Chengdu SIWI Science and Technology Company Limited 2025 Annual Report: Key Highlights for Investors

Strong Revenue Growth and Profit Recovery

Chengdu SIWI Science and Technology Company Limited has reported a robust financial performance for the year ended December 31, 2025, marking the conclusion of its three-year business development plan. The Group achieved an operating revenue of RMB 366.04 million, representing a significant increase of 21.2% compared to RMB 302.07 million in 2024. This was accompanied by a sharp improvement in profitability:

• Operating profit: RMB 4.17 million (2024: RMB 0.67 million)
• Profit before tax: RMB 4.15 million (2024: RMB 1.24 million)
• Profit attributable to equity holders: RMB 2.98 million (2024: RMB 1.15 million)
• Basic earnings per share: RMB 0.0075 (2024: RMB 0.0029)

Notably, the company’s profitability has rebounded from past losses, continuing the recovery trend first observed in 2023, following a substantial loss in 2021.

First Dividend in Years

Major News for Investors: For the first time in recent years, the Board has recommended a cash dividend of RMB 0.10 per 10 shares (including tax), amounting to RMB 4 million. This is a strong signal of restored financial health and a commitment to shareholder returns. The dividend will be paid to shareholders on record as of June 30, 2026, subject to approval at the annual general meeting scheduled for June 18, 2026, and is expected to be distributed on or before July 31, 2026.

This dividend resumption is a potentially price-sensitive event, demonstrating confidence in ongoing profitability and cash flow.

Operational and Strategic Developments

• Product Innovation: The Group launched 15 new products and resolved 10 technological challenges, acquiring 91 new customers. It also obtained 15 key industry qualifications and certifications, enhancing its competitive positioning, especially in sectors such as energy systems, dual carbon technology, and high-speed train cables.
• Quality Improvement: The company achieved a 71% year-on-year reduction in low-level quality issues, with no major quality incidents reported, reflecting successful enhancements in manufacturing and process management.
• Talent Development: Focused recruitment of R&D and skilled technicians (7 R&D staff and 15 technicians hired) has strengthened the talent pool, supporting innovation and technical advancement.
• Brand and Market Expansion: Participation in major industry expos and conferences has raised the Group’s profile and reinforced its brand credibility.

Financial Position and Capital Management

• Total assets: RMB 1.04 billion (2024: RMB 1.00 billion)
• Total net assets: RMB 865.26 million (2024: RMB 866.86 million)
• Total liabilities: RMB 171.59 million (2024: RMB 137.86 million)
• Net assets per share: RMB 2.16 (2024: RMB 2.17)
• Contingent liabilities: None reported
• Interest expenses: RMB 22,069 (down from RMB 65,109 in 2024)
• Net cash flow from operating activities: RMB -46.24 million (2024: RMB 86.13 million). The negative cash flow is attributed to the timing of bank acceptance bills not reaching maturity during the year.
• Capital Expenditure: RMB 18.45 million spent on property, plant, and equipment and construction in progress.

The sharp reversal in operating cash flow may warrant investor attention, though management attributes this to timing differences in bank acceptances.

Business Outlook for 2026

The Group will focus on two key growth areas: intelligent computing/artificial intelligence and military electronics. Strategic priorities include accelerating digital transformation, developing new product lines (especially optical products), and mitigating supply chain risks.

• Market Expansion: Strategy centers on consolidating the foundation and driving innovation via collaborative development.
• Technology and Product Development: Focus on standardized design and process optimization for cables and optical modules to meet emerging market needs.
• Talent and Innovation: Ongoing investment in R&D and talent development, including regular training and the creation of a robust talent pipeline.
• Manufacturing and Quality: Commitment to further enhancing manufacturing capabilities and quality controls.

Risk Factors and Management

• Market Risk: Risks include product homogeneity, market oversupply, and industry downturns, which may impact pricing and demand. The Group is actively expanding its customer base and promoting high-margin products.
• R&D Risk: Challenges include outdated technology, lack of core competitive products, and slow development progress. The company is intensifying investment in R&D and process management.
• Credit and Liquidity Risk: The company is closely monitoring receivables, inventory, and capital flow to reduce bad debt risk and avoid excessive inventory.
• Foreign Exchange Risk: Exposure mainly in USD and EUR, but no hedging activities were conducted in 2025.

Corporate Governance and ESG

• Corporate Governance: The company complies with all provisions of the Corporate Governance Code and Model Code for Securities Transactions by Directors. There were no material litigations or non-compliances reported.
• ESG and Social Responsibility: The company met all environmental compliance requirements, fulfilled its tax obligations, and prioritized workplace safety and social insurance contributions. A separate ESG Report will be published.

Share Capital and Major Shareholders

• Total shares: 400,000,000 (240 million domestic legal person shares, 160 million H shares)
• Number of shareholders: 133 (2 state-owned legal person shareholders, 131 H-shareholders)
• No new shares issued, no share buybacks, and no convertible securities or warrants issued during the year.
• Director Shareholding: Only Mr. Kang Yiguo (through spouse) holds H shares (658,000 shares, 0.1645% of total share capital).

Other Key Points

• No material litigation or contingent liabilities as of year-end.
• No significant related party transactions beyond those disclosed in continuing connected transactions, all confirmed by the independent auditor as compliant with pricing and disclosure rules.
• Remuneration: Senior management remuneration was conservative, with all five members earning less than RMB 1 million annually.

Potential Price-Sensitive Points

• Resumption of Cash Dividend: The company’s proposal to resume dividend payments is a clear sign of improved financial health and may positively impact share price.
• Strong Topline Growth and Profit Recovery: The significant rebound in revenue and net profit underscores the success of the transformation plan and ongoing operational improvements.
• Focused Strategy on AI and Military Electronics: The strategic shift towards high-growth technology sectors may attract investor interest and rerate the company’s valuation.
• Negative Operating Cash Flow: Although explained as a one-off timing issue, the reversal in operating cash flow should be monitored by investors for potential liquidity implications.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should carefully review the full annual report and consult their own financial advisors before making any investment decisions. The information provided is based on the company’s 2025 annual report and may be subject to change or clarification in future disclosures.

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