Tenfu (Cayman) Holdings Company Limited

2025 Annual Results: In-Depth Analysis for Investors

Key Financial Highlights

• Revenue declined by 15.1% to RMB1,327.3 million, down from RMB1,562.6 million in 2024.
• Gross profit decreased by 13.6% to RMB697.0 million (2024: RMB806.3 million), but gross profit margin increased to 52.5% from 51.6%, reflecting effective cost control.
• Net profit declined by 11.7% to RMB122.6 million (2024: RMB138.9 million).
• Net profit margin improved from 8.9% to 9.2%.
• Basic earnings per share fell to RMB0.11 (2024: RMB0.13), a decrease of 15.4%.
• Final dividend proposed at HKD0.09 per share (RMB0.08), up 14.3% from the RMB0.07 paid in 2024. Total dividends for the year amounted to RMB110.3 million.
• Cash and cash equivalents surged by 50% to RMB510.8 million, underlining strong liquidity.
• Gearing ratio fell sharply to 7.9% from 22.3% the previous year due to lower net debt, enhancing the company’s balance sheet strength.

Business Review and Strategic Developments

• The company faced a challenging macroeconomic environment in 2025, with weak consumer demand and global uncertainties, yet implemented cost controls and network optimisation that helped maintain profitability margins.
• Tenfu continued to fortify its leading brand position with multiple prestigious awards, including “2025 China Famous Consumer Products” and inclusion in the “Fujian Provincial Top 100 List of Leading Agricultural Industrialization Enterprises”.
• The Group adjusted its sales network in response to declining consumption, increasing the proportion of wholesale and distributors’ stores, resulting in 1,318 outlets as of year-end, a slight decrease from 1,349 in 2024.
• Continued to develop diversified product lines, including new tea-based food products and tea drinks under the “放牛斑” trademark, and increased the proportion of high cost-performance items.
• Maintained strict compliance with food safety and environmental regulations, with no material product recalls or regulatory breaches reported.
• Company has a strong ESG track record, ranked A for Wind ESG Comprehensive Score (Beverage) in 2024.
• Employee count reduced to 3,019 (2024: 3,194), with staff costs falling 12.5% to RMB279.8 million, reflecting further efficiency measures.

Detailed Financial Review

• Segment Performance:
  • Tea leaves: Revenue down 15.6% to RMB912.2 million.
  • Tea snacks: Revenue down 18.7% to RMB201.3 million.
  • Tea ware: Revenue down 8.9% to RMB163.6 million.
  • Other segments (including restaurants, hotels, catering, beverage, liquor): Revenue down to RMB50.2 million.
• Cost of sales decreased by 16.7% to RMB630.3 million, mirroring the sales drop.
• Distribution costs fell 12.9% to RMB298.9 million due to fewer self-owned outlets and cost controls.
• Administrative expenses down 10.1% to RMB252.2 million.
• Other income increased 5.3% to RMB37.7 million due to new service fees charged to distributors.
• Finance costs decreased 15.5% to RMB19.6 million from RMB23.2 million due to lower borrowings.
• Share of profit from equity investments rose to RMB2.8 million (2024: RMB0.1 million).
• Income tax expense dropped 25.4% to RMB46.5 million, reflecting lower pre-tax profits.

Balance Sheet and Capital Position

• Total assets at RMB2,915.6 million (2024: RMB2,973.6 million).
• Borrowings reduced to RMB495.6 million (2024: RMB571.4 million), all guaranteed by key directors, and at low average interest rates (2.24% long-term; 2.38% short-term).
• Net debt declined, with significant cash reserves and a lower gearing ratio, indicating improved financial flexibility.
• Capital commitments remain manageable at RMB42.7 million, to be funded with available cash.
• Inventories and receivables decreased, reflecting reduced sales and tighter working capital management.

Dividends and Shareholder Returns

• Final dividend of HKD0.09 per share (RMB0.08) proposed, up 14.3%.
• Total dividends (interim + final) for 2025: RMB110.3 million.
• Share buybacks continued, with 948,000 shares repurchased in 2025, reflecting management’s confidence in the intrinsic value of the company.
• No treasury shares held as at year-end; all repurchased shares cancelled.

Strategic Outlook for 2026 and Beyond

• Continued optimisation of retail network: Focus on profitable self-owned and distributor outlets, and further expansion in high-traffic locations and third-/fourth-tier cities.
• Accelerating online and omni-channel sales to capture evolving consumer habits, including live commerce and home delivery.
• Developing new tea-related products and innovative concepts to capture market trends and maintain brand leadership.
• Expansion in production capacity: New white tea facility completed in Fujian, with further expansion planned as market conditions permit.
• Cost and margin resilience: Management expects stable operating costs and gross margins due to the domestic supply chain and limited exposure to international commodity volatility.
• Management sees limited direct impact from global geopolitical tensions due to the company’s domestic procurement and diversified supply chain.

Other Important Notes for Shareholders

• No material contingent liabilities or post-balance sheet events disclosed.
• Corporate governance remains robust with full compliance to the Hong Kong Listing Rules.
• Audit Committee has reviewed and approved the annual results.
• PricewaterhouseCoopers re-appointed as auditor for 2026.
• Annual General Meeting scheduled for 11 May 2026; final dividend subject to shareholder approval.

Potential Price-Sensitive Factors

• Dividend Increase: A higher proposed final dividend (up 14.3%) could positively impact investor sentiment and share price.
• Substantial Net Debt Reduction and Lower Gearing: The steep drop in gearing ratio and strong cash position may be viewed favorably by investors, suggesting financial stability and scope for further shareholder returns.
• Share Buybacks: Continued buybacks and cancellation of shares signal management’s confidence and may support the share price.
• Margin Improvement Despite Lower Sales: Gross and net margin improvements, even in a weak consumer environment, demonstrate effective management and operational resilience.
• ESG Recognition: High ESG ratings may attract institutional investors and those with sustainability mandates.
• Expansion in Product Range and Production Capacity: New product launches and a completed white tea facility could support future growth and market share gains if consumer spending recovers.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult their financial advisor before making investment decisions. The information above is based on the official 2025 annual results announcement of Tenfu (Cayman) Holdings Company Limited as of 16 March 2026.

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