Qinqin Foodstuffs Group (Cayman) Company Limited: Annual Results for the Year Ended 31 December 2025

Key Financial Highlights

• Revenue: RMB911.5 million, down 8.5% YoY (2024: RMB996.5 million).
• Gross Profit: RMB249.6 million, down 11.5% YoY.
• Gross Profit Margin: 27.4%, down 0.9 percentage points.
• (Loss)/Profit Attributable to Shareholders: RMB(2.2) million, compared to a profit of RMB21.1 million in 2024.
• Adjusted EBITDA: RMB80.6 million, down 20.5% YoY.
• Final Dividend Proposed: RMB0.03 per share (higher than 2024’s RMB0.02 per share).
• Net Cash Position: RMB380.8 million, down from RMB415.1 million in 2024.
• Net Current Assets: RMB201.0 million, up 10.3% YoY.
• Total Equity: RMB1,205.0 million, down 1.2% YoY.
• Return on Equity: Negative at -0.2% (2024: 1.7%).
• Finished Goods Turnover Days: 13 days (2024: 12 days).
• Trade Receivables Turnover Days: 8 days (2024: 4 days).

Business Overview & Industry Environment

Qinqin Foodstuffs Group is a leading Chinese food and snacks manufacturer, distributing brands such as “Qinqin”, “Shangerry”, and “A Snack Shop”. The Group operates mainly in China, with over 90% of revenue and assets located in the country.

The Chinese snack market remains highly competitive. New snack food chain stores and sales channels are disrupting traditional retail outlets like supermarkets and grocers. Although the growth rate of these new chains has slowed, competition has intensified, requiring companies to adapt quickly. Consumer preferences are shifting towards high-quality, reliable, and personalized products, especially among younger generations. This increased price sensitivity and demand for innovation has put pressure on margins and necessitated continuous product development.

Segment Performance

• Jelly Products:
  • Revenue: RMB486.7 million (-8.3% YoY).
  • Gross Profit: RMB128.4 million (-15.4% YoY).
  • Gross Margin: 26.4% (down 2.2pp).
  • Sales decline due to reduced performance in traditional channels, partially offset by increased sales via snack food chains, OEM, and exports.
• Crackers and Chips:
  • Revenue: RMB297.0 million (-4.7% YoY).
  • Gross Profit: RMB86.0 million (-0.4% YoY).
  • Gross Margin: 29.0% (up 1.3pp).
  • Better margin due to product mix optimization, but sales in traditional channels still weak.
• Seasoning Products:
  • Revenue: RMB62.2 million (-15.6% YoY).
  • Gross Profit: RMB22.2 million (-13.3% YoY).
  • Gross Margin: 35.7% (up 1.0pp).
  • Sales decreased as product categories were streamlined, but profitability improved.
• Confectionery and Other Products:
  • Revenue: RMB65.6 million (-18.5% YoY).
  • Gross Profit: RMB13.1 million (-28.4% YoY).
  • Gross Margin: 20.0% (down 2.7pp).
  • Sales decline due to focus on higher-margin self-branded products and reduction of low-margin OEM lines.

Key Events Affecting Shareholder Value

• Loss for the Year: The Group swung to a net loss of RMB2.2 million, compared to a profit in 2024. This was mainly due to reduced revenue, lower economies of scale, and a one-off impairment loss on construction-in-progress (RMB6.7 million) after discontinuing a development project in Xiaogan City, Hubei Province.
• Asset Disposal: The Group recorded a one-off gain of RMB5.1 million from the sale of land use rights and properties in Xiantao City, Hubei Province, improving results somewhat.
• Dividend Increase: Despite the loss, the Board proposed a higher final dividend of RMB0.03 per share, a notable increase from RMB0.02 last year, which could support share price stability and investor sentiment.
• Share Buyback: The Group repurchased 1,300,000 shares in 2025 for HKD1,647,960, now held as treasury shares. Such buybacks may indicate management confidence and could be price supportive.
• Strategic Investment Losses: The Group’s holdings in consumer goods companies saw a fair value decrease of RMB1.7 million, and an after-tax loss of RMB1.3 million was recognized through other comprehensive income.
• Capital Expenditure: Capex increased sharply to RMB35.7 million (2024: RMB12.9 million), mainly for upgrading production bases and new equipment. This suggests ongoing investment in future growth.
• Discontinued Project: The Group ceased a planned construction in Xiaogan City, leading to a one-off impairment and disposal of the subsidiary holding the project.
• Continued Net Cash Position: The Group remained in net cash, which is positive for liquidity and financial stability, though total assets and cash balances decreased.
• Staff Reduction: Headcount fell to 2,200 from 2,400, reflecting cost control and increased automation, with total staff costs also decreasing.

