On February 11, 2020, Vland (603739.sh)issued an announcement that its wholly-owned subsidiary Shandong VlandBiotechnology Co., Ltd. (hereinafter referred to as “Shandong Vland”) intendedto invest in a technology updating program for annually producing 1,000 tons offunctional edible probiotics. The total investment will reach 203 million yuan,including 187 million yuan in construction and 15.06 million yuan as workingcapital. All the funds needed for project will be raised by Shandong Vlanditself. The project has been recorded in Huimin County Bureau of Industry andInformation Technology.

In accordance with the announcement, theproject will achieve an annual production capacity of 1,000 tons of functionaledible probiotic products after completion. It covers a total area of ??19,980square meters and a construction area of ??17,320 square meters, mainlyincluding R&D center, fermentation workshop, post-processing workshop,intelligent packaging workshop and warehouse.

In recent years, probiotics have becomeincreasingly popular and the functions have gradually become well known. Asconsumption upgrades, the probiotics industry has ushered in a golden period ofrapid development, and it has also played an important role in the industrialtransformation and upgrading of China's food industry. The sales and growth ofprobiotic products worldwide have maintained a good momentum. The downstreamapplication chain of the probiotics industry is very wide, spanning multipleindustries such as functional foods, health products, daily chemicals andpharmaceuticals. The current industrial scale and expansion in China are farfrom meeting the growing market demand.

Vland has accumulated many years ofpractical experience in the R&D and production of probiotics for animalsand plants. In 2018, the company introduced high-end talents at home and abroad(those who had done R&D on strains in DuPont-Danisco and ?Chr. Hansen basedin Denmark). With the talents, it made a heavy investment to establish anutrition and health technology center specializing in the R&D of foodprobiotics. At present, Vland has mastered certain key advanced technologies inthe R&D of probiotics used by human, and has got several functional strainswith independent intellectual property rights. More new strains are also underdevelopment, laying a solid foundation for future production.

After the project is completed, ShandongVland will mainly produce highly concentrated active probiotic powder byapplying hi-tech such as high-density fermentation and freeze-drying protection.The powder can be further processed into probiotic food, solid beverages,medicines, cosmetics, etc. to meet customer’s needs. Functional strains withfermented flavor can also be used to produce probiotic fermentation broth andfermented foods (such as yogurt, functional fermented milk). In addition, asthe annual production capacity of 1,000 tons of functional edible probiotics takesthe lead in the domestic companies of the same kind, Shandong Vland can notonly use its own strains to produce products, but also have strong OEMproduction capabilities. The implementation of the project will further enrichthe company's product structure and promote its sustainable development, whichconform to the its development strategy.