Key Highlights of the Annual Report

• Significant Net Loss and Liquidity Challenges: The Group reported a substantial net loss attributable to owners of the Company of approximately RMB 126.88 million for the year ended 31 December 2025. As of that date, current liabilities exceeded current assets by around RMB 161.79 million, with capital commitments of RMB 87.46 million and cash and cash equivalents of only RMB 7.52 million. This points to severe liquidity concerns and a material uncertainty about the Group’s ability to continue as a going concern.
• Auditor’s Warning on Going Concern: The independent auditors explicitly highlighted material uncertainty regarding the Group’s ability to continue as a going concern. This is a key risk factor that could significantly affect share value and investor confidence.
• No Dividend Recommended: The Board does not recommend the payment of any dividend for the 2025 financial year, continuing a trend from the previous year. There are also no distributable reserves under PRC Company Law.
• Major Customers and Suppliers: The Group’s five largest customers accounted for 20.74% of sales, with the largest single customer contributing 9.33%. On the supply side, the five largest suppliers represented 22.72% of purchases, with the largest at 6.25%. No directors or major shareholders have interests in these major customers or suppliers.
• Shareholding Structure and Significant Shareholders: Beijing Hua Xia Ding Technology Company Limited holds a 28.58% stake (420,000,000 domestic shares), making it a significant controlling shareholder.
• No Share Option Scheme: There was no share option scheme in place or implemented during the year.
• Corporate Governance and Compliance: The Company affirms compliance with the Model Code for securities transactions and reports ongoing review of internal controls, risk management, and financial reporting procedures.
• Business Developments: The Group expanded into property management during the year, establishing a new reportable segment. Existing business includes infrastructure construction, property development, and property investment and leasing, with assets in several Chinese cities.
• Financial Reporting Changes and Accounting Standards: The Group adopted new and amended HKFRS standards, but these did not have a material impact on the financial position.
• Asset Valuations and Market Uncertainties: The fair value of investment properties (RMB 293.69 million at year-end) is subject to significant market uncertainty, especially due to the weak property market conditions in Mainland China. The independent valuer included uncertainty clauses in the valuation reports, indicating heightened risk of further value adjustments.
• Potential Asset Sales and Financing Activities: Post year-end, the Group extended a RMB 5 million bank loan and obtained RMB 20 million in new financing at a high interest rate (15% p.a.). Management is actively considering the sale of investment properties and equity investments to address liquidity needs.
• Risk Factors and Outlook: The report acknowledges major risks, including liquidity risk, market risk (especially property market volatility), refinancing risk, and the potential need for asset disposals at unfavorable terms.
• Environmental, Compliance, and Social Responsibility: The Group emphasizes the importance of environmental protection and legal compliance, reporting no material violations during the year.

Potentially Price-Sensitive Developments

• Going Concern Doubt: The most critical issue for shareholders is the auditor’s warning and the severe liquidity shortfall. There is a real risk that the Group may not be able to meet its obligations without successful refinancing, asset sales, or other measures.
• High-Interest Financing: The Group’s reliance on high-cost borrowing (15% p.a.) post year-end signals urgent financial distress and could erode future profitability.
• Possible Asset Sales: Management’s plan to sell investment properties and equity investments, possibly at a loss, could materially impact net asset value and share price.
• Valuation Uncertainties: The property market in Mainland China remains volatile, and further write-downs on investment properties are possible if market conditions deteriorate.
• No Dividend and No Distributable Reserves: The lack of dividends and distributable reserves signals ongoing financial strain and may suppress investor appetite for the stock.

Detailed Segment and Subsidiary Information

• The Group is organized around infrastructure construction, property development, property investments/leasing, and property management services.
• It controls a complex structure of subsidiaries, most of which are wholly-owned domestic enterprises in Mainland China, each with RMB 100,000 registered capital, and primarily focused on property investment. These operating entities are consolidated into group results, and their performance is closely linked to the broader Chinese property market.
• The Group’s single largest asset risk relates to its property investments, which are subject to market-driven fair value changes. The 2025 report notes significant uncertainty in these valuations due to ongoing market weakness.

Corporate Governance and Shareholder Rights

• The Group maintains that it is in compliance with Hong Kong’s Listing Rules regarding minimum public float (at least 25% of H shares).
• There were no significant changes to the constitutional documents in 2025.
• The Company has policies in place for dividend distribution (though none was recommended for 2025), as well as whistleblowing, internal controls, risk management, and shareholder communications.
• Shareholders holding more than 3% of shares have the right to submit proposals for general meetings, but no such proposals were reported in 2025.

Conclusion and Investor Takeaways

Investors should be acutely aware of the material going concern risk, the Group’s heavy dependence on asset sales and refinancing, the lack of dividend payout, and the potential for further property write-downs. These factors, combined with weak market conditions and high-cost borrowing, present significant downside risks to both the Company’s share price and long-term value.

Any negative development regarding asset sales, refinancing, or property market conditions could trigger a substantial revaluation of the shares. Conversely, successful refinancing or asset disposals at favorable terms could provide short-term relief but would not resolve underlying structural challenges.