To steadfastly implement the strategic goal of asset optimization in 2024, the company has decided to optimize its assets in the recycling businesses, such as end-of-life vehicles and electronic waste. This involves restructuring equity in select premium assets with a more competitive state-owned group. This initiative aligns with the national trend of bolstering the green circular economy, enabling quality assets to better serve the national equipment upgrade and consumer product trade-in strategies while reinforcing the company’s role as a leader in resource recycling.

On the morning of December 26, 2024, the signing ceremony for the equity cooperation agreement regarding the equity of a second-tier subsidiary under GEM's control between GEM and Henan Resources Recycling Technology Industrial Group Co., Ltd. (hereinafter referred to as "Henan Resources Recycling Group") was held in the international conference hall of GEM Jingmen Industrial Park. Themed “Embracing Innovation, Advancing Green Development,” the ceremony was graced by Mr. Li Zhuoying, Chairman of Henan Resources Recycling Group, and Prof. Xu Kaihua, Chairman of GEM. Representatives from Xinhua News Agency, Shanghai Securities News, and Orient Securities, among other media and financial institutions, were invited to attend.

△ The signing ceremony at GEM Jingmen Industrial Park international conference hall

Chairman Xu Kaihua, expressed his heartfelt gratitude to Henan Resources Recycling Group for their steadfast support and to the distinguished guests for their presence. Chairman Xu remarked that while Jingmen is in the grip of winter, it enjoys the warmth of the sun, much like this green era brings warmth and opportunities to GEM, and like state-owned enterprises extend opportunities to private enterprises. This equity transfer of three northern industrial parks to Henan Resources Recycling Group marks the beginning of the circular economy’s transition from model leadership to scale leadership, aligning with the national trend of advancing the circular economy.

Chairman Xu shared three key themes with the attendees and GEM staff:

Developing the Circular Economy, Constructing a Beautiful China – The circular economy is an effective means of promoting global climate improvement and mitigating greenhouse effects.

Turning Waste into Treasure, Embracing Circularity – Circularity is the strongest driver of green-era development. GEM has evolved from focusing on “waste management” to “recycling resources” and “urban mining,” and now to being part of the “circular economy,” reflecting the industry’s continuous upgrade and advancement. This transition signifies progress from disorderly development to an organized green industry and from private sector-led innovation to large-scale state-owned collaboration in recycling. “State-owned enterprises entering the recycling sector” represents a milestone for the industry, inaugurating the circular economy as a leading force in the green industry.

The “Upgrades and Trade-in” Strategy – E-waste recycling is the pioneer of this year’s “Upgrades and Trade-in” strategy, serving as its vital bridge. With over 250 million units of e-waste in the market, the sector boasts a potential worth trillion. Effectively addressing e-waste disposal can fulfill our historical mission of driving domestic demand.

When asked why Henan Resources Recycling Group was chosen as a partner, Chairman Xu explained that Henan Resources Recycling Group operates over a dozen recycling industrial parks and has already become a cornerstone of China's recycling industry. As a rapidly emerging state-owned enterprise in the environmental sector, Henan Resources Recycling Group possesses strong capital advantages and outstanding organizational and management capabilities. GEM is fully confident in transferring three northern industrial parks to Henan Resources Recycling Group, as they have the ability and resources to further expand and enhance the e-waste recycling business.”

Chairman Xu Kaihua concluded with a call to GEM employees to commit to global green development and to honor the national mission of green development. The establishment of the National Engineering Research Center for E-Waste Recycling at GEM reflects the government's expectations. By transferring the equity of the "Northern Three Parks," GEM seeks to foster collaboration between the public and private sectors. GEM employees should continue to support and care for the growth of the "Northern Three Parks," leveraging GEM's technological expertise, brand influence, and talent platform to propel their future development, supporting the parks' future success and leadership in the next wave of green development.

Chairman Xu highlighted that the asset optimization in 2024 would generate over ¥1.3 billion in funds for GEM, enabling the company to pursue new opportunities in recycling rare and scattered metals, as well as advancing nickel, cobalt, and lithium energy metal recycling. This would address unresolved challenges in the resource recycling industry, converting technical advantages in rare and scattered metals into industrial advantages and ensuring the sustainable strategic supply of critical minerals for the nation.

