Haitian Co., Ltd. Announcement: Victory in lawsuit! Expected compensation exceeds 100 million yuan!

On April 1st, Haitan Co., Ltd. (603759) released the latest progress announcement on a subsidiary’s litigation matter: winning the first trial, with a potential compensation of 115 million yuan.

Tracing back to July 2025, Haitan Co., Ltd.’s wholly owned subsidiary Chengdu Tianfu New Area Haitan Water Services Co., Ltd. (hereinafter referred to as “Tianfu Haitan”) filed a lawsuit with Sichuan Tianfu New Area People’s Court due to the failure to reach an agreement on the withdrawal compensation plan for the concession rights of the Huayang First Sewage Treatment Plant (Phase II) in Shuangliu County, involving the Sichuan Tianfu New Area Agriculture and Rural Bureau and the Sichuan Tianfu New Area Management Committee (hereinafter referred to as “Sichuan Tianfu New Area Management Committee”), and the case was accepted.

The latest announcement shows that on March 31 of this year, Haitan Co., Ltd. received the court’s administrative judgment, which made the following first-instance ruling:

1. Confirmed that the Sichuan Tianfu New Area Management Committee’s decision to revoke the “Contract for the Removal of the Concession Rights for the Huayang First Sewage Treatment Plant (Phase II) Project—Construction, Operation, and Handover” and its supplementary agreement, made on December 31, 2024, was illegal.

2. Annulled the defendant Sichuan Tianfu New Area Management Committee’s “Withdrawal Compensation Plan for the Huayang First Sewage Treatment Plant (Phase II) Concession Rights,” issued on May 30, 2025.

3. The defendant Sichuan Tianfu New Area Management Committee shall pay the plaintiff Tianfu Haitan compensation of 115 million yuan within sixty days from the effective date of this judgment.

4. The other claims of the plaintiff Tianfu Haitan are dismissed. Additionally, the case acceptance fee of 50 yuan shall be borne by the defendant Sichuan Tianfu New Area Management Committee.

In response, Haitan Co., Ltd. stated that since this is a first-instance judgment and the case is still within the appeal period, whether this judgment is final remains uncertain. The specific impact of this case on the current or future profits of the listed company cannot be assessed at this time. The final impact amount will be based on subsequent developments and the results confirmed after auditing by an accounting firm, and will be disclosed in periodic reports.

It should be noted that Haitan Co., Ltd. was listed on the Shanghai Stock Exchange Main Board in March 2021, becoming the first A-share listed company in Sichuan Tianfu New Area (hereinafter referred to as “Tianfu New Area”). According to the company’s periodic reports, Sichuan Haitan Investment Co., Ltd. holds 268 million shares of Haitan Co., Ltd., accounting for 57.99%, making it the controlling shareholder. The actual controller of Haitan Co., Ltd. is Fei Gongquan.

In March 2011, Haitan Co., Ltd. won the bid for the BOT concession rights of the Huayang First Sewage Treatment Plant (Phase II) project in Shuangliu County through open tender. In June of the same year, Haitan Co., Ltd. registered and established Tianfu Haitan and signed the relevant “Concession Rights Contract” with the People’s Government of Shuangliu County. Tianfu Haitan was granted the concession rights for the Phase II project of Huayang Sewage Treatment Plant.

After the establishment of Tianfu New Area, the above sewage plant is located within the scope of the new area. In May 2019, Tianfu Haitan signed a “Supplementary Agreement” with the Tianfu New Area Management Committee, whereby the government side (Tianfu New Area Management Committee) would perform all rights and obligations in the above concession project. According to the “Concession Rights Contract,” the concession period for the project officially started on July 6, 2015, with a total duration of 25 years.

As of November 2024, the Sichuan Tianfu New Area Huayang Water Purification Plant project, constructed by Chengdu TianTuo Environmental Construction (hereinafter referred to as “Huayang Water Purification Plant Project”), officially entered operation. This project shares the same geographic location, treatment process, and effluent quality as the sewage plant’s Phase II concession project involved in the case. On November 29, Tianfu Haitan received a “Notice” from the Tianfu New Area Management Committee, informing of the proposed termination of the “Concession Rights Contract” and the withdrawal of the concession rights.

On December 31, 2024, the Tianfu New Area Management Committee issued an “Administrative Decision,” deciding to terminate the “Concession Rights Contract” and the “Supplementary Agreement” from January 1, 2025, withdraw Tianfu Haitan’s concession rights, and provide lawful compensation. At that time, the remaining concession period for Tianfu Haitan’s project was about 15.5 years.

Previous announcements indicated that Tianfu Haitan and the Tianfu New Area Agriculture and Rural Bureau, as well as the Sichuan Tianfu New Area Management Committee, had not reached an agreement on the compensation amount.

As of the disclosure date of April 1, Haitan Co., Ltd. and its controlling subsidiaries’ other undisclosed litigation and arbitration cases involved a total amount of 30.4828 million yuan, accounting for 1.11% of the company’s audited net assets for 2024. Besides, Haitan Co., Ltd. and its controlling subsidiaries have no other litigation or arbitration matters that need disclosure but have not been disclosed.

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