MING YANG SMART ENERGY GROUP LIMITED

(GDR under the symbol: "MYSE")

(a joint stock company established under the laws of the People's Republic of China with limited liability)

Announcement on the Reply to the Inquiry Letter from the Shanghai Stock Exchange Regarding the Information Disclosure of the Proposal on Issuance of Shares and Cash Payment for Asset Acquisition

On January 23, 2026, Ming Yang Smart Energy Group Limited (hereinafter referred to as the "Company", the "Listed Company", or "MYSE") received the Inquiry Letter regarding the Information Disclosure of the Proposal of Ming Yang Smart Energy Group Limited on Issuance of Shares and Cash Payment for Asset Acquisition, Raising of Supporting Funds and Related-Party Transactions (SZGH [2026] No. 0129) (hereinafter referred to as the "Inquiry Letter") from the Listed Company Management Department I of the Shanghai Stock Exchange.

In accordance with the Inquiry Letter, the Company has organized relevant parties to conduct careful verification, analysis, and research on the related matters, and has implemented and responded to them item by item. Meanwhile, in accordance with the Inquiry Letter and the relevant replies, the Company has revised, supplemented, and disclosed the Proposal on Issuance of Shares and Cash Payment for Asset Acquisition, Raising of Supporting Funds and Related-Party Transactions and its summary, which are marked in bold italic. As the Company has not yet finalized the appointment process for the independent financial advisor, this reply does not include the verification opinion of the independent financial advisor.

The financial data of the Target Company involved in this reply to the Inquiry Letter has not been audited. Unless otherwise specified, the abbreviations or definitions of terms herein are the same as those in the Proposal on Issuance of Shares and Cash Payment for Asset Acquisition, Raising of Supporting Funds and Related-Party Transactions (Revised Version). The replies are hereby disclosed as follows:

Issue 1: regarding the losses of the Target Company. According to the Proposal, the Target Company was established in August 2015 and achieved net profits of RMB 2.1555 million, -RMB 42.5750 million, and -RMB 20.2262 million in 2023, 2024, and January-September 2025, respectively, indicating a state of marginal profit or loss. The Target Company is primarily engaged in the R&D and industrialization of semiconductor epitaxial wafers, chips, and power systems, with a relatively concentrated client base, and the development of its downstream related industries is significantly influenced by national industrial policies and industry planning. The Company is requested to: (1) explain the specific profit model of the Target Company and whether it is a simple assembly manufacturer, in combination with the procurement and production models, revenue proportion, gross profit margin, etc., of its main products; (2) supplement the disclosure on the industry sub-segment, competitive landscape, and comparable companies of the Target Company, and explain its industry position and competitive advantages and disadvantages; (3) explain whether the high client concentration is in line with industry practice and whether there is a risk of reliance on a single client or loss of major clients, in combination with the revenue proportion from the top ten clients, cooperation duration, changes, and client stickiness; (4) explain whether the Target Company has sustainable and stable profitability and whether this acquisition is conducive to enhancing the Listed Company's sustainable operation capability, in combination with the aforementioned situations and related risks.

Reply:

(I) Explain the specific profit model of the Target Company and whether it is a simple assembly manufacturer, in combination with the procurement and production models, revenue proportion, gross profit margin, etc., of its main products

The Target Company is a high-tech enterprise dedicated to the R&D and industrialization of high-end compound semiconductor epitaxial wafers, chips, and power systems. It possesses R&D and manufacturing capabilities across the entire industry chain, from epitaxial materials to power systems, and provides integrated energy system solutions. Its main products include gallium arsenide solar cell epitaxial wafers, rigid and flexible gallium arsenide solar cell chips, and power systems.

1. Revenue and gross profit margin of main products

Unit: RMB 10,000, %

The main revenue of the Target Company from 2023 to September 2025 was derived from the sales of epitaxial wafers, chips, and power systems. The revenue scale was relatively small, and both the revenue scale and gross profit margin showed some fluctuations. The main reasons were as follows: (1) the Target Company's business structure has undergone certain changes. Before and in 2024, its business was primarily focused on epitaxial wafers. As its business extends along the industrial chain, the Target Company has developed rapidly in the fields of chips and power systems since 2025, with business revenue showing significant growth compared to 2024. Epitaxial wafers were the basic material for chip manufacturing. As the Target Company expanded its main products into the downstream fields of chips and power systems, the scale of its corresponding epitaxial wafer sales business declined; (2) Market competition has led to a decrease in the gross profit margin of epitaxial wafers. With technological advancements and market maturation, the gross profit margin of the traditional epitaxial wafer business has gradually returned to normal levels as market capacity and supply have increased; (3) The economies of scale have not yet been realized. Since 2024, the Target Company has generated a certain scale of revenue in the chip and power system fields, but the gross profit margin is low. This is mainly because the technical routes and products are still undergoing continuous verification and have not yet reached the stage of large-scale mass production. The materials consumed and fixed costs incurred are higher than those in mass production, resulting in a low gross profit margin for the newly added main product types, chips and power systems.

