Key Financial Highlights

• Revenue: RMB54.4 billion, up 8% from RMB50.34 billion last year.
• Gross Profit: RMB3.66 billion, modest growth from RMB3.49 billion.
• Net Profit attributable to owners: RMB360.9 million, up from RMB289.5 million.
• Earnings per Share: RMB0.33 (basic and diluted), up from RMB0.26.
• Proposed Final Dividend: HKD0.056 per share, subject to approval at AGM on 3 June 2026. Expected payment on or around 15 July 2026.

Revenue breakdown by product:

• Renewable Materials: 45.88% (RMB24.96bn)
• Electric Bike Battery: 36.69% (RMB19.96bn)
• Electric Vehicle & Special EV Battery: 16.28% (RMB8.86bn)
• Li-ion Battery: 1.15% (RMB625m)

Shareholders should note: Steady improvement in profitability and dividend payout. Dividend growth and earnings rise may positively impact share price. However, gross margin growth remains modest, highlighting cost pressures.

Corporate Governance and Board Structure

• Mr. Zhou Mingming serves as both Chairman and CEO, a deviation from Hong Kong’s Corporate Governance Code recommendation to separate these roles.
• The Board asserts this arrangement maximises operational efficiency, but investors should monitor for any governance risks.
• Audit Committee consists solely of independent non-executive directors. The committee reviewed and approved the audited financials.
• Strict adherence to Model Code for Securities Transactions and robust whistleblowing/anti-corruption policies.
• Dividend policy is flexible; payout is subject to retained earnings, liquidity, capital needs, and lender restrictions. No guaranteed payout amount.

Potential Price Impact: Governance practices are strong, but the combined Chairman/CEO role may concern some institutional investors.

Risk Factors and Uncertainties

• Principal risks disclosed include credit risk, deferred tax asset realization, and capital management. Net debt is RMB2.76bn, with a gearing ratio of 11.1%, within the company’s target range (10%-15%).
• Sensitivity analysis shows that a 5% movement in RMB against major currencies (HKD, USD, EUR, CAD) would have limited but noticeable impact on profits.
• Interest rate risk: A 10 basis point change in rates would impact post-tax profit by RMB3.19m, while a 27bp change in variable-rate borrowings would impact profit by RMB7.6m.
• Equity price risk: A 20% move in prices of listed equity holdings would move profits by RMB15.57m.
• Commodity price risk: 5% change in derivative financial instruments’ prices would move profit by RMB539,300.

Price Sensitivity: Currency and interest rate volatility, as well as exposure to commodity and equity market swings, could materially affect earnings and share valuation.

Connected Transactions & Related Party Dealings

• Continuing connected transaction: Chaowei Power Group continues to purchase battery manufacturing equipment from Zhejiang Doulan, an associate of Mr. Zhou Mingming (Chairman/CEO).
• Transactions are confirmed by independent directors and auditors as fair and in line with shareholders’ interests.
• Deed of Non-Competition confirmed compliance; no competing business activities reported.
• No material acquisitions/disposals during the year; no significant equity-linked agreements or arrangements.

Shareholder Impact: Related party transactions are fully disclosed and independently reviewed, reducing risk of governance issues.

Share Capital, Share Options, and Major Shareholders

• Issued shares: 1,104,126,979 ordinary shares.
• Share option scheme (2023) remains valid until 2033; RMB4.53m recognised as expense for options granted in 2025.
• Major shareholders: Great State (22.5%), Bai Xiang (10.1%), Jolly Pride (3.3%). No substantial change in control.
• No buybacks or treasury shares held at year end.

Shareholder Impact: Option expenses and major shareholder stability underpin market confidence. No dilution or buyback activity.

Operational & Strategic Developments

• Strong market presence: Ranked among “Top 500 Chinese Enterprises”, “Top 500 Chinese Private-owned Enterprises”, “Top 500 Chinese Manufacturers”, and “Top 500 Chinese Energy Enterprises”.
• Focus on “green production”, with industry alliances for recycling and environmental protection. Environmental, social, and governance (ESG) initiatives are a strategic priority.
• No significant investments, acquisitions, or disposals authorized or planned at year end.
• Capital commitments for asset acquisitions: RMB25.38m.
• Pledged assets for bank facilities: RMB438m (buildings), RMB393m (right-of-use), RMB2.38bn (receivables), RMB3.36bn (restricted bank deposits).

Investor Takeaway: The company’s ESG focus and strong national rankings enhance its reputation and may attract long-term, institutional investors. Limited capital commitments and stable asset base support financial stability.

Employee, Customer, and Supplier Relations

• Remuneration policies provide incentives including bonuses and share awards.
• Major customer and supplier concentration is low: Largest customer/supplier accounts for 2.23%/3.92% of sales/purchases.
• Five largest customers/suppliers account for 9.46%/16.22% of sales/purchases.
• No director, associate, or shareholder (with >5% equity) has any interest in major customers or suppliers.

Investor Outlook: Low concentration risk in customers and suppliers supports business resilience.

Audit and Transparency

• Financials audited by Ernst & Young, Certified Public Accountants; audit committee reviewed financial statements.
• Audit fees: RMB2.6m; non-audit fees: RMB800k.
• No material misstatement found in other information within the annual report.

Shareholder Assurance: Robust audit and transparency practices reinforce market trust.

Outlook and Dividend Policy

• Future business development plans are referenced, but no major expansion or acquisition is planned.
• Final dividend of HKD0.056 per share proposed, subject to shareholder approval. Policy is not a binding commitment — may change based on earnings, liquidity, and capital requirements.

Investor Implication: Dividend growth and strong cash flow support investor returns, but policy flexibility means future dividends are not guaranteed.