Wise Living Technology Co., Ltd Annual Report 2025: Key Insights for Investors

1. Financial Performance Highlights

• Revenue: Wise Living Technology reported a revenue of RMB 1,506.3 million for the year ended 31 December 2025, an 8.6% decrease compared to RMB 1,648.3 million in 2024. This decline was mainly due to market and operational challenges.
• Profit Attributable to Owners: Despite the revenue drop, profit attributable to owners rose by 3.7% to RMB 170.2 million, up from RMB 164.2 million in 2024.
• Earnings Per Share (EPS): Basic and diluted EPS increased to RMB 0.56 (from RMB 0.54), reflecting a 3.7% rise.
• Net Profit Margin: Improved to 16.0% (2024: 14.4%).
• Total Assets: Grew 2.5% to RMB 6,115.1 million (2024: RMB 5,966.7 million).
• Equity Attributable to Owners: Increased notably by 10.3% to RMB 1,295.5 million.
• Total Liabilities: Slight reduction by 0.9% to RMB 4,494.8 million.
• Return on Equity (ROE): Decreased to 15.8% (2024: 17.4%), mainly due to the increased equity base.
• Gearing Ratio: Improved to 0.4 from 0.5, indicating lower leverage.
• Net Debt to Equity: The company moved to a net cash position from a net debt position the previous year.

2. Dividend and Capital Management

• Final Dividend: The Board recommends a final dividend of RMB 0.17 per share (tax inclusive), up from RMB 0.164. The payout is subject to shareholder approval at the AGM on 15 May 2026, totaling approximately RMB 51.27 million.
• Dividend Policy: The company aims to pay out at least 30% of annual distributable profit as dividends, subject to various financial and regulatory considerations.
• Withholding Tax: Non-resident enterprise H-shareholders are subject to a 10% withholding tax on dividends under PRC law.
• Public Float: Maintained at 31.37% as of year-end 2025, exceeding the minimum requirement.

3. Operational and Strategic Developments

• Dual-Driven Growth Strategy: The company continues to pursue “scale × quality,” focusing on new heat services (including steam supply) and project rollout in key northern provinces.
• Geographic Focus: Expansion efforts target the Bohai Economic Rim (Liaodong Peninsula, Shandong Peninsula, Beijing-Tianjin-Hebei), with Inner Mongolia and Shanxi as key growth regions. Selective pilot projects are planned in other cities.
• Operational Optimization: Emphasis on clean operations, diversified heat sources (including waste heat recovery), and technological upgrades to reduce energy losses and improve service quality.
• Project Pipeline: Active tracking of new project opportunities with a focus on risk control and sustainable returns.

4. Financial Risk Management and Capital Structure

• Risk Management: The Group actively manages market, credit, and liquidity risks through established procedures. There is close monitoring of financial markets and counterparty exposures.
• Foreign Exchange Exposure: Minimal, as most operations and transactions are denominated in RMB. No hedging contracts were entered into during the period.
• Credit Risk: Concentrated on state-owned banks and reputable PRC financial institutions. The Group has no significant credit risk with individual customers and low risk with government counterparties.
• Gearing: Net cash position as of 2025, compared to a net debt position in 2024, reflecting a stronger balance sheet and lower leverage risk.

5. Share Capital and Corporate Events

• Full Circulation of Shares: 226 million Domestic Shares were converted into H Shares and listed on the Stock Exchange on 3 September 2024. This enhances liquidity and accessibility for global investors.
• Articles of Association Amendment: Pending shareholder approval at the 2026 AGM, amendments will enable hybrid general meetings and E-voting, and reflect the abolition of the Supervisory Committee (duties now transferred to the Audit Committee).

6. Key Risks and Uncertainties

• Geographic Concentration: The business is heavily concentrated in the “Three North Region” of China, exposing it to regional economic and policy risks.
• Concession Rights: Main business operates on concession rights, which may expire or be terminated, impacting future revenue streams.
• Government Subsidies and Grants: The company’s profitability relies on government support, which may not be guaranteed under evolving regulations.
• Heat Source Supply: Any shortage or disruption in heat sources could materially affect operations.
• Intangible Assets: Significant intangible assets recorded under engineering construction services. Any impairment could adversely impact results.

7. Corporate Governance and Internal Controls

• Governance Structure: The Board has a diverse mix of industry and professional backgrounds. The Supervisory Committee was abolished in February 2026, with statutory oversight functions assumed by the Audit Committee.
• Risk and Internal Control: Annual reviews indicate effective risk management and internal control systems, with no material deficiencies identified.
• Compliance: No material non-compliance events reported; the company operates in accordance with local and national laws.
• Environmental, Social, and Governance (ESG): The company maintains strict compliance with environmental regulations and has published a separate ESG report.

8. Related Party Transactions and Connected Transactions

• Connected Transactions: Transactions with Shuangliang Eco-Energy and Shuangliang Boiler (purchase of heat services-related equipment and materials) were reviewed by independent non-executive directors and external auditors, with no breaches or cap exceedances reported.
• Other Related Party Transactions: Disclosed in Note 38, none were regarded as connected transactions requiring further shareholder action.

9. Other Noteworthy Items

• Use of IPO Proceeds: As of 22 August 2025, a portion of IPO proceeds remains unutilised, primarily due to revised payment terms for the Lanzhou Peak-shaving Boiler Construction. The timeline for use has been extended to 31 December 2026, with no material adverse impact expected.
• No Material Litigation: The company is not involved in any material litigation, arbitration, or administrative proceedings as of year-end 2025.

10. Outlook and Prospects

• Strategic Direction: The company remains committed to steady progress, balancing scale expansion with quality improvement, and creating long-term value for customers, shareholders, and partners.
• Industry Opportunities: Management will continue to seek new opportunities in heat service expansion, intelligent energy dispatching, and clean energy solutions, while maintaining prudent risk controls.
• Shareholder Engagement: Enhanced communication through the company website and annual meetings, with new provisions for E-voting and hybrid meetings.

Potentially Price-Sensitive and Shareholder-Relevant Information

• Dividend Increase: The proposed final dividend increase may positively impact share price and investor sentiment.
• Net Cash Position: The transition to a net cash position signals financial strength and reduced leverage risk, potentially making the stock more attractive.
• Full Circulation of H Shares: The conversion and listing of Domestic Shares as H Shares is a significant liquidity event, opening the stock to broader investor participation.
• Corporate Governance Changes: The abolition of the Supervisory Committee and transfer of its functions to the Audit Committee reflects a streamlined governance approach, expected to enhance oversight and efficiency.
• Project Pipeline and Strategic Expansion: The company’s commitment to new project development and regional expansion can influence future growth prospects and valuation.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own research or consult with a financial advisor before making investment decisions. The information is based on the 2025 Annual Report of Wise Living Technology Co., Ltd and subject to change without notice.

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