2. Procurement model

The industry chain in which the Target Company operates can be divided into three levels:

(1) Upstream: supply of basic materials, including gallium arsenide (GaAs) single crystal substrates, germanium (Ge) single crystal substrates, high-purity metal sources (such as gold, germanium, and nickel), silver pellets, anti-radiation glass cover slides, high-purity gases (such as arsine and phosphine), and packaging auxiliary materials;

(2) Midstream: manufacturing of core devices, covering epitaxial growth, chip fabrication processes (such as photolithography, etching, evaporation, and passivation), and electrical performance testing;

(3) Downstream: system-level integrated applications, including series-parallel connection of components, thermal control design, EMC protection, and reliability verification.

The Target Company is positioned in the midstream and downstream of the industrial chain. The core products of the Target Company are epitaxial wafers, chips, and supporting power systems. Among them, epitaxial wafers and chips are high-value-added core devices, while power systems are integrated solutions based on its self-developed chips.

The Target Company formulates corresponding material procurement plans based on the demand information from sales orders. It selects suppliers through product performance testing, product comparison and screening, and price comparison, and has gradually formed a long-term cooperative supplier system. The main raw materials required for the Target Company's production include:

The Target Company has established a strict supplier access and quality management system. All key materials must pass technical verification and batch consistency tests. It does not purchase any semi-finished products (such as epitaxial wafers, chips, or power modules), nor does it rely on a single supplier, ensuring supply chain security and technological independence.

3. Production model

The Target Company primarily adopts a "production-to-order" model, organizing its entire in-house production process based on orders and plans from downstream clients. The main production stages include:

(1) Epitaxial growth: on its own Metal-Organic Chemical Vapor Deposition (MOCVD) equipment, using purchased substrates as a base, multi-layer heterostructure epitaxial wafers are grown by precisely controlling temperature, gas flow, and doping concentration - this is a core technology stage, where the technology is independently developed and all production is performed in-house.

(2) Chip fabrication: patterning of epitaxial wafers, including photolithography, dry/wet etching, metal evaporation, alloy annealing, and surface passivation - all completed in the Target Company's cleanroom, with process recipes and flows developed by the internal team;

(3) Power system integration: high-reliability packaging and electrical integration of self-produced chips with purchased structural parts, connectors, circuit boards, etc., to form a power system that meets space environment requirements - key capabilities such as system design, thermal control, and EMC testing are mastered by the Target Company, and the assembly stage is also completed internally.

In summary, all core process stages of the Target Company (epitaxy, chip manufacturing, and system integration design) are independently researched, developed, and produced. No key technologies or main processes are outsourced. Although some non-core structural parts or standard electronic components are purchased, they are only used as auxiliary materials in the final assembly and do not involve the creation of the product's core value. Therefore, the Target Company is not a simple assembly manufacturer.

(II) Supplementary disclosure of the industry segment, competitive landscape, and comparable companies of the Target Company, and explanation of its industry position and competitive advantages and disadvantages

The Target Company is a high-tech enterprise dedicated to the R&D and industrialization of high-end compound semiconductor epitaxial wafers, chips, and power systems, with the capability to provide overall solutions for power systems. Its main products include gallium arsenide solar cell epitaxial wafers, rigid and flexible gallium arsenide solar cell chips, solar arrays, and solar wings. The Target Company was successfully recognized as the Guangdong Provincial Engineering Technology Research Center in 2019, the Guangdong Provincial Intellectual Property Demonstration Enterprise in 2020, the Guangdong Provincial Specialized, Refined, Differentiated and Innovative (SRDI) Enterprise and a National-level "Little Giant" Enterprise in 2023, and the Guangdong Provincial Single-item Champion Enterprise in 2025.

1. The Target Company's industry segment, competitive landscape, and comparable companies

According to the business registration information of the Target Company, it is engaged in the "Manufacturing - Computer, Communication and Other Electronic Equipment Manufacturing - Other Electronic Equipment Manufacturing". The Target Company's main products are gallium arsenide (GaAs) solar cell epitaxial wafers, and rigid and flexible GaAs solar cell chips. In 2025, the Target Company's power system products have achieved sales revenue, but the current revenue scale is still small.

