Playmates Holdings Limited (HKEX: 635) 2025 Annual Results: In-Depth Analysis for Investors

Key Financial Highlights

• Revenue: The Group reported a significant decrease in consolidated revenue to HK\$665.2 million for the year ended 31 December 2025, representing a sharp 39.1% drop from HK\$1,092.2 million in 2024.
• Operating Profit (Before Revaluation Deficit): Operating profit before revaluation deficit fell to HK\$56.5 million, down from HK\$208.3 million in the prior year.
• Net Revaluation Deficit on Investment Properties: A substantial deficit of HK\$439.3 million was recorded, compared to HK\$539.9 million last year. This had a material impact on the bottom line.
• Net Loss Attributable to Shareholders: The Group posted a net loss of HK\$362.2 million (2024: HK\$382.3 million), translating to a basic loss per share of HK cents 17.51 (2024: HK cents 18.48).
• Net Asset Value: Net asset value per share declined to HK\$2.47 as at 31 December 2025 (2024: HK\$2.71).

Segment Performance

Property Investments and Management

• Turnover: HK\$151.7 million for 2025, down 3.6% compared to 2024.
• Rental Income: HK\$132.2 million, a 2.8% decline year-on-year.
• Occupancy Rate: 61.8% at year-end (2024: 60.3%).
• Portfolio Valuation: Fair value of investment properties decreased to HK\$4.0 billion (2024: HK\$4.4 billion).
• Geographical Diversification: Overseas investment properties (UK, USA, Japan) accounted for 9.8% of total portfolio value.
• Major Properties: The Toy House (Canton Road), Hillview (MacDonnell Road), Playmates Factory Building (Tuen Mun).
• Industrial Property Development: Application for wholesale conversion of Playmates Factory Building for commercial use is in progress, with conditional approval received in 2020. The Group is monitoring policy updates before proceeding further.
• Property Management Revenue: HK\$19.5 million, down 8.5% from 2024. Savills Property Management Limited continues to manage key properties.
• Key Risks: Property valuations remain pressured by weak commercial and industrial markets in Hong Kong, oversupply, and subdued retail demand. This is a material, price-sensitive issue for shareholders.

Toy Business (Playmates Toys)

• Turnover: HK\$512 million in 2025, a steep 45% decline from HK\$931 million in 2024.
• Factors Behind Decline:
  • Expected drop in Godzilla x Kong product shipments post 2024 movie release.
  • Reduced demand for Teenage Mutant Ninja Turtles (TMNT) due to lack of major entertainment events.
  • Shipment disruptions to the US amid escalating trade tensions.
  • Partially offset by the launch of the Power Rangers product line in Fall 2025.
• Geographical Revenue: US market contributed 76%, Europe 15%, rest of Americas 6%, and Asia Pacific 3%.
• Gross Profit Margin: Dropped to 48% (2024: 54%) due to US tariffs, selective pricing changes, and higher product development/tooling costs.
• Operating Expenses: Down 38% due to lower variable costs, but marketing/licensing expenses rose as a percentage of sales due to new launches.
• Operating Result: Operating loss of HK\$49 million (2024: profit of HK\$94 million). Net loss for Playmates Toys group was HK\$15 million (2024: net profit of HK\$132 million).
• Tariffs: US tariffs on goods affected profitability. Despite a Supreme Court ruling against tariffs under IEEPA, the company expects tariffs to persist in other forms, maintaining negative pressure on margins. Potential refund mechanisms are under discussion but remain uncertain—this is a price-sensitive issue for the toy segment.

Brand Updates

• Power Rangers: New toy line launched in Fall 2025. Distribution to expand in 2026 with refreshed figures and accessories. Hasbro Entertainment has a new series with Disney+ in development.
• Godzilla x Kong: Product line continues to expand. 2027 will see a major new movie, Godzilla x Kong: Supernova. The company is developing its most ambitious product range to date for this franchise.

Investment Portfolio

• Fair Market Value (as at 31 Dec 2025): HK\$110.3 million, 2.0% of total assets.
• Top Holdings: NVIDIA, Alphabet, Tencent, Amazon, Disney, Microsoft, Netflix, Goldman Sachs, Sun Hung Kai Properties, Apple. None exceeded 0.4% of total assets individually.
• Portfolio Return: Net gain of HK\$22.7 million (2024: HK\$31.5 million). Dividend and interest income was HK\$42.0 million (2024: HK\$59.4 million).
• Risk Management: The Group will remain vigilant and adjust its investment mix based on global economic and securities market developments.

Financial Position and Liquidity

• Cash and Deposits: HK\$1,004.7 million as of year-end, predominantly held in USD (HK\$947.2 million).
• Gearing Ratio: 2.1% (2024: 2.9%).
• Current Ratio: 3.8 (2024: 3.4).
• Toy Segment Receivables: HK\$108.4 million (2024: HK\$136.7 million); Inventories HK\$27.4 million (2024: HK\$27.7 million).
• Property Receivables: Remain minimal due to steady income stream and high collection rates.

Dividends

• Total Dividends for 2025: HK cents 4.5 per share (first interim, second interim, and special interim, each at HK cents 1.5 per share), same as 2024.
• Second Interim and Special Interim: Declared on 13 March 2026, to be paid on 24 April 2026 to shareholders on record as of 9 April 2026.
• Dividend Stability: Despite a challenging year, the dividend payout was maintained, which may support share price stability.

Corporate Governance and Other Matters

• The Company complied with all applicable Corporate Governance Code provisions, except that the roles of chairman and chief executive remain combined—a structure the board believes is effective for the Group’s operations.
• No share buybacks, redemptions, or treasury shares during the year or up to the report date.

Key Takeaways and Price-Sensitive Issues

• Investors should note the ongoing headwinds in the property sector, with substantial revaluation deficits continuing to weigh heavily on the Group’s bottom line. The outlook for property values remains uncertain given weak market conditions in Hong Kong and globally.
• The toy business faces a challenging 2026 with no major entertainment tentpoles, continued US tariff risks, and the impact of shifting consumer demand and trade disruptions. However, the launch of new product lines (Power Rangers, upcoming Godzilla x Kong release in 2027) offers medium-term growth potential.
• Dividend stability amid losses may offer some support to the share price, but the combination of sustained operating losses and market uncertainties in key business segments remains a risk.
• The Group’s strong liquidity and conservative gearing provide a buffer for navigating ongoing challenges.

Upcoming Dates for Shareholders

• Register of Members will be closed from 8-9 April 2026 for dividend qualification.
• Dividends will be paid on 24 April 2026.

Disclaimer: This article is prepared for informational purposes only, based on publicly disclosed financial statements and management commentary of Playmates Holdings Limited. It does not constitute investment advice or a recommendation to buy or sell any securities. Investors are advised to conduct their own research or consult a professional adviser before making any investment decisions. The author and publisher accept no liability for any actions taken based on the information contained herein.

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