AF Global Limited Issues Critical Update on Xuzhou Investment Liquidation: Major Potential Write-Down Expected

AF Global Limited (“AF Global” or the “Company”) has released a significant update regarding the ongoing liquidation of its joint venture investment in Xuzhou, China—Xuzhou Yinjian LumChang Real Estate Development Co., Ltd (“XZYJLC”). This investment, representing a 55% equity interest for the Group, is a substantial part of AF Global’s asset and investment portfolio and may have a material impact on the Company’s net asset value (NAV) and potentially its share price.

Key Developments in the Liquidation Process

• Repeated Auction Failures: To date, five rounds of public auctions for major components of XZYJLC’s investment in Gulou Square—a mixed-use development in Xuzhou—have all closed without any bids. The most recent auction, held from 24 to 25 December 2025, was conducted at a 60% discount to the fair value of the key assets, yet still attracted no bidders.
• Possible Next Steps: AF Global, its joint venture partner, and the appointed liquidator are now considering further options, which include:
  • Additional auction rounds with even lower reserve prices (potentially up to a 70% discount to fair value).
  • Exploring alternative disposal options for the real estate assets of Gulou Square.
  • Other actions as deemed appropriate to complete the liquidation process.

Financial Impact and Potential Write-Downs

• Illustrative Impact of a 70% Discount Auction: If the next round of auction goes ahead in 2026 and assets are sold at a 70% discount to their fair value, the recoverable value of AF Global’s joint venture investment could be written down from S\$35,855,000 to approximately S\$11,355,000. This would result in a substantial fair value loss of approximately S\$24,500,000 recognized in other comprehensive income, not in profit or loss. This means the Group’s net assets and NAV would decrease, but earnings per share for the half-year ended 30 June 2025 (1H2025) would remain unchanged at 0.14 Singapore cents.
• Impact on NAV Per Share:
  

  Before Write-Down	After Write-Down
  Net assets: S\$150,550,000 NAV per share: 14.26 Singapore cents	Net assets: S\$126,050,000 NAV per share: 11.94 Singapore cents

  This illustrative scenario underscores the potential severity of the NAV reduction, which is a price-sensitive factor for shareholders.

• Accounting Treatment: With no successful auction at a 60% discount, and no further auction expected for the remainder of 2025, the Company will likely write down the recoverable amount of the investment based on a discount greater than 60% for its full-year results. The final amount is subject to audit and may change depending on eventual asset realization values.
• Uncertainty Remains: The final realization value is uncertain. There is no assurance that the loss will be limited to a 70% discount, as continued lack of bidders could force further reductions, resulting in additional write-downs.

Important Shareholder Considerations

• Material Impact on Net Asset Value: The potential write-down and reduction in NAV per share could directly affect the Company’s share price, making this a price-sensitive development that investors must monitor closely.
• No Profit Guidance or Forecast: The Company stresses that the numbers provided are for illustrative purposes only and do not constitute profit guidance or forecasts. Actual outcomes may vary significantly.
• Continued Uncertainty: With the liquidation still in progress and further asset value erosion possible, shareholders are strongly advised to exercise caution when dealing in AF Global shares.
• Future Updates: The Board will provide further updates as and when there are material developments.

Conclusion

The ongoing liquidation of AF Global Limited’s Xuzhou joint venture remains unresolved, with repeated auction failures and the prospect of substantial asset write-downs. The potential reduction in NAV per share and the uncertainty over final asset recovery make this a critical issue for shareholders and could be a significant driver of share price volatility in the near term. Investors should follow developments closely and anticipate the possibility of further losses.

Disclaimer: The information above is provided for informational purposes only and does not constitute investment advice, profit guidance, or financial forecasting by AF Global Limited or the author. Actual outcomes may differ from illustrative scenarios. Investors should conduct their own due diligence and consult professional advisers before making investment decisions. The Company cautions shareholders to exercise care when dealing in its shares due to the ongoing uncertainty.

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