(1) Overview of the Industry Segment

Epitaxial wafers refer to multi-junction III-V compound semiconductor thin film materials with specific band structures and atomic-level precision, which are grown layer by layer on a single-crystal substrate (typically germanium, Ge) via sophisticated epitaxial technologies such as Metal-Organic Chemical Vapor Deposition (MOCVD). As the "material cornerstone" of high-performance space solar cells, the quality of epitaxial wafers directly determines the physical upper limit of photoelectric conversion efficiency. Chips are independent power generation units fabricated on high-quality epitaxial wafers through a series of semiconductor planar processes such as photolithography, etching, passivation, and metallization. They have a complete PN junction structure and electrode system, and are the core functional devices that convert light energy into electrical energy. The power system, the "central nervous system" of energy management, is a highly reliable and comprehensive electronic system that integrates energy acquisition, storage, regulation, distribution, and intelligent management. Its core subsystem is the power conditioning and distribution unit, which is responsible for efficiently and stably converting the unstable electrical energy output from the solar cell array and distributing it to various subsystems to ensure long-term reliable operation. Epitaxial wafers lay the foundation for performance, chips achieve photoelectric conversion, and power systems ensure a reliable energy supply. They are interlinked and together constitute the technological core of the energy system.

(2) Industry Competitive Landscape

Uniwatt focuses on high-end compound semiconductor cell chips and power systems. This niche market has high technical barriers, strict entry thresholds, and relatively few industry participants. In China, only a few companies with relevant qualifications compete in this market, mainly including Changelight, CETC Lantian, and the Target Company.

(3) Comparable companies in the same industry

① Changelight (300101.SZ)

Xiamen Changelight Co., Ltd., founded in 2006 and listed on the ChiNext market in 2010, primarily deals in full-color ultra-high brightness LED epitaxial wafers and chips, high-performance gallium arsenide solar cells, and LED lighting products, while also providing energy-saving lighting application solutions. Changelight currently produces 1 million 6-inch gallium arsenide (GaAs) wafers annually, making it the largest domestic enterprise capable of mass-producing GaAs solar cell epitaxial wafers. It is also dedicated to the research, development and production of high-performance GaAs solar cells.

② CETC Lantian (688818.SH)

CETC Lantian Technology Co., Ltd., established in 1992, received its IPO registration approval in December 2025. As a subsidiary of China Electronics Technology Group Corporation, it primarily engages in the R&D, production, sales, and services of electric energy products and systems. The company offers a full suite of solutions covering power generation, energy storage, control, and system integration. Its products are widely used in applications ranging from the deep sea (1 km underwater) to deep space (225 million km from Earth), spanning three major sectors, namely the aerospace power supplies, special-purpose power supplies, and new energy applications and services.

2. Industry position and competitive advantages and disadvantages of the Target Company

(1) Industry position of the Target Company

The Target Company has been established for over 10 years, actively responding to national strategies, vigorously developing power supply system technology, building automated production lines for power supply systems, and committing to developing high-performance, low-cost, and mass-produced power supply system products.

The Target Company's main products include epitaxial wafers, chips, and power systems. Its current revenue is relatively small, mainly because the downstream market demand is low at this stage. The Target Company's related products are still in the early stages of industrialization, and its market expansion resources and channel development are still being improved. Its revenue is primarily derived from a few core clients that have passed verification. The Target Company has been continuously and vigorously developing new power technologies, with significant investment in R&D. It has established certain advantages in domestic substitution, technological advancement, and client reserves. It is one of the few enterprises in the industry with R&D and production capabilities covering the entire industry chain from epitaxial wafers to power systems. The Target Company has business cooperation with major relevant entities or companies in the industry. The GaInP/GaAs/GaInAs triple-junction cells it develops have technical specifications that exceed other similar products in the industry, making it one of the core domestic power supply providers with commercial delivery capabilities.

(2) Competitive advantages of the Target Company

① Complete industrial chain and leading product technology

Compared with comparable companies in the same industry, the Target Company's business covers the entire power system industry chain, including epitaxial wafers, chips, solar modules, and solar arrays. It is a domestic enterprise with R&D and production capabilities spanning the entire industry chain from epitaxial materials to space energy systems. The Target Company has mastered the core solar cell epitaxial chip technology for energy systems and possesses full-process capabilities in power system design, production, verification, and support. This allows for full-process control over the production quality and cost of power supply systems, and provides advantages in rapid response and customized development.

The GaInP/GaAs/GaInAs triple-junction cells developed by the Target Company have been tested and certified by the Fraunhofer Institute of Solar Energy in Germany, achieving a conversion efficiency of 36.6%. This efficiency level has been included as the highest domestic efficiency for GaAs multi-junction solar cells in the 2025 Highest Solar Cell Efficiencies Table (Ver. 9) released by the Photovoltaic Committee of the Chinese Renewable Energy Society, which is higher than other similar products in the industry.

