*ST HILE: Deletes Certain Zeldon Acquisition Terms, Strengthens Post-Merger Control Rights

Image source: *ST HILE's Reply Announcement to the Shanghai Stock Exchange's "Regulatory Work Letter on the Foreign Investment Matters of Shanghai HILE Biotechnology Co., Ltd."

DentalGoodNews｜June 22, 2026 - *ST HILE (603718) issued an announcement responding to the Shanghai Stock Exchange's regulatory inquiry regarding its controlling subsidiary, Shaanxi Ruisheng Biology Co., Ltd. (hereinafter referred to as "Ruisheng Biology"), which plans to acquire 60% equity of Hunan Zerdun New Materials Co., Ltd. (hereinafter referred to as "Zerdun") for RMB 93.6 million. To further safeguard the interests of the listed company and ensure control over the target company, HILE has signed a supplementary agreement with the transaction counterparty, removing the clauses on excess performance rewards and cash dividend policies from the original agreement.

According to previous reports by DENTALGOODNEWS (Leading Dental Industry Media, DGN), *ST HILE disclosed this acquisition plan in May 2026, aiming to enhance its dental restoration materials industry chain and strengthen its overseas business layout. The latest response announcement clarifies that if Zerdun experiences severe performance decline, poor management, internal chaos, or other negative situations requiring a change of general manager, the transaction counterparty, Deyue Technology, will no longer have the right to nominate the general manager candidate. Instead, the listed company will appoint one to strengthen control over the target company.

According to the announcement by *ST HILE, Zerdun was established in August 2020 and is primarily engaged in the R&D, production, and sales of dental materials such as Zirconia Block for full-ceramic dentures. Its core product, "3D-Pro Multi-Layer Colored Zirconia Block," adopts a glue-free process route. The company has built a "Cloud Factory for Denture Intelligent Manufacturing" that covers the entire process from "order receiving, modeling, production, to shipment." It has now established a fully automated production line, reducing the traditional workshop that required hundreds of workers to just 20, cutting labor costs by 80%.

In terms of market distribution, Zerdun's overseas sales accounted for 90% in 2025, with indirect export business comprising 73.23%. The announcement disclosed that Zerdun's domestic market revenue in 2025 was RMB 7.3335 million, while its international market revenue was RMB 65.5616 million. The regulatory inquiry also noted that Zerdun's net profits for the past two years were RMB 11.9 million and RMB 15.97 million, respectively. *ST HILE cautioned that due to intensified market competition and uncertainties in policies such as tariffs and export tax rebates, Zerdun's product prices in 2026 have declined compared to 2025, and the indirect export business has continued to see a slight decrease since the first quarter. It is expected that 2026 performance will decline compared to 2025.

Regarding the Performance commitment Earn-out clause, the transaction counterparty has committed that Zerdun's net profits for 2026, 2027, and 2028 will be no less than RMB 12 million, RMB 13 million, and RMB 14 million, respectively. HILE stated that this commitment is relatively conservative, which helps reduce the risk of Goodwill Impairment. Additionally, after the completion of this transaction, Zerdun's financial officer will be Guo Liping, who currently serves as the Deputy Chief Financial Officer of the company and the Financial Director of Ruisheng Biology. The listed company will also integrate Zerdun into its unified "YonSuite Cloud Service" system to strengthen financial management and approval processes.