Leoch International Technology Limited 2025 Annual Report: Key Developments and Insights for Investors

Leoch International Technology Limited has released its Annual Report for the year ended 31 December 2025. Below is an in-depth analysis summarizing the most important developments, financial information, risks, and strategic updates that are crucial for shareholders and may impact the company’s share price.

1. Financial Performance and Dividend Policy

• Financial Results: The Group reported a loss attributable to ordinary equity holders of the parent of RMB 173.9 million for 2025, compared to a profit of RMB 603.6 million in 2024. This significant reversal from profit to loss was primarily due to losses from continuing operations (RMB 267.6 million loss) which were partially offset by gains from discontinued operations (RMB 93.7 million profit).
• No Final Dividend: The Board has decided not to declare a final dividend for 2025 (compared to a final dividend of HK7 cents per share in 2024). This decision reflects the challenging operating environment and the need to conserve cash.
• Share Capital Movements: During the year, 30,062,000 share options were exercised, and convertible bonds were converted into 25,490,191 shares. The total number of shares outstanding increased to 1,437,970,357.

2. Key Risks and Uncertainties Affecting Future Prospects

• Business Concentration Risk: The Group’s revenue remains heavily reliant on lead-acid battery technology. If market growth slows or if alternative technologies gain traction, it could materially and adversely affect future profitability.
• Geopolitical and Economic Risks: The report highlights that recent US tariffs, a global economic downturn, or changes in the economic, political, and social conditions in China could negatively impact the Group’s operations, financial stability, and outlook.
• Client Concentration: A significant portion of income is derived from major customers, especially in the UPS and telecommunications sectors. The Group does not have long-term sales contracts, posing a risk if key customers reduce or cease orders.
• Intense Competition & Cost Pressures: The Group faces ongoing competitive pressures in its main markets and must continually reduce production costs to remain price competitive.
• Raw Material Volatility: Fluctuations in the price of lead and potential supply chain disruptions from major suppliers could significantly affect results.
• Foreign Exchange Risk: The Group’s global operations expose it to currency conversion risks, especially due to regulatory restrictions in China, and movements in the RMB/USD exchange rate can impact receivables and profitability.

3. Strategic and Corporate Developments

• Spin-off and NASDAQ Listing Cancelled: A significant corporate event was the planned spin-off and separate NASDAQ listing of Leoch Energy Inc, a wholly-owned subsidiary. After a series of shareholder meetings and regulatory reviews, the Board announced on 1 April 2026 that it will not proceed with the spin-off at this time due to market and regulatory conditions. This is a major development that could have impacted shareholder value, with the potential to unlock or delay value realization from the subsidiary.
• No Major Acquisitions or Disposals: The Group reported no material acquisitions or disposals of subsidiaries, associates, or joint ventures during the year.
• No Significant Investments: As at 31 December 2025, the Group did not have any investments amounting to 5% or more of total assets.
• No Equity Fundraising: There was no equity fundraising during the year, nor any carry-over of proceeds from previous equity issues.
• Public Float Sufficient: The Company confirmed that the public float remains above 25% of issued shares, in compliance with listing rules.

4. Corporate Governance, Compliance, and ESG Focus

• Remuneration and Employee Relations: The Group maintains competitive remuneration and training programs. There are no management contracts or arrangements affecting substantial parts of the business.
• Major Suppliers and Customers: The largest supplier accounted for 10% of procurement, and the five largest suppliers for 32.5%. The largest customer contributed 6% of sales, and the top five customers 11.5% of sales.
• Compliance: The Group confirms adherence to significant laws and regulations and maintains high operating standards.
• ESG Governance: The Board oversees ESG strategy and reporting, with regular reviews of resources, risk, and management monitoring. Investors are encouraged to refer to the separate ESG report for further details.

5. Accounting and Policy Changes

• Change in Investment Property Measurement: The Group has changed its accounting policy for investment properties from cost model to fair value model. The switch resulted in a net gain of RMB 30.8 million (2024: RMB 37.2 million) in the latest period, directly impacting the bottom line.
• Other Accounting Updates: The Group adopted the latest amendments to IAS 21 (Lack of Exchangeability) with no material impact and disclosed several upcoming IFRS standards that may affect reporting in future years.

6. Financial Risk Management

• Interest Rate and Foreign Exchange Sensitivity: The Group is exposed to interest rate movements, especially in USD, HKD, and MYR. A 50 basis point movement in these currencies would have limited impact on profit before tax.
• Foreign Currency Sensitivity: A 5% move in the RMB/USD exchange rate would affect profit before tax by over RMB 513 million. This underlines the significant FX risk exposure facing the Group.
• Credit Risk: Credit risk is closely monitored, with the majority of customers being investment grade or covered by credit insurance/letters of credit.

7. Post Balance Sheet Events

• Spin-off of Leoch Energy Inc Not Proceeding: As highlighted earlier, the Board’s decision not to proceed with the NASDAQ spin-off, after a lengthy consultation and regulatory process, is potentially price-sensitive and could affect investor sentiment and valuation expectations.

Conclusion for Investors

The 2025 Annual Report for Leoch International Technology Limited reveals a challenging year with a swing to losses, no final dividend, and the cancellation of a potentially value-unlocking spin-off. The Group faces substantial risks from technological change, customer concentration, raw material price volatility, and FX risks. At the same time, it continues to invest in compliance, ESG, and corporate governance.

Investors should closely monitor the Group’s efforts to diversify its business, manage key risks, and its strategy in the face of a rapidly changing global operating environment. The decision not to proceed with the Leoch Energy Inc spin-off is a significant event and may influence future share price performance.

Disclaimer: The above article is a summary and analysis based on the company’s 2025 Annual Report. It is not investment advice. Investors should conduct their own research and consult with professional advisors before making investment decisions. The company’s future performance is subject to various risks and uncertainties as detailed in the report.

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