② Products have been validated

The Target Company has long been engaged in the R&D and production of power system-related products and has completed the verification of multiple products. The Target Company's epitaxial wafers and power chips have achieved mass supply. Its power system products have been used in multiple missions and have been verified, with clients covering several well-known manufacturers.

(2) Competitive disadvantages of the Target Company

① The Target Company is small in scale and is still in a loss-making stage

As of the end of September 2025, the Target Company's total assets were RMB 411.0127 million, and its net assets were RMB 131.5121 million; its operating revenues for 2024 and for January-September 2025 were RMB 52.9787 million and RMB 90.5969 million, respectively, with net profits of -RMB 42.5750 million and -RMB 20.2262 million, respectively. The Target Company has a small operating revenue scale and is still in a loss-making stage.

② Relatively undiversified financing channels

In the past, the Target Company primarily raised funds through primary market financing, shareholder loans, etc. Subsequent R&D investment and business expansion may bring certain financial pressure. The Target Company's current financial strength limits the large-scale growth of its R&D activities and production operations to some extent.

③ Concentrated downstream clients

Affected by the characteristics of the industrial chain, the Target Company's downstream clients are relatively concentrated. During the reporting period, the revenue from the top three clients accounted for 95.92%, 95.32%, and 93.55% of its primary business revenue for each year, respectively. If major clients adjust their procurement pricing policies and production procurement plans, it may have a significant impact on the Target Company's operating performance.

(III) Explain whether the high client concentration is in line with industry practice and whether there is a risk of reliance on a single client or loss of major clients, in combination with the revenue proportion from the top ten clients, cooperation duration, changes, and client stickiness

From 2023 to September 2025, the Target Company had a high client concentration, with the revenue from the top three clients accounting for 95.92%, 95.32%, and 93.55% of its primary business revenue for each year, respectively.

The client concentration of comparable companies in the same industry is as shown in the table below:

Unit: RMB 10,000

During the reporting period, the Target Company's client concentration was higher than that of comparable companies in the same industry, mainly because it was still in the early stages of industrialization: on the one hand, the Target Company's revenue was relatively small, and its market expansion resources and channel development were still being improved; on the other hand, the high-reliability requirements of its products resulted in a long sales cycle, as major products can only be delivered in batches after rigorous verification. At this stage, the Target Company's revenue was primarily derived from a few core clients that have passed verification. Therefore, during the reporting period, the Target Company had a high client concentration and faced the risk of single-client dependency, which was in line with industry practice.

During the reporting period, the cooperation with the Target Company's major clients is described as follows:

The Target Company has technological and industrial chain synergies with its major clients related to power systems, and is also vigorously engaging with and onboarding other strong enterprises in the industry. Given that the Target Company is a technology-oriented enterprise capable of full-chain production from epitaxial wafers to solar array power systems, its technical parameters and product performance have been continuously verified through in-orbit operations, and it has business cooperation with major relevant units or companies in the industry. Therefore, the overall client stickiness is high, and the risk of client churn is low.

(IV) In combination with the aforementioned situations and related risks, explain whether the Target Company has sustainable and stable profitability and whether this acquisition is conducive to enhancing the Listed Company's sustainable operation capability.

The Target Company is dedicated to the R&D and industrialization of high-end compound semiconductor epitaxial wafers, chips, and power systems. Its related products all require complex and rigorous processing and manufacturing procedures, and it is not a simple assembly manufacturer. Currently, the Target Company mainly relies on the sales of products such as epitaxial wafers and chips, while vigorously developing new power supply technologies. It has established certain first-mover advantages in domestic substitution, technological advancement, and client reserves, and is one of the domestic core power supply suppliers with commercial delivery capabilities. In market competition, the Target Company has competitive advantages such as a complete power system industry chain, leading product technology, proven products, and complete qualifications. Although there is a risk of single-client dependency, the high concentration of downstream clients is in line with industry practice, and the stickiness of major clients is high, resulting in a low risk of client churn.

At the current stage, as downstream client orders have not yet been released on a large scale, the Target Company's revenue scale is relatively small. Coupled with continuous and increased investment in production line construction and R&D, the Target Company incurred losses during the reporting period. In the short term, the Target Company does not possess sustainable and stable profitability. However, with the rapid development of downstream industries and the fast growth of downstream market demand, its profitability is expected to improve. Therefore, in the long run, the Target Company possesses sustainable and stable profitability, and this acquisition is also conducive to enhancing the Listed Company's sustainable operation capability.

