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(Yicai Global) May 14 -- Shares in Aoyang Health Industry rose by the maximum 10 percent daily limit today after affiliate Aoyang Technology teamed with Jiangsu Textile Industry Design and Research Institute to develop hemp fiber textile products.
Aoyang Health [SHE:002172] rose 10.06 percent to CNY5.25 (USD0.77) after a statement confirming plans to jointly develop hemp for making underwear, outerwear, shoes and bedding, as well as home, hygiene and medical supplies.
Hemp has become an investment hotspot in the Chinese stock market since the beginning of this year. Stocks of many listed companies surged after they announced entry into the hemp cultivation and processing sector. But China has not approved the cultivation of hemp for medical use, nor the selling of drugs containing active cannabinoids such as tetrahydrocannabinol.
JTIDRI will develop hemp pulping tech, fiber production and modification in accordance with the requirements of Jiangsu province-based Aoyang. It will cover the initial CNY100,000 (USD145,55) annual research and development costs over the two-year deal.
Aoyang will pay CNY1 million after completion of a small-scale hemp fiber test and another CNY2 million after the close of the trial production. The firm will also pay CNY5 million if mass production is achieved.
Aoyang also inked a deal with Zhaoguang Farm in northeastern Heilongjiang province on May 13 to ensure the supply of raw materials. The latter will plant up to 333,333 square meters of hemp this year and Aoyang will purchase all of the output.
Hemp fiber products can be used for skin care as well as bacteria and mite prevention, and the development of related products will spur Aoyang's growth, the announcement said.
Editor: William Clegg