Changhong Jiahua Holdings Limited 2025 Annual Report: What Investors Must Know

Key Highlights and Potentially Price-Sensitive Developments

1. Robust Revenue Growth and Profit Increase

• Revenue: The Group recorded revenue of HK\$43.83 billion in 2025, representing a 9.6% increase from HK\$39.99 billion in 2024.
• Profit Attributable to Shareholders: Profit rose to HK\$400.86 million, a 5.69% increase from HK\$379.27 million in 2024.
• Basic Earnings Per Share: Improved to 15.59 HK cents, up from 14.75 HK cents in 2024.
• Gross Margin: Declined slightly to 3.19% (down 0.27 percentage points), attributed to increased market competition.

2. Significant Strategic Developments: Proposed Privatisation

On 22 September 2025, a pre-conditional proposal for the privatisation of the Company was announced. HONGTU INVESTMENT CO., LIMITED (a wholly-owned subsidiary of Changhong Group and controlling shareholder) entered into an Implementation Agreement with the Company for privatisation by way of a scheme of arrangement under section 99 of the Companies Act 1981 of Bermuda.
This includes a proposed withdrawal of the Company’s listing on the Hong Kong Stock Exchange. This is a highly price-sensitive development and could have a significant impact on the share price and liquidity of the stock. Shareholders are strongly advised to review related announcements and monitor developments closely.

• For progress updates, refer to Company announcements dated 22 Sep 2025, 3 Oct 2025, 13 Oct 2025, 13 Nov 2025, 12 Dec 2025, 24 Dec 2025, 24 Jan 2026, 24 Feb 2026, and 24 Mar 2026.

3. Dividends

• No Final Dividend for 2025: The Board did not recommend paying any dividends for 2025. By contrast, a final dividend of HK\$0.05 per share (total HK\$128.53 million) was paid for 2024.
• Dividend Policy: The Company maintains flexible dividend payout based on cash reserves and future growth needs; there is no pre-determined dividend distribution ratio.

4. Business Transformation and Technology Focus

• The Group continues to pursue business transformation by building a diverse and professional smart distribution service. It has accelerated its ecosystem layout and leveraged AI and digital technologies for innovation and value creation.
• Enhanced digital intelligence systems and process optimizations are driving operational quality and capital turnover.
• Distribution and selling expenses rose (due to higher e-commerce costs), while administrative expenses decreased (mainly due to the refund of previous litigation fees).
• Finance costs dropped due to lower interest expenses.

5. Segment Performance

• ICT Consumer Products: Turnover decreased by 1.81% to HK\$23.08 billion, with profit dropping by 10.28% to HK\$424.33 million due to fierce competition.
• Other Businesses (e.g., Smartphones): Sales increased by 11.85% to HK\$8.90 billion, with profit up 17.07% to HK\$104.39 million.

6. Solid Corporate Governance and Risk Management

• Corporate Governance: The Company adheres to high standards of integrity, transparency, and efficiency. It has complied with the Corporate Governance Code except that the roles of Chairman and President are held by the same person (Mr. Zhu Jianqiu).
• Risk Management: The Group faces key risks such as economic dependence on the PRC market, reliance on a small number of key suppliers/products, inventory risk, and foreign currency risk due to RMB fluctuations.
• There are no material contingent liabilities or significant events after year-end that would affect the Group.

7. Financial Strength and Capital Management

• Distributable Reserves: The Company had approximately HK\$48 million in distributable reserves as of 31 December 2025.
• Public Float: Maintained throughout the year.
• No Purchase, Sale, or Redemption of Shares: The Company did not buy back or issue any shares during the year.

8. Environmental, Social, and Corporate Responsibility

• The Group actively pursues sustainable development, energy efficiency, and green initiatives, including low-carbon logistics, office air quality improvements, and paperless processes.
• Reported carbon emissions from fuel use (9.1 tons) and paper usage (0.54 million sheets) remained stable year-on-year.
• No material disputes with stakeholders and full compliance with PRC laws and regulations.

9. Notable Related Party Transactions and Internal Controls

• Key continuing connected transactions (e.g., Leases, Master Purchase Agreements, Financial Services Agreement with Changhong Finance) are disclosed and have obtained independent shareholders’ approval where needed.
• Internal audit and risk management systems are considered effective and adequate.

10. Share Capital Structure

• Share capital comprises 1,454,652,000 ordinary shares and 1,115,868,000 convertible preference shares (non-redeemable, convertible into ordinary shares at the holder’s option, and ranking ahead in winding up).

Potentially Price-Sensitive Information

• The proposed privatisation and delisting is a major corporate action likely to have a significant impact on share price and liquidity. Investors should monitor ongoing announcements and developments closely.
• No final dividend for 2025 may negatively affect the stock’s yield appeal in the short term.
• Resilient profit growth and segment performance in a competitive market demonstrate operational strength, which could support valuation.
• Ongoing digital transformation and AI-driven initiatives position the Group for future growth, potentially enhancing long-term value.

Disclaimer

The above article is based on the 2025 Annual Report of Changhong Jiahua Holdings Limited. It is intended for informational purposes only and does not constitute financial advice or a recommendation to buy or sell shares in the Company. Investors are urged to review official announcements and seek professional advice before making investment decisions. The information is current as of the report date and may be subject to change.

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