JBB Builders International Announces Discloseable Transaction: Acquisition of 100% Equity in Regional Convenience Store Operator

Key Highlights and Details for Investors

JBB Builders International Limited has issued a supplemental announcement providing significant new details regarding its planned acquisition of 100% equity interest in a Sichuan-based convenience store operator (the “Target Company”). The transaction, which is classed as a discloseable transaction, is strategically important and contains several elements that could materially impact shareholder value.

1. Transaction Overview and Strategic Rationale

• The Target Company, established in January 2019 and formerly known as Chengdu Shanhai Lantu Supermarket Management Co., Ltd., was acquired by the Vendor in November 2020. It operates a well-established network of convenience stores under the “OurHours” brand in Sichuan, China, and brings substantial franchising experience.
• The transaction enables JBB Builders to immediately enter the PRC convenience store sector, leveraging the Target Company’s established supply chain, store network, and local brand recognition.

2. Business Model of the Target Company

• Self-Operated Stores: Directly controlled by the Target Company, these stores serve as models for franchisees and as testing grounds for new products.
• Franchise Model: Franchisees run the stores and retain most of the profits, incentivising improved performance. The Target Company earns revenue via franchise fees, management fees, and supply chain mark-ups. Some franchisees share operational costs but bear their own staff costs, lowering the entry barrier and supporting rapid network expansion.
• Wholesaling Supply Chain: The Target Company manages a network of over 104 suppliers, centralising procurement, warehousing, and distribution, including cold-chain for fresh food. Revenue streams include delivery fees, supply chain fees, OEM food supply, and consultancy.

3. Management Team and Transitional Support

• The existing Board of JBB Builders lacks direct PRC convenience store experience; however, the current senior management team of the Target Company, including the general manager, financial director, and operation director, will be retained. These key personnel have 10–20 years of relevant industry experience.
• The Vendor has contractually committed to a one-year operational support and handover, ensuring a smooth transition, supplier introductions, and uninterrupted access to IT and POS systems. The Group will also seek to recruit additional industry talent as needed.

4. Royalty Cost Waiver – Significant Price-Sensitive Point

• The Vendor owns the “FOOK” trademark and management system, historically licensing these to the Target Company for a Royalty Cost. Due to the pandemic, royalty payments were deferred, causing significant net losses in 2024 (RMB26.55 million), largely from accrued and deferred royalty costs.
• As part of the acquisition, the Vendor has agreed to waive all future Royalty Costs from 1 January 2026, allowing continued use of the trademarks and systems at no charge. This is expected to significantly improve profitability and reduce liabilities going forward.

5. Financial Position and Debt Restructuring

• As of 31 December 2025, the Target Company’s liabilities stood at RMB165.4 million, mainly from intra-group loans and accrued royalty fees. A comprehensive Debt Restructuring will be completed before the transaction closes, reducing liabilities to primarily lease obligations (not exceeding RMB38 million).
• The adjusted net asset value (NAV) post-restructuring is estimated at RMB72.8 million, improving the company’s financial stability and reducing liquidity risk.

6. Profit Guarantee – Key Shareholder Safeguard

• The Vendor has agreed to a profit guarantee: for the purposes of profit calculation, a RMB30 million receivable due from a Vendor subsidiary is guaranteed to be repaid by 30 June 2026. Any related write-offs or impairments will be disregarded in profit measurement.
• For 2025, the Target Company reported a net profit of RMB1.1 million. With the Royalty Cost added back, the adjusted profit approaches the guaranteed target of RMB10 million per guarantee year. The Board has reviewed the Vendor’s financials and considers the guarantee credible and enforceable, with recourse to legal action if the Vendor defaults.

7. Long-Term Business Plan and Risk Mitigation

• If the Target Company suffers losses after 2027, JBB Builders has outlined measures to expand the franchise network, optimise its supply chain, enforce budgetary controls, and recruit further industry professionals. The Board is confident these measures will safeguard shareholder value and ensure continued viability.

8. Valuation Methodology and Rationale

• The valuation uses a market approach, comparing the Target Company with eight listed PRC and Hong Kong retailers operating similar models. Key metrics include enterprise value to earnings (EV/E), sales (EV/S), and book value (EV/B), adjusted for size and marketability.
• The valuation applies a 20% discount for lack of marketability and uses a median weighting of multiples, resulting in an appraised value of HK\$154 million. The Board considers the approach fair, transparent, and appropriate given market conditions and the nature of the assets.

9. Policy Support and Market Outlook

• The PRC government’s policies, including the “Action Plan for Improving the Modern Business and Trade Circulation System” and the “Outline of the Construction Plan for the Chengdu-Chongqing Economic Circle”, provide strong tailwinds. These initiatives support convenience store expansion, logistics efficiency, and may entitle the Target Company to a reduced tax rate of 15%.
• Industry data shows sustained growth in the sector, with over 60% of convenience store operators reporting sales increases in 2025, further underpinning the transaction’s rationale.

10. Completion Risks and Shareholder Advisory

• Completion of the acquisition depends on successful Debt Restructuring. The Company does not intend to waive this condition unless the outstanding liabilities are immaterial.
• Shareholders and potential investors are advised to exercise caution. The transaction may or may not proceed depending on fulfilment of conditions precedent.

Conclusion: Why This Is Price-Sensitive

• The acquisition presents a transformative opportunity for JBB Builders to diversify into the fast-growing PRC convenience store sector.
• The Royalty Cost waiver, profit guarantee, and significant debt reduction materially improve the Target Company’s financial profile and earnings outlook.
• Strategic government policy support, market validation, and a robust valuation underpin the Board’s view that the acquisition is in the best interests of shareholders.
• The transaction’s impact on profitability, debt, and growth opportunities make it a potentially price-moving event for JBB Builders International Limited shares.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should read the full company announcement and consult professional advisers before making any investment decisions. Completion of the transaction is subject to conditions and may not proceed. Past performance and forward-looking statements are not guarantees of future results.

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