China Environmental Resources Group Limited Annual Report 2025 – Business Overview, Financial Performance, and No Dividend Declared 3240

China Environmental Resources Group Limited (1130.HK): FY2025 Financial Analysis & Business Update

China Environmental Resources Group Limited (“CERG” or “the Group”) has released its Annual Report for the year ended 30 June 2025. The company is diversified across metal recycling, motor and motor accessories, car parking rental, money lending, securities investment, green technologies, and hotel leasing (Nepal). This article analyzes CERG’s latest financial results, key events, historical trends, and corporate governance disclosures, providing investors with a clear view of the company’s performance and prospects.

Key Financial Metrics: YoY and Historical Trend Analysis

Metric	FY2025	FY2024	FY2023	YoY Change (2025/24)	2-Year Change (2025/23)
Revenue (HK\$’000)	60,749	82,817	84,414	-26.6%	-28.0%
Gross Profit (HK\$’000)	13,252	17,724	n.a.	-25.2%	n.a.
Net Loss (HK\$’000)	42,940	72,084	35,200	-40.4% (loss narrowed)	+22.0% (higher loss)
EPS (HK cents)	(8)	(16)	n.a.	+50.0% (loss narrowed)	n.a.
Dividend (HK\$)	Nil	Nil	Nil	No change	No change
Total Assets (HK\$’000)	607,732	661,398	622,904	-8.1%	-2.4%
Net Assets (HK\$’000)	380,585	419,022	476,320	-9.2%	-20.1%
Gearing Ratio	17.9%	20.2%	n.a.	-2.3pp	n.a.

Chairman’s Statement

“On behalf of the board of directors … I am pleased to present the Annual Report 2025 and the audited consolidated financial statements … for the year ended 30 June 2025. … The Group has been continuing to explore new business opportunities for corporate development and dedicates to develop sustainable current business.”

Tone: Neutral to mildly positive. The Chairman acknowledges ongoing challenges but stresses commitment to exploring new opportunities and sustainability.

Historical Performance Trends

The Group’s revenue has declined for two consecutive years, from HK\$93.2m in FY2022 to HK\$60.7m in FY2025. Net loss, while still significant, narrowed from HK\$72.1m in FY2024 to HK\$42.9m in FY2025, mainly due to reductions in administrative and operating expenses and smaller fair value losses on investment properties and biological assets.

Exceptional Items, Asset Revaluations & Errors

Fair value loss on investment properties: HK\$15.7m (down from HK\$17.3m last year).
Fair value changes in biological assets: Loss of HK\$5.4m (significantly reduced from HK\$38.6m in FY2024).
No evidence of material errors or inconsistencies, but a retrospective restatement was made for asset classification (held for sale status removed in FY2025).

Legal Proceedings

There is an ongoing legal case to recover a HK\$11m refundable secured deposit related to a previously proposed acquisition of hotel assets in the PRC. The High Court of Hong Kong has ruled in favor of the Group, ordering repayment with interest and legal costs. The company is seeking advice on enforcement.

Dividends

No dividends have been declared for FY2025, continuing the trend from previous years. The Board cites the need to retain cash given ongoing losses and uncertain outlook.

Share Capital Actions: Buybacks, Dilution, Placement

In FY2024, the company completed a placement of 407.3m new shares and carried out a 1-for-5 consolidation. Total issued shares as at 30 June 2025: 488,769,147. No share buybacks have occurred, and public float remains adequate.

Directors’ Pay and Remuneration

Year	Number of Employees	Directors’ & Key Management Emoluments (HK\$’000)
2025	31	2,018
2024	44	2,018

Executive remuneration is stable, with no extraordinary payments or inducements.

Macroeconomic and Operational Outlook

PRC Economy: Expected moderate growth (IMF forecasts ~4.8% GDP growth), but challenges persist due to property sector downturn, high public debt, and potential US-China trade friction.
Hong Kong: Projected 2–3% GDP growth in 2025, supported by strong exports and improving domestic demand.
Group Operations: Main businesses (metal recycling, motor vehicles) saw revenue declines; hotel leasing in Nepal generated stable revenue (~HK\$4.9m).
Securities Investment: Portfolio shrank to HK\$140k (from HK\$5m), but net fair value gain of HK\$5.7m was recorded.
Going Concern: The Group faces material uncertainty due to ongoing net losses, negative operating cash flow, and net current liabilities. However, the Chairman has committed to financial support and a HK\$20m undrawn banking facility is available.

Risk Factors & Other Events

Credit Risk: High concentration; 60% of receivables due from largest customer.
Legal Risk: HK\$11m deposit recovery underway; judgment in favor of CERG.
No major natural disasters or regulatory changes reported affecting Group assets.

Conclusion & Investment Recommendations

Financial Performance and Outlook: CERG’s financial performance in FY2025 remains weak, with declining revenues and continued losses, although the net loss narrowed significantly. The lack of dividend, ongoing legal proceedings, and material uncertainty over going concern highlight considerable risk. On the positive side, management is actively seeking new business opportunities, cost savings, and maintains access to liquidity through director support and bank facilities.

Investor Recommendations

If holding CERG stock: Consider reducing exposure or holding only if risk tolerance is high and there is confidence in management’s ability to stabilize and turn around core businesses. The company’s commitment to seeking new opportunities and available liquidity may provide upside if economic conditions improve, but risks remain elevated.
If not holding CERG stock: Exercise caution before initiating a position. Wait for signs of revenue stabilization, profitability, or successful asset recovery/legal resolution. The stock may be suitable only for speculative investors with a high tolerance for risk and long-term horizon.

Disclaimer: This analysis is based solely on publicly disclosed financial statements and does not constitute investment advice. Investors should consider their own risk tolerance and consult a licensed financial adviser before making any investment decisions.