Haosen Fintech Group Limited (HKEX: 3848) – 2025 Annual Results: Detailed Investor Analysis

Key Highlights from the Annual Report

• Revenue: The Group recorded revenue of RMB92.2 million in 2025, a decrease of approximately 13.9% from RMB107.2 million in 2024.
• Profitability: Profit attributable to equity holders was RMB5.6 million, effectively flat compared to last year despite revenue decline. The profit from continuing operations improved to RMB2.0 million from a loss of RMB2.3 million in 2024.
• Dividend: The Board recommends a final dividend of HK3 cents per share, matching last year’s payout. Dividend warrants are expected to be dispatched by 26 June 2026.
• Segment Changes: The finance leasing business was discontinued in 2025, resulting in a profit from discontinued operations of RMB3.6 million (down from RMB7.9 million in 2024).
• Risk Management: The Group continued to strengthen its risk controls, especially in small loan operations, in light of market changes and increased credit risks.
• Share Options: Significant share options remain outstanding under both the 2017 and 2023 schemes, with notable forfeitures and no new grants in 2025.
• Liquidity: Cash and cash equivalents stood at RMB30.6 million. Gearing ratio improved to 17.1% from 24.5%, reflecting lower bank borrowings.
• Business Focus: The Group is pivoting towards supply chain business (building materials trading) following the decline of its financial leasing and factoring segment.
• Credit Quality and Impairments: Allowance for expected credit losses (ECLs) on loan and accounts receivable was RMB46.8 million, still substantial but markedly lower than RMB59.3 million in 2024.

Detailed Analysis for Investors

Business Overview & Strategy

The macro environment in mainland China remained highly uncertain throughout 2025. The Group’s core business continues to be small loans, with over 94% of revenue derived from loans interest income. Management responded to market changes—especially the downturn in the real estate sector—by reallocating resources towards second mortgages and supply chain business, particularly building materials trading. This pivot is significant and could impact future earnings and risk profile, especially given the appointment of Mr. Xie Zhuochou as the legal representative to lead the new venture.

The real estate market’s decline has led to tighter risk management and more conservative lending practices. Despite these challenges, Haosen maintained its market share in Shenzhen’s second mortgage market, indicating resilience and adaptability.

Financial Performance

• Revenue Decline: The drop in revenue, mainly from lower loan interest income, is a key concern. Small loan interest income fell by RMB14.8 million, reflecting tougher market conditions and possibly stricter lending standards.
• Profit Stability: Despite revenue decline, profit remained stable due to lower operating expenses and a reduced provision for credit losses. Employee benefit expenses fell sharply, primarily due to fewer share option grants in 2025.
• Discontinued Operations: The finance leasing business was discontinued, which is a strategic shift. The profit from discontinued operations was RMB3.6 million, down from RMB7.9 million, mainly due to reversal of ECLs and lower staff costs post-cessation.
• Impairments: ECL provision remains high (RMB46.8 million), but is improving. Eight material loans are over 90 days past due and subject to litigation, with a total impairment allowance of RMB14.0 million. This is a key risk area and may affect future recoveries.
• Liquidity & Leverage: Cash balances are stable, and the gearing ratio improved due to reduced bank borrowings. No capital commitments were outstanding, indicating a conservative capital management approach.

Operational Metrics

• Loan Portfolio: As of year-end, Haosen had 694 loans to 558 customers, down from 922 loans to 851 customers in 2024. Most loans (84.6%) were limited to RMB1 million, targeting individuals and micro-enterprises.
• Loan Security: The portfolio includes RMB5.8 million in unsecured loans, RMB491 million in guaranteed loans, and RMB283 million in subordinated mortgage loans. Subordinated mortgage loans are secured by real estate with fair value of RMB803 million, providing some asset coverage.
• Credit Quality: Of the total RMB779.9 million loan portfolio, RMB86.2 million is overdue and credit-impaired, up slightly from RMB84.5 million in 2024. The ten largest loans account for 19.2% of the portfolio, with minimal impairment allowances, indicating careful risk concentration management.

Shareholder Information & Corporate Actions

• Dividend: The recommended dividend is unchanged at HK3 cents per share, with payment expected by 26 June 2026. This stability may appeal to income-focused investors.
• Share Buybacks: The Company repurchased and cancelled 166,000 shares in 2024; the remaining 40,000 treasury shares were cancelled in 2025. This reflects commitment to capital management and may support share price.
• Share Option Schemes: No new options or awards granted in 2025. Forfeitures occurred due to resignations, reducing outstanding options. The scheme limits remain robust, with over 15.6 million shares available for issue under both option and award schemes.
• Corporate Governance: The Company complies with all CG Code provisions except C.2.1 (separation of chairman and CEO roles). Mr. Lo Wai Ho remains both chairman and CEO, which may be a concern for some investors seeking more independent governance.
• Audit & Compliance: The Audit Committee, comprising three independent non-executive Directors, reviewed the financial statements. The Company confirms compliance with the Model Code for securities transactions by Directors.

Risk Management & Outlook

Haosen Fintech’s risk control system is strong, with a dedicated committee and departments for risk management, business development, accounting, and finance. Enhanced credit assessment and post-loan monitoring are in place, with plans to further digitize operations for efficiency and accuracy. The Group is expanding its risk management team to address increased risk from new business lines and the changing market environment.

The Directors stress a prudent approach for 2026, focusing on internal informatisation, cost control, and digital integration across business segments. The supply chain initiative, led by Mr. Xie, represents a major strategic pivot, which could materially impact future earnings and risk profile. Investors should monitor the success and execution of this new business line closely.

Share Price Sensitive Information

• Discontinuation of Finance Leasing Business: This strategic exit and resource reallocation could significantly alter future earnings streams and risk exposure.
• High ECL Provisions & Litigation: The ongoing legal proceedings on eight overdue and credit-impaired loans (with RMB14.0 million in impairments) are material. Recovery rates and outcomes will impact financial results and could affect valuation.
• Supply Chain Business Launch: The new supply chain initiative is a key risk and opportunity. Its execution and profitability will be a major determinant of future share performance.
• Dividend Stability: Maintaining the dividend despite profit stability and revenue decline signals confidence, but also limits flexibility for reinvestment.
• Share Buybacks: Continued buybacks and cancellation may support share price, especially in the context of stable dividends and cautious business expansion.
• Corporate Governance Exception: Investors may view the combination of chairman and CEO roles as a governance risk, though the Board justifies it based on Mr. Lo’s experience.

Conclusion

Haosen Fintech Group Limited’s 2025 results reflect a challenging market, strategic pivots, and ongoing risk management efforts. The discontinuation of the finance leasing business, high provisions for credit losses, and the launch of a supply chain business—alongside stable dividends and improved liquidity—are all key factors that could influence the share price. Investors should closely monitor the execution of new business strategies, ongoing risk exposures, and litigation outcomes, as well as any further corporate actions.

Disclaimer

This article is for information purposes only and does not constitute investment advice or a recommendation to buy or sell securities. All financial information is based on the Company’s official filings and public disclosures. Investors should conduct their own research and consult professional advisors before making investment decisions. The author does not accept any liability for the accuracy or completeness of the information provided herein.

View HAOSEN FINTECH Historical chart here