Operational and Strategic Updates

• Product Innovation: The Group emphasized continued investment in R&D and product upgrades to meet changing consumer preferences, leveraging social media and digital channels for marketing.
• Channel Expansion: Distribution is being broadened to snack food branded stores, convenience stores, and new retail channels. E-commerce sales are focused on higher-margin products, and export/OEM business is being expanded.
• Production Improvements: Automation and facility upgrades continue, aiming to reduce labor reliance, improve efficiency, and maintain high quality standards (HALAL, SC, KOSHER, ISO14001, ISO9001 certifications).
• Digital Transformation: Ongoing integration of software systems and adoption of AI for management efficiency.
• Strategic Investments: The Group will continue to explore synergistic investments in consumer goods companies.

Liquidity and Capital Resources

The Group’s net cash position decreased to RMB380.8 million, mainly due to increased capex offset by operating cash flow. Working capital and current ratios improved, but total equity declined slightly. Bank borrowings are secured against assets and carry low interest rates. Capital commitments contracted but not provided for were RMB9.8 million, and lease commitments were RMB0.4 million. No material contingent liabilities were reported.

Corporate Governance and Shareholder Matters

• Dividend Record Dates: Proposed final dividend will be paid in HKD on 25 June 2026, subject to AGM approval. Relevant record dates are: 18 May 2026 (AGM), 10 June 2026 (dividend).
• Compliance: The Company confirms compliance with Hong Kong Stock Exchange corporate governance codes and director conduct guidelines. All Independent Non-executive Directors are confirmed independent.
• Audit Committee Review: Annual results reviewed by the Audit Committee and auditor, Baker Tilly Hong Kong Limited.

Potential Price-Sensitive Issues for Investors

• Net Loss and Margin Decline: The swing to a net loss, declining margins, and lower gross profit may negatively impact share price, especially if investors had expected continued profitability.
• Dividend Increase: Higher dividend payout despite loss may maintain investor confidence and potentially support share price.
• Share Buybacks: Repurchased shares could signal undervaluation and may positively affect share value.
• Discontinuation of Project: The impairment and disposal of a subsidiary could impact perceptions of management effectiveness, though the one-off nature may limit longer-term effects.
• Strategic Focus: Continued investment in automation, channel expansion, and product innovation positions the Group for future growth, which may be viewed positively by investors.
• Liquidity: Maintenance of a strong net cash position is a positive factor for financial stability and resilience.

Outlook and Future Strategies

• Focus on product innovation and upgrades to capture consumer upgrade opportunities.
• Expansion of distribution channels and export/OEM business.
• Continued improvement in production facilities, efficiency, and environmental standards.
• Digital transformation and talent development to elevate management standards.

Conclusion

The annual report for 2025 signals a challenging year for Qinqin Foodstuffs Group, with revenue and profitability declining amid intense market competition and changing consumer preferences. However, management’s commitment to dividend payout, share buybacks, ongoing investment in production and channels, and maintenance of net cash position indicate resilience and focus on long-term growth. Investors should closely monitor the Group’s ability to return to profitability and deliver on its strategic initiatives, as these factors will be key to future share price performance.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with professional advisers before making investment decisions. The author accepts no responsibility for any loss arising from reliance on the information provided herein.

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