Taizhou Water Group Co., Ltd. (Taizhou Water) has amended its 2025 Yuhuan Water Supply Framework Agreement, lifting the annual transaction ceilings for municipal water sales to Yuhuan Water Supply following an unexpected rise in demand.
The 2025 cap climbs to RMB90.00 million from the original RMB84.00 million after the actual 2025 transaction value reached about RMB88.10 million, exceeding the previous limit by roughly 4.10 million. Projections for stronger demand have also pushed the 2026 and 2027 caps to RMB106.00 million and RMB110.00 million, respectively, compared with the earlier RMB86.00 million and RMB87.00 million.
Key drivers • Demand surge: Yuhuan Water Supply’s intake hit 39.1 million tons in 2025, surpassing the initial 35 million-ton estimate. The uptick was mainly attributed to climatic factors that boosted municipal water consumption. • Forward outlook: Taizhou Water now expects its supply volume to Yuhuan Water Supply to run 12–15% above prior forecasts over 2026-2027 and has added a 10–20% buffer to the revised caps to accommodate potential volatility in volume and pricing.
Commercial terms Pricing continues to follow tariffs sanctioned by the Taizhou Development and Reform Commission, currently at RMB2.47 per cubic metre (excluding tax: RMB2.3981/m³). Billing remains on a monthly, volume-based basis.
Governance and Listing Rule compliance Yuhuan Water Supply is deemed a connected person at the subsidiary level because its parent holds 40% of Taizhou South Bay Water Supply, a 60%-owned subsidiary of Taizhou Water. The board, including all independent non-executive directors, has endorsed the revised caps as fair, reasonable and in the ordinary course of business. Consequently, the supplemental agreement requires only reporting, announcement and annual review under HKEX Listing Rule 14A.101; no circular or independent shareholder approval is mandated.
Enhanced internal controls To prevent future cap overruns, Taizhou Water has tightened internal procedures by: 1. Strengthening water-volume measurement checks and real-time monitoring of rainfall and local reserves. 2. Instituting regular training on volume tracking and continuing connected-transaction rules. 3. Implementing monthly cross-departmental reviews of supply volumes and related revenues.
The supplemental agreement leaves all other terms of the original framework unchanged while positioning Taizhou Water to meet heightened regional water demand through 2027.