600735.SH announced that in May 4, 2018, the company signed the new material industry merger fund cooperation framework agreement with Shandong Xinhua Klc Holdings Ltd and Shenzhen Qianhai Ruixiang Cci Capital Ltd. As the company is optimistic about the future development of graphite and graphene industry, the company intends to invest in the field of graphite new materials through the joint establishment of new material industry acquisition fund by related parties and professional investment institutions. In the meantime, with the continuous development of the main industry, we will make use of the resource advantages of the capital market and professional investment institutions to find new materials, new energy batteries and carbon materials related industries. Looking for high-quality investment opportunities, while obtaining investment income, layout new material industry.

Due to the failure to reach an agreement on the specific terms of cooperation, the new material industry acquisition fund has not been established as scheduled. In order to speed up the pace of the layout of the new material industry, the company intends to directly purchase 40 million 750 thousand of its own capital to the Affiliated Xinhua Xinhua Mstar Technology Ltd (hereinafter referred to as "new materials company") to purchase its 50% stake in Qingdao Sen Hui graphite Co., Ltd. in Shandong. After the completion of the equity transfer, the new material company owns 50% stake in Qingdao SSE and becomes the controlling shareholder of Qingdao SSE. Up to now, Qingdao Sen Hui has obtained the "mining license" issued by the land and resources administration department and the "safety production permit" issued by the safety supervision department, which has the basic conditions for commencement of production.