Issue 2: regarding the background and purpose of the Transaction. The Transaction constitutes a related-party transaction. Chao Zhang, the Actual Controller of the Target Company, serves as a director and Vice President of the Listed Company and is also a close relative of the Listed Company's Actual Controllers. The shareholders of the Target Company include a significant number of financial investors. According to the disclosure of the Proposal, the primary businesses of the Target Company and the Listed Company have synergistic effects, and there are risks of market expansion falling short of expectations and intensified competition. The Company is requested to: (1) additionally disclose the specific manifestations of synergistic effects between the Target Company and the Listed Company in terms of products, technology, and channels, as well as subsequent integration arrangements and related risks; (2) explain the main considerations, necessity, and reasonableness for the Listed Company to acquire a loss-making target from related parties, in light of the competitive landscape, industry position, and financial condition of the Target Company's industry segment; (3) additionally disclose the reasons for the exit of financial investors, and state whether there are any valuation adjustment mechanism (VAM) agreements or other arrangements unfavorable to the Listed Company between the Target Company, its Actual Controller, and the financial investor shareholders. If so, please disclose the main terms of the agreements.

Reply:

(I) Additionally disclose the specific manifestations of synergistic effects between the Target Company and the Listed Company in terms of products, technology, and channels, as well as subsequent integration arrangements and related risks

1. Specific manifestations of synergistic effects between the Target Company and the Listed Company in terms of products, technology, and channels

With the mission of "Innovating Clean Energy to Benefit Human Society"," the Listed Company is committed to becoming a global leader in intelligent and accessible clean energy, and to building itself into a value chain management and system solution provider with an integrated layout covering "wind, solar, storage, hydrogen, and fuel cells". Currently, the Listed Company's primary business focuses on integrated new energy solutions, new energy power station development and operation, and electricity distribution and sales, with a strategic layout across multiple fields including wind power, photovoltaics, energy storage, and hydrogen-ammonia-methanol. However, the Target Company has been deeply involved in power supply systems for many years and has established a complete industrial chain covering compound semiconductor epitaxial wafers, high-efficiency gallium arsenide solar cell chips, and power supply systems. The products of both the Listed Company and the Target Company focus on expansion and strategic positioning in the new energy sector. They have synergistic effects in terms of products, business, upstream and downstream operations, and technology, which can lead to a win-win cooperation. Upon completion of this acquisition:

(1) In terms of products, the Listed Company has a full-fledged business layout in multiple fields such as wind power, photovoltaics, energy storage, and hydrogen-ammonia-methanol. The Target Company has built a complete industrial chain covering compound semiconductor epitaxial wafers, high-efficiency gallium arsenide solar cell chips, and power systems. The Parties can establish strong synergies in areas such as high-efficiency photovoltaic materials, flexible integration, and lightweight power systems.

(2) In terms of technology, the Listed Company possesses cutting-edge photovoltaic technologies such as perovskite thin-film, heterojunction, and tandem cells, forming a series of core technologies and patented achievements with independent intellectual property rights. Its perovskite modules have achieved breakthroughs in both efficiency and stability. The Target Company holds over 120 authorized core technology patents, including nearly 80 invention patents. The GaInP/GaAs/GaInAs triple-junction cell it developed is recorded as the highest domestic efficiency for GaAs multi-junction solar cells to date in the 2025 Highest Efficiency Solar Cells Chart (Ver.9) released by the Photovoltaic Professional Committee of the Chinese Renewable Energy Society. The Parties have extensive experience in product application design and material structure design, enabling them to achieve complementary synergies.

2. Subsequent integration arrangements and related risks for the Target Company and the Listed Company

(1) Proposed integration measures

Upon completion of the Transaction, the Listed Company will primarily implement the following integration measures:

① While maintaining the stability of the Target Company's main management team, the Listed Company will complement the Target Company's advantages and integrate in areas such as operational management, financial management, personnel management, and sales channels. It will introduce the Listed Company's mature project management and lean production systems to help the Target Company optimize the entire process from order receipt to delivery and acceptance, reduce production costs, and improve production ramp-up efficiency and on-time delivery, thereby expanding the Target Company's revenue scale and improving its profitability;

② By leveraging the platform and funding advantages of the Listed Company, along with its existing standardized management experience, we will coordinate resources from all aspects to integrate the Target Company into the Listed Company's unified financial management and capital allocation platform, significantly reducing its financing costs and enhancing financial transparency and decision-making efficiency through shared digital tools like ERP and BI.

