Strong Financial Performance Amid Challenging Market

Poly Property Group Co., Limited delivered robust financial results for the year ended 31 December 2025, despite ongoing challenges in the real estate market. The Group reported revenue of RMB 46,153.9 million from property sales, marking a year-on-year increase of 20.3%. Profit attributable to shareholders reached RMB 225 million, representing a notable rise of 23.2% year-on-year.

However, the property sector’s continued correction kept profit margins at relatively low levels. The Group made a substantial impairment provision of approximately RMB 1,019 million for properties under development and held for sale. This significant non-cash item is critical for investors to note, as it directly affects net profits and book value.

The Board has recommended a final dividend of 2.6 HK cents per share, translating to a payout ratio of 40%. This move underscores the Group’s commitment to maintaining stable and sustainable returns, even during turbulent times. The company’s dividend policy has also been amended to reinforce a minimum payout of 40% of annual attributable profit, reviewed at least once every three years.

Capital and Liquidity Position

Poly Property Group maintains a healthy capital structure, with net current assets of RMB 82.1 billion as of 31 December 2025. The Group reported available undrawn banking facilities of approximately RMB 19.3 billion, up from RMB 12.2 billion in the previous year, enhancing its liquidity buffer amid market uncertainties.

The gearing ratio (net debt to total capital) is closely monitored, and the company regularly balances its capital structure through dividends, new share issues, and debt management actions. This prudent approach is intended to maximize shareholder returns while ensuring the Group stays resilient against market shocks.

Key Corporate Governance and Risk Management Developments

• Board and Governance: The Group conducted its first-ever board performance evaluation to identify strengths and areas for improvement, aiming to enhance decision-making and oversight effectiveness.
• ESG Advancements: The WIND ESG Rating was upgraded from A (2024) to AA (2025), and the Hang Seng Index ESG Rating improved from BBB+ to A-. This reflects significant progress in environmental, social, and governance practices, likely to attract more ESG-focused investors.
• Sustainable Finance Framework: The company established a framework aligned with international sustainable finance principles, paving the way for future issuance of green bonds and sustainability-linked loans.
• Change of Auditor: BDO Limited replaced Baker Tilly Hong Kong Limited as the external auditor, which may signal changes in audit strategy or compliance focus.

The Group has also enhanced its stakeholder communication and succession planning efforts. It now systematically reports on shareholder structure changes, core investor concerns, and public opinion risks, while regularly reviewing board skills and diversity.

Principal Risks and Uncertainties

The Group’s operational outlook remains sensitive to several macro and sector-specific risks:

• Macroeconomic Risk: Fluctuations in global trade, geopolitics, and domestic market competition could impact results.
• Policy Risk: Frequent adjustments in real estate policies, especially in core cities, require proactive monitoring and flexibility.
• Cash Flow Risk: Tighter credit conditions and regulatory controls over project-level funds may constrain liquidity.
• Data Security & Public Opinion: The Group is exposed to risks related to information leakage and brand reputation in the digital age.

The company has implemented targeted risk management measures, including dedicated teams for market and policy tracking, enhanced data protocols, and cross-departmental mechanisms for fund management and public opinion monitoring.

Connected Transactions and Regulatory Compliance

The Group continues to engage in significant connected transactions, particularly with China Poly Group. In 2025, the annual caps for related-party financial services were RMB 2.5 billion (until July) and RMB 250 million (from July to year-end), with actual deposit balances closely tracking these limits.

All such transactions have been confirmed by independent non-executive directors and the auditor to be in compliance with the Listing Rules and on normal commercial terms. Investors should monitor any changes to these arrangements, as they could affect capital allocation and related-party risk exposures.

Valuation of Investment Properties

As of 31 December 2025, the Group’s investment properties were independently valued at RMB 9.71 billion. The fair value measurement relied on a mix of market data and management assumptions, with an RMB 85.8 million revaluation surplus recorded for the year.

The valuation process is subject to significant judgment and market volatility. Any material changes in cap rates, market prices, or regulatory environment could substantially affect asset values and, by extension, the Group’s book value and earnings.

Shareholder Rights and Engagement

The Group has strengthened its Shareholders’ Communication Policy, ensuring continuous and transparent information flow via its website, Stock Exchange filings, and investor relations activities. Shareholders with at least 5% of voting rights may request the convening of general meetings, while those with 2.5% (or at least 50 shareholders) may propose resolutions at annual meetings.

In 2025, the Group organized 31 investor engagement events, with direct participation from directors and senior management in 7 of them, reflecting a proactive approach to investor relations and governance transparency.

Other Noteworthy Developments

• Dividend Policy Revision: Reinforced commitment to a minimum 40% payout ratio, reviewed triennially.
• Employee Diversity Policy: Newly formulated to foster an inclusive workforce, potentially enhancing innovation and risk management.
• Major Properties: The Group holds a diversified portfolio of investment, development, and sale properties, detailed on pages 383–444 of the report.
• Public Float: As of year-end, public float stood at 51.91%, well above the regulatory minimum, indicating strong market liquidity for the shares.
• Charitable Contributions: The Group donated approximately RMB 3.75 million to charitable causes during the year.

Conclusion: Price-Sensitive and Shareholder-Relevant Matters

• Impairment Provision: The RMB 1,019 million impairment on properties held for development and sale is a significant non-cash charge that could impact investor perception of asset quality and future earnings.
• Dividend Commitment: The maintenance of a 40% payout ratio, despite market headwinds, signals management’s confidence in cash flow resilience and a focus on shareholder returns.
• ESG and Sustainable Finance Initiatives: Upgraded ESG ratings and new finance frameworks may enhance the Group’s profile among institutional and ESG-focused investors.
• Governance and Auditor Change: The appointment of a new auditor and enhanced board evaluation processes could foreshadow further improvements in transparency and internal controls.

Investors should closely monitor the Group’s ability to maintain its dividend, manage connected-party exposures, and realize value from its property portfolio amid ongoing sector volatility.