1. Financial Performance and Earnings

• Profit Decline: The profit attributable to equity holders was RMB 40.24 million for 2025, representing a significant decrease of approximately 32.88% compared to RMB 59.94 million in 2024. This drop in profitability is a critical development for shareholders, as it may impact dividend expectations and share price sentiment.
• Earnings Per Share (EPS): Basic earnings per share (EPS) for 2025 was RMB 0.22, a sharp decline from RMB 0.37 in 2024. The continued downtrend in EPS over recent years reflects margin pressures and is a potential concern for equity investors.
• Dividend: The Board has proposed a final dividend of RMB 0.10 per share (including tax) for 2025, down from RMB 0.20 in 2024. This reduction signals lower distributable profits and a more conservative payout approach.
• Revenue: In 2025, the Group achieved operating revenue of RMB 9.53 billion, reflecting the scale of operations but also highlighting the need to closely monitor profit margins amid rising costs or competitive pressures.

The sharp decrease in both net profit and the dividend per share is a potentially price-sensitive development and could negatively affect the share value if investor sentiment sours.

2. Capital Structure and Major Share Issuance

• Share Capital Increase: The Company’s share capital increased substantially from 162,064,000 to 202,064,000 shares in 2025, following a major new share subscription.
• Strategic Share Subscription: On 22 August 2024, the Company entered into a Share Subscription Agreement with China South Industries Assets Management Co., Ltd. (SIAMC), resulting in the issuance of 40,000,000 new domestic shares at RMB 2.54648 per share, raising RMB 101.86 million in cash. This transaction was approved at the EGM on 22 November 2024 and completed on 27 May 2025.
• Use of Proceeds: Net proceeds of approximately RMB 100.15 million are earmarked for overseas capacity building and smart logistics construction, with RMB 13.4 million utilized by 31 December 2025 and RMB 86.6 million remaining for future investment. The full utilization is expected by end-2027.

This equity raise is pivotal: it replenishes liquidity, optimizes capital structure, and signals strong support from major shareholders, which could boost market confidence and potentially support the share price.

3. Changes in Corporate Governance

• Governance Restructuring: At the EGM on 28 November 2025, shareholders approved amendments to the Articles of Association and the abolishment of the Supervisory Committee. The Audit and Risk Committee under the Board now assumes oversight responsibilities, streamlining governance and potentially enhancing efficiency and accountability.
• Board and Committee Oversight: The Board, together with its committees, is now directly responsible for corporate governance, risk, audit, and compliance functions.

Such significant changes in governance structure are material and may influence investor perception regarding oversight and internal controls, possibly impacting valuation both positively (for efficiency) or negatively (for perceived risk).

4. Business and Customer Concentration

• Main Business: The Group remains focused on automotive supply chain management, including vehicle transportation, raw materials, components, tire assembly, and after-sales logistics. It also supports non-automotive goods transportation.
• Customer Concentration: The top five customers accounted for 59% of total sales in 2025, with Chongqing Changan Automobile Co., Ltd. alone making up 24%. High customer concentration introduces revenue risk if any major customer reduces orders or changes suppliers.

5. Dividend Policy and Taxation

• Dividend Policy: The Board aims to pay out at least 30% of distributable profits as cash dividends annually, subject to business needs and capital requirements. The 2025 dividend proposal is RMB 0.10 per share, pending AGM approval.
• Taxation: A 10% enterprise income tax is withheld for non-resident enterprise shareholders of H shares, while individual foreign shareholders are exempt from PRC individual income tax on dividends.

Investors should note the reduced dividend payout and the tax policies affecting yield, which may influence demand for the shares.

6. Major Shareholders and Shareholding Structure

• Shareholding Changes: Following the new share issuance, SIAMC and CSGC emerged as substantial shareholders, each holding 40 million domestic shares (19.8% of total share capital).
• Other Major Holders: China Changan Automobile (20.4%) and APLL/Kintetsu World Express (16.03%) remain key stakeholders. Pemberton Asian Opportunities Fund holds 3.22%.
• Share Appreciation Rights Plan: The company maintains a share appreciation rights scheme to incentivize management, with up to 4,861,400 units granted to 29 key employees, aligning long-term interests.

The increased shareholding by state-linked and strategic investors is a confidence booster, while the incentive plan indicates a commitment to management alignment with shareholder value.

7. Risk Factors and Financial Position

• Key Risks: The Group identifies market risk, liquidity risk, and operational risk as major concerns. It maintains strong liquidity and credit risk controls, but high customer concentration and industry-specific risks persist.
• Leverage and Liquidity: The asset-liability ratio increased to 59.70% in 2025 (from 57.54%), reflecting higher leverage following the share issuance. Available credit lines remain robust at RMB 1.63 billion.
• No Overdue Deposits: The Group reported no overdue or unrecoverable fixed deposits as of year-end, highlighting prudent cash management.

Rising leverage and customer concentration are watch points for investors assessing risk and valuation.

8. Regulatory Compliance and ESG

• Compliance: The Group affirms compliance with all major laws and regulations. No material breaches occurred during the year.
• ESG Reporting: The company is preparing its annual ESG report for 2025, to be published alongside the annual report, in line with Hong Kong Stock Exchange requirements.

Strong compliance and ESG disclosure practices may support long-term investor confidence and broaden the shareholder base.

9. Auditors’ Confirmation

• Unqualified Audit Opinion: Grant Thornton Zhitong Certified Public Accountants LLP issued an unqualified audit opinion, confirming the accounts present fairly, in all material respects, the financial position and results for 2025.
• Key Audit Matters: The accuracy of revenue recognition was highlighted as a key audit matter, with no significant issues reported.

10. Accounting Standards Change

• Adoption of China Accounting Standards: From 2023, the Company prepares its financial statements in accordance with China Accounting Standards for Business Enterprises (CASBE), aligning with its mainland operations. No material impact was observed from this transition.

11. Shareholder Rights and Communication

• Rights: Shareholders enjoy rights to dividends, voting, information access, and to call general meetings under specified conditions.
• Communication: The Company encourages direct engagement at AGMs and via the investor relations office, supporting transparency and responsiveness.

12. Other Noteworthy Items

• No Share Buybacks: There were no purchases, redemptions, or cancellations of listed securities during 2025; the Company holds no treasury shares.
• Donations: The Company made cash donations totaling RMB 600,000, consistent with the prior year.
• Audit Fees: The audit fee increased to RMB 1.38 million (from RMB 1.28 million).