△ Prof. Xu Kaihua, Chairman of GEM, delivering a speech

Chairman Li Zhuoying expressed gratitude for GEM's warm hospitality and lauded its pioneering achievements in the global recycling industry. He emphasized that Henan Circular Group has experienced rapid growth, with e-waste dismantling exceeding 14.5 million units in 2024 and a market share surpassing 18%. Through this collaboration, Henan Circular Group aims to become a leader in e-waste recycling and disposal, fulfilling its green mission while elevating the industry to new heights. The collaboration between both parties is merely a starting point. Li affirmed the Group's commitment to following GEM's global expansion path and contributing to China's circular economy.

△ Speech by Mr. Li Zhuoying, Chairman of Henan Resources Recycling Group

Mr. Lu Rixin, Chief Analyst at Orient Securities, shared his perspectives on the industry's development, noting that the Central Economic Work Conference called for proactive fiscal policies to support the "Two Innovations" strategy, presenting ongoing opportunities. Lu noted that the development of the real estate sector has created a significant stock market for household appliances, driving the recycling industry into a new phase. Beyond traditional e-waste processing, new business models are emerging, including waste plastics regeneration, rare and precious metal recovery, and municipal waste management. He expressed hope that both parties could further leverage the capital market to support their future growth.

△Mr. Lu Rixin, Chief Analyst at Orient Securities, delivered an industry development report

During the signing ceremony, Chairman Li Zhuoying and Chairman Xu Kaihua jointly signed the "Equity Cooperation Agreement." The event was witnessed by Ms. Shi Wenjun, Deputy Director of the Office of Henan Investment Group; Ms. Shen Linan, Deputy General Manager of Henan Resources Recycling Group; Mr. Li Chunhui, Deputy General Manager of the Investment and Development Department at Chengfa Environment Co., Ltd.; Mr. Wan Huashun, General Manager of Hubei Dongjiang Environmental Protection Co., Ltd.; Mr. Lu Rixin, Chief Analyst at Orient Securities; Mr. Zhou Bo, Director and Executive Deputy General Manager of GEM; Mr. Lu Xijin, Chairman of the Supervisory Board at GEM; and Mr. Mu Menggang, Deputy General Manager and Chief Financial Officer of GEM.

The company and Henan Resources Recycling Group have established a strategic partnership and will collaborate in fields such as electronic waste, recycled plastics, and power batteries. Together, they aim to advance the recycling industry, forming a large-scale circular economy encompassing collection, processing, and deep utilization of resources.

△GEM and Henan Resources Recycling Group Successfully Sign Equity Cooperation Agreement

In pursuit of green development and innovation, GEM’s subsidiary, Jiangxi Green Recycling Co., Ltd., transferred its holdings in three companies to Henan Resources Recycling Group:

100% equity in Henan Green Recycling Electronic Waste Disposal Co., Ltd.

90% equity in Shanxi Hongyang Seagull WEEE Recycling and Treatment Co., Ltd.

100% equity in Inner Mongolia Xinchuang Resources Recycling Co., Ltd.

Following the transfer, GEM no longer holds equity in these three companies.

Through this equity cooperation, the company successfully received over 900 million yuan, reduced accounts receivable by 800 million yuan, lowered the debt-to-asset ratio, expanded development capital, and enhanced its competitiveness and profitability. With the proceeds from this transaction, GEM will focus on the recycling and utilization of rare and scattered metals such as germanium, gallium, indium, platinum, palladium, rhodium, and rare earth elements. It will also expand its capacity for recycling energy metals like nickel, cobalt, lithium, and tungsten. These efforts aim to address unresolved critical challenges in the resource recycling industry, transforming GEM's technical advantages in rare and scattered metals and energy metals into industrial strengths. This initiative will ensure the sustainable strategic supply of critical minerals for the nation, enabling GEM to gain growth momentum in the next phase of competitive development.