Heng Tian Hai Long's Wholly-owned Subsidiary Plans to Acquire Not Less Than 40% Equity Stake in Qun Jian Aviation, Further Enriching Industrial Layout

Hengtian Hailong (000677) announced on the evening of March 12 that the company plans to acquire at least 40% of the equity in Xi’an Qunjian Aviation Precision Manufacturing Co., Ltd. (Qunjian Aviation) through its wholly owned subsidiary Beijing Dofu Hailong Flight Control Technology Co., Ltd. (hereinafter referred to as “Hailong Flight Control”) with cash. After the completion of this transaction, Hailong Flight Control will become the controlling shareholder of Qunjian Aviation.

According to Hengtian Hailong’s 2025 semi-annual report, its wholly owned subsidiary Beijing Dofu Hailong Flight Control Technology Co., Ltd. is engaged in aviation operation support services and other businesses, and is currently investing in project research and development.

Additionally, during the 2024 annual online performance briefing held on May 9, 2025, Hengtian Hailong introduced that its subsidiary Beijing Dofu Hailong Flight Control Technology Co., Ltd. has recruited R&D personnel to support project development. A certain model of manned helicopter to drone conversion flight control system has completed preliminary design and project planning. The company has conducted research and performance analysis on similar drones and performed comprehensive analysis of helicopters. The flight control system installation and debugging for a certain vertical-type drone have been completed, including system link modification, installation, and power-on debugging.

Qunjian Aviation mainly focuses on the R&D, production, and sales of aircraft engines and gas turbine components. It holds multiple technological and invention patents. Its products mainly include five categories: long-shaft, blades, disk rings, casings, and structural parts. Qunjian Aviation is a high-tech enterprise and a “specialized, refined, distinctive, and innovative” small and medium-sized enterprise in Shaanxi Province.

Hengtian Hailong stated that, according to the company’s overall strategic layout and business development direction, the proposed acquisition of Qunjian Aviation’s equity aims to further enrich the company’s industrial layout and promote strategic transformation and upgrading. This transaction is an effort to leverage the platform advantages of a listed company, combined with long-term project research and analysis experience, to carry out cross-industry mergers and acquisitions.

After the transaction is completed, Qunjian Aviation will become a controlled subsidiary of Hailong Flight Control. The company will follow the guidelines of “vigorously developing new quality productivity,” and, while consolidating its traditional main businesses of canvas and special fibers, actively explore new fields in high-end equipment manufacturing and enter the high-end precision manufacturing track. Relying on Qunjian Aviation’s mature technology, capacity, and customer resources, the company aims to cultivate new profit growth points and broaden its long-term development space.

Hengtian Hailong noted that the “Equity Acquisition Intent Agreement” signed this time is a framework and indicative document for the parties involved regarding the acquisition of the target company’s equity. The related transaction is still in the planning stage. As of the date of this announcement, the due diligence work on the target company has not been completed, and key terms such as the final transaction price remain uncertain.

Hengtian Hailong previously disclosed its 2025 annual performance forecast, estimating net profit attributable to shareholders of the listed company to be between 4 million and 6 million yuan, a decrease of 90.88% to 86.33% year-on-year; and net profit after deducting non-recurring gains and losses to be between 3.3 million and 4.7 million yuan, a decrease of 92.31% to 89.04% year-on-year.

Regarding the reasons for the performance decline, Hengtian Hailong explained that in 2025, sales of its canvas and fabric products remained stable. The main reason for the performance change was a lawsuit filed by Weifang Guoheng Industrial Development Group Co., Ltd. against Hengtian Hailong for damages to the company’s interests. On September 26, 2025, the Intermediate People’s Court of Weifang, Shandong Province, issued a civil judgment requiring Hengtian Hailong to repay 249 million yuan owed to Shandong Hailong Bolite Chemical Fiber Co., Ltd., along with interest during the period of funds occupation. The company has accrued the corresponding interest based on the judgment, which impacted the net profit attributable to shareholders by -41.14 million yuan, leading to a year-on-year decline in 2025 performance.