(2) Planned arrangements

The specific plans and arrangements made by the Listed Company for its existing business, assets, finance, personnel, and organization are as follows:

① Business operation plan and integration arrangement

Upon completion of the Transaction, the Target Company will be integrated into the overall business system of the Listed Company. The Target Company's complete industry chain, from compound semiconductor epitaxial wafers and high-efficiency gallium arsenide solar cell chips to power systems, will further enhance the Listed Company's strategic development space in the energy sector, aligning with the national development direction of "new quality productive forces". The Listed Company will fully leverage the rapid overall business development opportunities brought by the injection of the Target Company's business, coordinate the synergistic development of the Target Company's business with its existing business, and achieve a positive interaction of mutual promotion and resource sharing.

② Asset operation plans and integration arrangements

Upon completion of the Transaction, the Target Company will become a wholly-owned subsidiary of the Listed Company, but will retain its independent legal personality, enjoy independent legal person property rights, and maintain relatively independent assets. Meanwhile, relying on its own management level and capital operation capabilities, the company will further optimize resource allocation in combination with the Target Company's market development prospects to enhance the company's overall competitiveness.

③ Financial operation plans and integration arrangements

Upon completion of the Transaction, the Target Company will maintain its original financial management structure, but will be incorporated into the company's overall financial management system, subject to the Company's supervision and management, and will regularly submit financial reports and related financial information to the Company. The Company will standardize the financial operations of the Target Company in its daily business activities in accordance with its own financial system, control financial risks, achieve unified management and optimization of internal resources, improve the overall efficiency of the company's capital utilization, and promote the sustainable and healthy development of both the company and the Target Company.

④ Personnel operation plans and integration arrangements

Upon completion of the Transaction, the Target Company will maintain the stability of its original management team, which is conducive to ensuring the stability of its market position and the sustainability of its competitive advantages. At the same time, the Listed Company will further optimize and integrate the organizational structure and human resource management of the Target Company, promote innovative talent development mechanisms, optimize the environment for talent development, and build a human resource team that matches the company's development.

⑤ Organizational operation plans and integration arrangements

Upon completion of the Transaction, the Listed Company will assist the Target Company in further establishing a more complete, scientific, and standardized corporate governance structure to ensure that the Target Company operates in accordance with its Articles of Association and the Listed Company's management system for its subsidiaries. In principle, the Listed Company will maintain the stability of the Target Company's existing internal organizational structure, and will continue to operate based on its current business model and organizational structure, and make dynamic optimization and adjustments as needed for the Target Company's business development and in accordance with the Listed Company's internal control and management requirements, so as to improve the overall management and control level of the Listed Company.

(3) Integration risks of the Transaction

The Listed Company has established an effective and standardized governance structure and management system, and has a relatively clear approach to integrating new businesses. However, due to the detailed differences between the existing businesses of the Listed Company and the Target Company, and the distinctions in industry supervision, business models, markets, and client groups, it is expected to take some time to achieve ideal and effective integration and fusion after the acquisition. The integration risks of the Transaction are manifested as follows:

Upon completion of the Transaction, higher demands are placed on the management capabilities of the Listed Company. As the business scale of the Listed Company expands, if it fails to timely improve, perfect, and adjust its management model and risk control system, it may face ineffective control over related businesses due to factors such as inadequate management, thus failing to complete the integration with the Target Company in the short term or achieving unsatisfactory integration results. The Listed Company will actively adjust and integrate its business, assets, finance, personnel, and organization, but deep integration will take a certain amount of time, and there may be integration risks.

(II) Explain the main considerations, necessity, and reasonableness for the Listed Company to acquire a loss-making Target Company from related parties, in light of the competitive landscape, industry position, and financial condition of the Target Company's industry segment.

1. Competitive landscape and industry position of the Target Company's industry segment

Please refer to "2. Industry position and competitive advantages and disadvantages of the Target Company" under "(II) Supplementary disclosure of the Target Company's industry segment, competitive landscape, and comparable companies in the same industry, with an explanation of the Target Company's industry position and competitive advantages and disadvantages" in Issue 1 of this reply.

2. Explanation of the Target Company's financial condition

As of the end of September 2025, the Target Company's total assets were RMB 411.0127 million, and its net assets were RMB 131.5121 million; its operating revenues for 2024 and for January-September 2025 were RMB 52.9787 million and RMB 90.5969 million, respectively, with net profits of -RMB 42.5750 million and -RMB 20.2262 million, respectively. The Target Company's operating revenue is relatively small, mainly because orders from its current downstream clients have not yet been placed on a large scale, resulting in a lag in revenue recognition compared to its early-stage investments; the Target Company is experiencing losses, primarily attributable to its continuous increase in production line construction and R&D investments, coupled with a relatively small revenue base, which has yet to yield economies of scale.

