Langkun Technology's subsidiary signs a supplementary agreement for the Tongzhou organic waste treatment project with a total investment of 1.53B yuan; treatment unit price is reduced.

Recently, Langkun Technology Co., Ltd. of Shenzhen (Securities code: 301305, Securities abbreviation: Langkun Technology) released an announcement stating that its wholly-owned subsidiary Beijing Langkun Biomass New Energy Co., Ltd. signed an “Additional Agreement to the Concession Agreement for the Tongzhou District Organic Waste Resource-Based Integrated Treatment Center Project” with the Tongzhou District Urban Management Commission, adjusting the original contract’s total project investment, processing unit price, and the pricing adjustment formula.

According to the announcement, the project was initially won by Langkun Technology on May 22, 2024, and the concession agreement was signed on August 29, 2024 by its subsidiary Beijing Langkun Biomass New Energy Co., Ltd. with the Tongzhou District Urban Management Commission. The signing of this additional agreement is intended to optimize and adjust relevant terms in accordance with the actual circumstances of the project.

Pursuant to the additional agreement, after this change, the project’s total investment is 153,397.42 million yuan. After applying for central-budget investment funds of 50 million yuan, the project’s total investment is adjusted to 153,189.89 million yuan, with the specific breakdown as follows:

It is worth noting that due to the dual effects of engineering changes and the acquisition of central-budget investment funds, the initial pricing for the project’s organic waste treatment fees has been lowered to varying degrees. The specific adjustments are as follows:

The announcement states that before the project’s construction investment is audited and confirmed by the government party or a third-party unit entrusted by the party(ies) (the “auditing confirmation”), the waste treatment service fees may be temporarily calculated using the unit prices based on the central-budget investment funds. After the auditing confirmation, the unit prices will be adjusted according to the pricing agreed in the agreement; any overpaid or underpaid waste treatment service fees will be reconciled between both parties, and neither party will accrue or pay interest.

In addition, the additional agreement also revises the original agreement’s pricing adjustment formula regarding investment changes. The revised terms clarify that if the actual investment amount exceeds 153,189.89 million yuan due to reasons attributable to Party B (Beijing Langkun Biomass New Energy Co., Ltd.), the waste treatment fee will not be adjusted. If the actual investment amount does not reach 95% of that figure, or if the investment amount deviation exceeds 5% due to reasons attributable to the government party, or in other circumstances agreed upon by both parties through consultation, the unit price of the waste treatment fee will be adjusted according to the agreed formula.

Langkun Technology states that the matters related to the signing of this additional agreement comply with the actual situation of the project and are beneficial for promoting the project to continue being implemented in a stable and orderly manner. The smooth performance of the agreement will have a positive impact on the company’s future business development and operating performance. However, given uncertainties such as the large agreement amount and the long performance period, the company cannot yet determine the specific impact on its future financial position and operating results; the specific impact shall be subject to the actual implementation and subsequent audit data.

At the same time, the company also reminds investors that the execution of the agreement involves a certain time period; during the actual performance process, unforeseeable situations may occur or performance may be affected by factors such as force majeure. Therefore, there may be certain performance risk and uncertainty. Investors are kindly advised to invest rationally and pay attention to investment risks.

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Responsible editor: Xiao Lang Express