. Fang Haibo for a total consideration of RMB 37.5 million.
Under the terms of the sale and purchase agreement, following the completion of the transaction, the grantors will grant the buyer a call option over the relevant option shares. This call option can be exercised at a nominal consideration of RMB 1.0, to be paid by the buyer to each grantor. The buyer holds the sole discretion to exercise all or part of this call option at any time within twelve (12) months after the completion date. The total exercise price for the call option will be RMB 20.1 million, equivalent to approximately HK$23.3 million.
The target company is primarily engaged in providing warehousing services and also generates rental income from leasing its investment properties. It owns a property in Hefei, Anhui Province, China, with a site area of approximately 19,972.47 square meters. The property comprises seven buildings, including a six-story comprehensive building with a total gross floor area of about 5,136.18 square meters, which houses a staff canteen and functional rooms. The remaining six buildings are production plants, ranging from three to six stories high, with a combined total gross floor area of approximately 24,935.98 square meters.
Strategic Rationale for the Acquisition
The company stated that this acquisition represents a strategic milestone in the group's long-term objective of transforming from a specialized manufacturer into a vertically integrated, comprehensive rock drilling solutions provider. Upon completion, the target company will become an indirect non-wholly owned subsidiary of Yuk Wing Group.
This move will enable the group to significantly expand its production capacity beyond its currently leased facility in Shunde. It will also facilitate the establishment of a central warehouse by utilizing the target company's existing, self-owned factory and warehousing facilities in Hefei. Through this acquisition, the group will gain access to over 30,000 square meters of high-quality industrial space, providing a critical logistics hub within a major transportation nexus in China.
Enhancing Supply Chain Capabilities
This acquisition is expected to substantially enhance the group's supply chain resilience. It will allow for the centralized storage and efficient distribution of both self-manufactured down-the-hole drilling tools and externally sourced heavy machinery. Furthermore, as the group continues to expand its product portfolio, particularly with larger items such as casings and cluster drilling tools, having proprietary ownership of these warehouse facilities will reduce exposure to volatility in third-party logistics costs. It will also ensure the specialized handling standards that are crucial for high-precision industrial equipment.