3. Main considerations, necessity, and reasonableness for acquiring the loss-making Target Company

The main considerations, necessity, and reasonableness for the Listed Company's proposed acquisition of Uniwatt are analyzed as follows:

(1) Expanding the Listed Company's strategic development space in the energy sector

With the mission of "Innovating Clean Energy to Benefit Human Society"," the Listed Company is committed to becoming a global leader in intelligent and accessible clean energy, and to building itself into a value chain management and system solution provider with an integrated layout covering "wind, solar, storage, hydrogen, and fuel cells". Currently, the Listed Company's primary business focuses on integrated new energy solutions, new energy power station development and operation, and electricity distribution and sales, with a strategic layout across multiple fields including wind power, photovoltaics, energy storage, and hydrogen-ammonia-methanol. The Target Company has been deeply involved in power supply systems for many years and has established a complete industrial chain covering compound semiconductor epitaxial wafers, high-efficiency gallium arsenide solar cell chips, and power supply systems. Upon completion of this acquisition, the Listed Company's business will extend from land (wind power, photovoltaics) and sea (offshore wind power, hydrogen production from seawater) to space power systems, aligning with the national development direction of "new quality productive forces" and representing a forward-looking strategic layout in the energy sector.

(2) Achieving technological complementarity to seize the opportunity in next-generation photovoltaics

The Listed Company possesses cutting-edge photovoltaic technologies such as perovskite thin-film, heterojunction, and tandem cells, and has formed a series of core technologies and patented achievements with independent intellectual property rights. Its perovskite modules have achieved breakthroughs in both efficiency and stability, with a third-party certified efficiency of up to 22.4% for 1200mm*600mm modules. Meanwhile, the laboratory conversion efficiency of its perovskite/HJT two-terminal tandem cells has exceeded 34%, and they are now entering the large-size verification stage. The perovskite/crystalline silicon four-terminal tandem modules have also achieved a conversion efficiency of 27.6%. The Target Company is dedicated to the R&D and industrialization of high-end compound semiconductor epitaxial wafers, chips, and energy systems in the photovoltaic field. It possesses the capability to provide integrated solutions for power supply systems, and has developed full-industry-chain R&D and manufacturing capabilities covering the entire spectrum from epitaxial materials to power supply systems. The two companies have high synergistic potential in areas such as high-efficiency photovoltaic materials, flexible integration, and lightweight power systems. In the future, they can jointly develop new high-efficiency flexible solar arrays, creating a multi-scenario photovoltaic technology platform. This will promote application validation and commercialization in more scenarios and enhance the Listed Company's overall competitiveness in the photovoltaic field.

(3) Injecting high-quality, unprofitable yet high-growth assets

Although the Target Company is currently loss-making, the power system sector it operates in is characterized by high barriers to entry, high certainty, and high growth potential. Through this acquisition, the Listed Company can make an early layout of the core supply chain and add a new emerging business segment with high barriers to entry and strong growth potential. This will optimize the overall business structure of the Listed Company, create new and long-term performance growth drivers for the Listed Company, and generate long-term and sustainable returns for all shareholders. Meanwhile, by leveraging the financing capabilities of the Listed Company's platform, the industrialization process of the Target Company can be accelerated, achieving the development goal of expanding and strengthening the power system industry.

In summary, although the Target Company is currently in a loss-making stage, it possesses technological leadership, client advantages, and clear industrialization prospects in the power system segment. The Listed Company's acquisition is based on considerations of national strategic direction, industrial synergy logic, and long-term value creation, and is fully necessary, reasonable, and forward-looking.

(III) Additionally disclose the reasons for the exit of financial investors, and state whether there are any valuation adjustment mechanism (VAM) agreements or other arrangements unfavorable to the Listed Company between the Target Company, its Actual Controllers, and the financial investor shareholders. If so, please disclose the main terms of the agreements.

The financial investors of the Target Company include Qiyuci, Zhongqing Henghui, Zhongqing Henghui Phase II, Anhui Huiyuan, Zhongshan Guoyuan Venture Capital, Torch Industries, and Torch Huaying No. 1. When the Target Company introduced financial investors, the Target Company, Ruide Venture Capital (the controlling shareholder of the Target Company), Energy Investment Group (the controlling shareholder of the Listed Company), and Zhongshan Yuezhi (one of the shareholders of the Target Company, controlled by the general manager of the Target Company) signed relevant Investment Agreements and/or Share Repurchase Agreements with the aforementioned financial investors. These agreements contained VAM arrangements, stipulating VAM clauses such as share repurchase rights and share transfer restriction rights. Chao Zhang, the Actual Controller of the Target Company, did not sign any VAM agreements or make other arrangements unfavorable to the Listed Company with the financial investor shareholders. The relevant agreements also do not contain any clauses requiring the Listed Company to assume repurchase obligations or guarantee responsibilities.

