HKC International Holdings Limited Announces Major Transaction: Disposal of Tseung Kwan O Property

Key Points of the Transaction

• HKC International Holdings Limited (Stock Code: 248) has entered into a major transaction involving the disposal of an investment property.
• The property in question is Flat G on the 45th Floor of Tower 10 Phase II (Le Point), Metro Town, No. 8 King Ling Road, Tseung Kwan O, New Territories, Hong Kong, with a saleable area of approximately 914 square feet.
• The Consideration for the disposal is HK\$13,200,000, payable in cash to the Vendor, Generalvestor (HK) Limited, an indirect wholly-owned subsidiary of the Company.
• The valuation report from an independent valuer assessed the market value of the property at HK\$13,000,000 as of 28 January 2026.
• The transaction was approved by written shareholders’ consent in lieu of a general meeting, with controlling shareholders Mr. Hubert Chan and Light Emotion Limited holding approximately 54.7% of the issued share capital.

Details of the Transaction

• Payment Terms:
  • Initial deposit: HK\$660,000 paid upon signing the provisional agreement on 28 January 2026.
  • Further deposit: HK\$660,000 due upon signing the formal sale and purchase agreement on or before 10 February 2026.
  • Remaining balance: HK\$11,880,000 to be paid on completion, scheduled for or before 27 March 2026.
• Financial Impact:
  • The audited net book value of the property as at 31 March 2025 was HK\$13,500,000.
  • After accounting for related disposal expenses of approximately HK\$200,000, the Group expects to record a loss of approximately HK\$500,000 in the financial year ending 31 March 2026 (before tax).
  • The monthly rental income will decrease by HK\$32,000 upon completion of the disposal.
• Use of Proceeds: The net proceeds (approx. HK\$13,000,000) will be used for the repayment of bank loans, aiming to reduce gearing ratio and associated interest expenses, thus strengthening the financial position of the Group.
• Rationale: The Directors believe the disposal represents a good opportunity to improve liquidity and reduce debt, given weak market demand in some business segments and the need to strengthen the balance sheet.

Potential Price-Sensitive Information for Shareholders

• Major Transaction Status: The disposal constitutes a major transaction under Chapter 14 of the Hong Kong Listing Rules, as one or more applicable percentage ratios exceeds 25% but is less than 75%. This is a significant event for the Company.
• Financial Performance:
  • For the six months ended 30 September 2025, Group revenue was HK\$32 million (down 33% from HK\$48 million in the prior year period), and loss attributable to equity holders was HK\$9 million (compared to HK\$3 million loss previously).
  • Sales of mobile phones and IoT solutions both declined significantly, with the IoT segment recording a loss of HK\$8 million and the mobile phone segment a loss of HK\$0.6 million.
  • Property investment division’s rental income increased to HK\$1.2 million, but still recorded a loss of HK\$0.3 million.
• Market Value vs. Book Value: The property is being disposed of below its net book value, resulting in a loss. This may be seen as a sign of current property market conditions or urgent need for liquidity, both of which could be price sensitive.
• Reduction in Recurring Income: The loss of monthly rental income could impact future earnings potential and dividend capacity.
• Debt Repayment: The proceeds will be used to reduce bank borrowings, which stood at HK\$124.6 million as at 31 December 2025, carrying interest rates from 2.25% to 5.25%. This disposal will improve the Group’s gearing and interest expense profile.
• Shareholder Approval: No general meeting will be convened for approval due to written consent given by controlling shareholders. Minority shareholders should note the influence of the controlling shareholder group.

Additional Information and Risks

• The property is currently subject to a tenancy agreement until 26 May 2027, with monthly rent at HK\$32,000 (inclusive of management fees and rates).
• As of the latest practicable date, the Group had contingent liabilities including performance bonds (HK\$11.5 million) and bank guarantees (HK\$2.3 million), secured by property and deposits.
• No material adverse change in the financial or trading position since 31 March 2025.
• No ongoing litigation, arbitration or material claims affecting the Group.
• All material contracts and expert opinions referenced are available for shareholder review for 14 days from the date of the circular.

Conclusion and Outlook

The Directors, including independent non-executive Directors, unanimously consider the disposal and its terms to be fair, reasonable, and in the best interests of shareholders. The disposal is expected to improve the Group’s financial stability and reduce leverage, although it will result in a moderate loss and a decrease in recurring rental income. Given the declining revenue and losses in other business segments, investors should closely monitor the Group’s progress in debt reduction, cost control, and product innovation, especially in the IoT and property investment sectors.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors are strongly advised to conduct their own research and consult professional advisers before making any investment decisions. The information is based on the Company’s published circular and may be subject to change. Past performance and projections are not indicative of future results.

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