Executive Summary

Daohe Global Group Limited, a company listed on the Main Board of the Hong Kong Stock Exchange, has released its audited annual report for the year ended 31 December 2025. The Group operates primarily in trading and supply chain management services, alongside culture and entertainment. Investors should pay close attention to the Group’s operational performance, financial results, governance policies, and future outlook, as these factors may significantly impact share value.

Financial Performance and Dividend Policy

• Financial Results: The Group reported a profit attributable to owners of the Company of US\$77,000 for 2025, a substantial decline from US\$2,655,000 in 2024. Earnings per share remained at 1,509,593,000 shares, with no dilution from potential ordinary shares.
• Dividend: No interim or final dividends were declared or paid for the year 2025, continuing the policy from 2024. The Company had no distributable reserves available for dividend payment, as calculated under Bermuda law.
• Revenue Streams: The Group’s business comprises two segments: trading and supply chain management services, and culture and entertainment. Segment performance is evaluated based on adjusted profit before tax, excluding bank interest income, interest on bank borrowings, gain on dissolution of subsidiaries, and unallocated corporate expenses.
• Other Income: The Group received government subsidies of US\$317,000, reimbursement income, handling fees, and reversal of provisions, contributing to other income totaling US\$805,000.
• Cost Management: Total staff costs declined to US\$11.2 million from US\$11.8 million in 2024, with staff count rising to 260 from 245. The Group continues to offer competitive remuneration and has a share option scheme for eligible employees.

Corporate Governance and Shareholder Rights

• Compliance: The Company confirms full compliance with the Hong Kong Corporate Governance Code, save for noted deviations. Directors confirm adherence to the Model Code for Securities Transactions. No incidents of non-compliance were found among employees likely to possess unpublished inside information.
• Risk Management: The Board places significant emphasis on risk management and internal controls. An external independent professional firm is retained as outsourced internal auditor. Key risks include foreign currency risk, credit risk, and exposure from contractual arrangements (VIE structure).
• Shareholder Communication: The Company has a clear communication policy, with information disseminated through interim/annual reports, announcements, circulars, AGMs, and its website. Shareholders have access to contact channels for queries and can propose resolutions or director candidates at general meetings. The AGM process is regularly reviewed for transparency and shareholder engagement.
• Dividend Policy: The Board considers multiple factors when declaring dividends, including financial results, cash flow, business conditions, strategy, future operations, earnings, capital requirements, shareholder interests, taxation, restrictions, and other relevant factors. The policy is subject to review and revision as deemed necessary.

Material Developments and Contractual Arrangements

• VIE Structure: The Loovee Group operates under a VIE contractual arrangement, necessary to comply with Chinese regulations on foreign investment. Key controlling shareholders (the “Subject Persons”) have undertaken to maintain PRC nationality and only dispose of shares under conditions ensuring continued PRC control. The Company also undertakes to the Stock Exchange to enforce these provisions and restrict share issuances to non-subject persons unless PRC control is maintained.
• Shareholding Structure: The controlling shareholder is Sino Remittance Holding Limited, with Daohe Global Investment Holding Limited as the ultimate controlling shareholder. Both are incorporated in Seychelles. Significant shareholders include entities owned or controlled by Mr. ZHOU Xijian and Mr. ZHANG Qi.
• Equity-linked Agreements: The only active equity-linked agreement is the 2021 Share Option Scheme, under which no new options were granted or outstanding as of 31 December 2025. The scheme remains valid until 2031, with a maximum of 10% of issued shares available for grant.
• Related Party Transactions: Key management compensation totaled US\$1,465,000, down from US\$2,093,000 in 2024. No other material related party transactions were reported.

Outlook and Risks

• The operating environment for 2026 is expected to remain volatile, with ongoing geopolitical tensions, tariff uncertainties, and shifting customer purchasing behaviors impacting global trade and consumer sentiment.
• The Group will focus on strengthening and diversifying sourcing models and supply chain networks, investing in self-developed IP and new products, and pursuing collaborations with well-known copyright holders to drive growth.
• Prudent financial management, lean operations, and process optimization remain central to the Group’s strategy for resilience and market responsiveness.
• Environmental compliance is a priority, with continued adherence to PRC national, provincial, and municipal regulations. The Group encourages reduction in electricity and paper consumption, waste minimization, and the use of environmentally friendly products.
• Potential risks include foreign currency exposure (due to investments in foreign operations), credit risk from counterparties, and regulatory risk associated with VIE structures.

Fair Value and Financial Position

• Financial assets at FVTPL were US\$95,000, unchanged from 2024. Trade receivables declined to US\$2,798,000 from US\$3,901,000. Cash and cash equivalents increased to US\$15,756,000.
• Group assets and liabilities are reviewed for impairment, with a focus on fair value measurement, and regular monitoring of credit risk and net realisable value of inventories.

Conclusion – Investor Takeaways

• Shareholders should note the significant reduction in profit and the continued absence of dividends, which may be price-sensitive and impact share value.
• Ongoing compliance with VIE contractual arrangements and PRC laws is critical for business continuity and regulatory approval.
• No material changes in contractual arrangements or shareholding structure were reported, but the Group faces persistent risks in the operating environment.
• Financial management and operational resilience are actively pursued, but investors should monitor developments in regulatory, credit, and currency risk.
• The adoption of HKFRS 18 in 2027 will significantly change the presentation and disclosure in financial statements, potentially affecting how financial performance is viewed.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell securities. Investors should consult their own financial advisors and exercise independent judgment. All information is derived from the publicly released annual report and may be subject to change. The author accepts no liability for any actions taken based on this article.