The exit of all financial investors this time was not due to the triggering of the repurchase conditions stipulated in the valuation adjustment mechanism (VAM) clauses. The trigger conditions for the investor exit clauses in the relevant Investment Agreements and Share Repurchase Agreements, as well as the specific reasons for the exits of the financial investors this time, are as follows:

As of the date of this reply, apart from the VAM clauses mentioned above, there are no other arrangements between the Target Company, Ruide Venture Capital, Energy Investment Group, and the financial investor shareholders that are unfavorable to the Listed Company. The Parties will subsequently negotiate to terminate the relevant VAM clauses in accordance with the requirements of regulatory authorities. There are no lawsuits or arbitrations related to special shareholder rights between the Target Company, Ruide Venture Capital, Energy Investment Group, and the financial investor shareholders. The agreements signed between the financial investors and the Target Company do not contain any clauses that require the Listed Company to assume any obligations. After the completion of the Transaction, there will be no arrangements unfavorable to the Listed Company.

Issue 3: regarding the stock price. The Company's stock was suspended from trading on January 13, 2026 for the planning of the Transaction, while the Proposal was disclosed and trading resumed on January 23; before the trading suspension, the Company's stock price had risen significantly, with the stock hitting its daily limit on January 12. The Company is requested to provide details on the specific process of planning this major asset restructuring before the trading suspension, including important time points such as contact, negotiation, and agreement signing, as well as the personnel with inside information and the content of discussions and decisions. Moreover, the Company is requested to conduct a comprehensive self-inspection and verify the recent stock trading activities of insiders, including its controlling shareholder, Actual Controllers, directors, senior officers, transaction counterparties, and other related parties, and to state whether there are any illegal or non-compliant activities such as insider trading.

Reply:

(I) The specific process of planning this major asset restructuring before the trading suspension, including important time points such as contact, negotiation, and agreement signing, as well as the personnel with inside information and the content of discussions and decisions

On January 13, 2026, the Company applied for the suspension of its stock trading for the planning of the Transaction. The main planning process before the trading suspension for the Transaction was as follows:

(II) Recent stock trading activities of insiders, including the Company's controlling shareholders, Actual Controllers, directors, senior officers, transaction counterparties, and other related parties, with a statement on whether there are any illegal or non-compliant activities such as insider trading

Based on the Company's self-inspection of stock trading activities by insiders, the results show that insiders, including the Company's controlling shareholder, Actual Controllers, directors, senior officers, transaction counterparties, and other related parties, did not use inside information to trade the Company's stock during the self-inspection period. The specific self-inspection details are as follows:

According to the self-inspection, during the period from six months before the trading suspension for planning the Transaction to the day before the disclosure of documents such as the Proposal for the Transaction, some of the inspected parties were found to have traded the Company's stock, with details as follows:

In response to the aforementioned stock trading activities, the relevant personnel have made the following statements and commitments:

In summary, based on the Company's self-inspection, insiders, including the Company's controlling shareholder, Actual Controller, directors, senior officers, transaction counterparties, and other related parties, did not use inside information to trade the Company's stock during the self-inspection period.

Although the Company has established standardized insider information management systems and taken necessary and sufficient confidentiality measures in accordance with relevant laws and regulations, limited the scope of access to relevant sensitive information, and followed the principle of minimizing the number of insiders and reducing and avoiding the dissemination of inside information, the possibility that relevant institutions or individuals may use inside information from the Transaction for insider trading cannot be ruled out. Furthermore, the Company's verification methods are limited, and it cannot verify whether the information provided by related parties contains misrepresentations. If any party related to the Transaction is suspected of insider trading, there is a risk that the Restructuring may be suspended, terminated, or canceled due to abnormal stock price fluctuations or unusual trading. The Company has disclosed the relevant risks in "Section VII Risk Factors" -  "I. Risks Related to the Transaction" - "(II) Risk of Suspension, Termination, or Cancellation of the Transaction" of the Proposal.

The Company will promptly respond to the relevant issues in the Inquiry Letter and fulfill its information disclosure obligations as required by the Shanghai Stock Exchange. The Company's designated information disclosure media are the Shanghai Securities News, China Securities Journal, Securities Daily, Securities Times, and the website of the Shanghai Stock Exchange (www.sse.com.cn). All information about the Company shall be based on the information published in the aforementioned designated media. Investors are kindly reminded to invest rationally and be aware of investment risks.

For more detailed information, please visit:

http://www.rns-pdf.londonstockexchange.com/rns/9387R_1-2026-2-5.pdf

Ming Yang Smart Energy Group Limited

5 February, 2026