Road King Infrastructure Announces Disposal of 80% Equity Interest in Shanghai Junxin Property for RMB116.4 Million

Road King Infrastructure Announces Discloseable Transaction: Disposal of Equity Interests in Subsidiary

Key Highlights and Detailed Analysis for Investors

Overview of the Transaction

Road King Infrastructure Limited (“the Company”, Stock Code: 1098) has announced a significant transaction involving the disposal of its equity interests in a subsidiary. On 21 April 2026, the Company’s indirect wholly-owned subsidiary, Shanghai Junxiang Properties Developments Co., Ltd. (“the Vendor”), and Shanghai Lianxin Enterprise Development Co., Ltd. (“the Co-Vendor”), entered into an agreement with Shanghai Waigang Industrial Development Co., Ltd. (“the Purchaser”) for the sale of an aggregate 80% equity interest in Shanghai Junxin Property Co., Ltd. (“the Target Company”).

The total consideration for the transaction is approximately RMB116.4 million, with RMB94.4 million attributable to the Vendor’s 65% share and RMB22.0 million to the Co-Vendor’s 15% share. Upon completion, the Target Company will be wholly owned by the Purchaser, and the Group will cease to hold any equity interest in the Target Company. This means the Target Company will no longer be consolidated into the Group’s financial statements, which is a material change for shareholders.

Transaction Structure and Payment Terms

The agreement stipulates that the equity transfer will be conducted via the Shanghai Agricultural Assets & Equity Exchange.
The Purchaser is required to pay the full consideration to a designated bank account within five business days of the agreement.
Payment to the Vendor and Co-Vendor will be in two tranches:
- 70% of the consideration (RMB66.1 million to the Vendor and RMB15.4 million to the Co-Vendor) will be settled within three business days after the issuance of the property rights transaction certificate.
- The remaining 30% (RMB28.3 million to the Vendor and RMB6.6 million to the Co-Vendor) will be settled within three business days after equity registration in the Purchaser’s name and the issuance of a new business licence to the Target Company.

Conditions Precedent and Completion

The Target Company must remain a valid, operational entity with no adverse legal or financial issues during the process.
All registered capital must be fully contributed, and the equity interests must be free of encumbrances.
The Target Company must not bear any guarantee liabilities for third-party debts unrelated to the parties involved.
The disposal is completed upon equity registration and a new business licence is issued to the Target Company.

Information on the Target Company and Project Details

The Target Company was established on 22 May 2019 for the joint development of a 70-mu land parcel in Waigang Town, Jiading District, Shanghai.
The project comprises:
- Saleable residential units (GFA: approx. 55,145.1 sqm, all sold and delivered)
- 589 car parking spaces (155 sold and delivered, 434 unsold)
- Self-held apartments (GFA: approx. 10,442.6 sqm, unsold)
All exit conditions under the cooperation agreements have been satisfied, making this an optimal exit point for the Group.

Financial Overview of the Target Company

Financial information under PRC GAAP:

2024: Revenue RMB2.3 million, Profit before tax RMB11.4 million, Profit after tax RMB13.9 million (includes a tax refund).
2025: Revenue RMB1.3 million, Loss before and after tax RMB1.6 million.

The valuation pegged the net asset value at RMB145.2 million as of 31 December 2025. The consideration was adjusted for shareholder agreements and profit distribution mechanisms.

Valuation Methodology

The Valuer (GeLv (Shanghai) Assets Appraisal Co., Ltd.) based the valuation on agreed principles in the Cooperation Memorandum and Supplementary Memoranda, including:

Actual revenue and estimated revenue from unsold saleable properties (car parking spaces)
Project cost allocations
Rental income and related expenses from self-held assets
Interest income from loans and government subsidies

No premium or discount for controlling interest was considered.

Profile of the Purchaser, Vendor, and Co-Vendor

The Purchaser is Shanghai Waigang Industrial Development Co., Ltd., engaged in asset and investment management, and is ultimately owned by local collective economic associations in Jiading District, Shanghai.
The Vendor is an indirect wholly-owned subsidiary of Road King, engaged in property development.
The Co-Vendor is partially owned (39.96%) by the Purchaser and 60.04% by various collective associations.

Strategic Rationale and Impact on Shareholders

Optimising Asset Utilisation and Improving Liquidity: The disposal enables the Group to realise its investment at a reasonable price, optimising capital allocation and supporting liquidity needs, including tax settlement and working capital.
Financial Impact: The carrying value of the Group’s 65% equity interest in the Target Company as of 31 March 2026 was RMB90.9 million. The transaction is expected to result in a net gain of approximately RMB3.5 million after taxes and related expenses.
Deconsolidation: Upon completion, the Target Company will be deconsolidated from the Group’s accounts, which may affect future reported revenues and profits.

Regulatory and Listing Rules Implications

The transaction qualifies as a discloseable transaction under Chapter 14 of the Hong Kong Listing Rules, as one or more of the applicable percentage ratios is more than 5% but less than 25%. It is subject to announcement and reporting requirements.

Potential Share Price Sensitivity

Material Change in Asset Portfolio: The disposal of a significant subsidiary and the resulting liquidity event could influence investor perception of Road King’s asset strategy and financial health.
Net Gain Realised: The Group expects to realise a gain from the transaction, which may positively affect its financial position.
Future Earnings Impact: The loss of future income from the deconsolidated subsidiary and reduced exposure to the Shanghai real estate market could have longer-term implications for revenue streams.
Investors should monitor subsequent Group disclosures and financial statements for the actual impact on earnings and balance sheet.

Conclusion

This transaction represents a strategic divestment by Road King Infrastructure Limited, optimising asset utilisation and improving liquidity, with a modest gain expected. However, the loss of control over the Target Company and its deconsolidation may affect future consolidated income and asset base. The transaction is price sensitive and relevant for all shareholders and potential investors.

Disclaimer: This article summarises a company announcement and is provided for informational purposes only. It does not constitute investment advice. Investors should review the original company disclosures and consult their financial advisors before making any investment decisions. The author and publisher accept no liability for any investment decisions made based on this article.