Hanfort Development Holdings Announces Major 12-Year Lease Agreement in Vietnam

Key Points of the Discloseable Transaction

• Lease Agreement Signed: On 13 March 2026, Hanfort Development Holdings Limited (formerly Sino Golf Holdings Limited) announced that its indirect wholly-owned subsidiary, Hio Pro (Vietnam) Sporting Goods Company Limited, entered into a significant lease agreement with Huashuo Vietnam Joint Stock Company (the Landlord).
• 12-Year Lease Term: The agreement covers a fixed lease term of 12 years for two factory buildings (estimated at 10,244 m²) located at Lot CN12, Nam Cau Kien Industrial Park, Thien Huong Ward, Hai Phong City, Vietnam.
• Right-of-Use Asset Recognition: In accordance with HKFRS 16, this lease will be recognized as an acquisition of assets in the Group’s consolidated financial statements, with an unaudited value of approximately USD 5,558,877 (HKD 43,360,000) at a 4.5% discount rate.
• Transaction Classification: The transaction qualifies as a discloseable transaction under the Hong Kong Listing Rules, requiring notification and announcement but exempt from shareholders’ approval due to applicable percentage ratios exceeding 5% but below 25%.

Detailed Lease Terms and Financial Commitments

• Lease Structure:
  • Start Date: Lease commences upon handover, no later than 31 October 2026.
  • Option to Renew: Lessee can renew for additional term with six-month prior written notice.
  • Premises: Two single-story factory buildings (including office space) under construction, for manufacturing golf-related sports and athletic equipment.
• Conditions Precedent (must be met before final lease execution):
  • Premises construction completion and relevant permits obtained from authorities.
  • Fire prevention system acceptance certificate secured.
  • Technical infrastructure (electricity, water, wastewater) ready for use.
  • Environmental registration dossier submitted and acknowledged.
  • All other necessary legal permits and approvals obtained.
• Rental Details:
  • Total Rent for 12 Years: Approximately USD 7,229,703 (HKD 56,392,000).
  • Monthly Rent (excluding VAT, management, utilities):
    • First 4 years: USD 48,659/month (USD 4.75/m²/month)
    • Years 5-8: USD 51,220/month (USD 5.00/m²/month)
    • Years 9-12: USD 53,781/month (USD 5.25/m²/month)
  • Discounted Prepayment Option: Lessee may prepay 4 years’ rent at USD 4.25/m²/month after rent-free period.
  • Rent-free Period: Initial 3 months from handover are rent-free.
  • Payment Terms: Rent payable in Vietnamese Dong (VND) on a quarterly basis. Exchange rate fixed by Vietinbank’s rates on 25 June and 25 December each year.
• Security Deposit:
  • Total: USD 291,954 (HKD 2,277,000), equivalent to six months’ rent.
  • Payable in two installments: USD 97,318 within 10 days of agreement; balance within 10 days of signing final lease.
  • Deposit is refundable after deduction for rent arrears, damages (other than normal wear and tear or force majeure), or other amounts due, within seven days after lease expiry or termination.
  • If the Lessee refuses to sign the final lease despite all conditions being met, the first installment is forfeited. If the Lessee defaults, the full deposit may be forfeited. If the Landlord fails to meet conditions, the deposit is returned with a penalty equal to the first installment.
• Termination Clauses:
  • Agreement can be terminated by mutual consent, final lease execution, failure to handover/sign by 31 October 2026, material breach not remedied, or force majeure over 90 days.
  • Lessee may terminate from the 9th year with six months’ notice, without penalty.

Strategic and Financial Rationale

• Strategic Location: Premises are near existing factories, improving operational efficiency and logistics.
• Business Fit: Premises size, layout, and configuration align with current business expansion needs of Hanfort’s manufacturing operations.
• Financial Impact: The lease represents a long-term, large-scale financial commitment, with payments funded by internal resources. The right-of-use asset will have a significant impact on the balance sheet.
• Director’s Statement: The Board, including independent non-executive directors, unanimously considers the transaction fair, reasonable, and in the best interests of shareholders.

Shareholder and Price Sensitive Considerations

• Material Transaction: The size of the lease (right-of-use asset value exceeding 5% of company metrics) means this is a significant operational development, potentially affecting future earnings, asset base, and gearing ratios.
• Expansion of Manufacturing Capacity: This move signals Hanfort’s intention to expand or consolidate its manufacturing operations in Vietnam, likely to impact future revenues and cost structures.
• Conditional Risk: If the conditions precedent are not met (e.g., construction delays, regulatory bottlenecks), the transaction may not proceed, affecting planned capacity expansion and possibly leading to financial penalties or delays.
• Long-Term Commitment: The 12-year term and option to renew indicate a significant long-term commitment to Vietnam, which could be viewed positively for stability or negatively if market conditions change.
• Potential for Share Price Movement: Investors should note that this level of capital commitment and geographic expansion could move the share price, depending on market perception of execution risk and growth prospects.

About the Parties

• Lessee: Hio Pro (Vietnam) Sporting Goods Company Limited, an indirect wholly-owned subsidiary of Hanfort, focused on manufacturing golf equipment.
• Landlord: Huashuo Vietnam Joint Stock Company, majority owned by Greengrow Industries (51%) and Huashuo Plastic (46%), both independent third parties to Hanfort.

Board Composition

• Executive Director: Mr. Liu Jincheng
• Non-Executive Director: Mr. Sun Xiongfei
• Independent Non-Executive Directors: Mr. Choi Sum Shing Samson, Ms. Jiang Haiyan, Mr. Wu Weifeng

Currency and Exchange Rate Notes

All USD amounts have been converted to HKD at a rate of USD 1 to HKD 7.8 for illustrative purposes only. Actual transaction values may differ based on prevailing exchange rates at the time of payment.

Disclaimer: The information provided herein is for informational purposes only and does not constitute investment advice. This article is based on publicly disclosed documents and should not be relied upon as a substitute for professional financial advice. Investors should conduct their own due diligence and consult with their financial advisor before making investment decisions. Hanfort Development Holdings Limited and its directors accept no responsibility for any consequences arising from reliance on this information.

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