Key Highlights for Investors

• Return to Profitability: The Group’s net profit margin improved to 0.04% in 2025, reversing last year’s net loss margin of (2.07)%. This turnaround was attributed to increased sales revenue, recognition of government subsidy, and higher net exchange gains.
• Margin Pressure: Despite the profit, gross profit margin declined from 25.00% to 21.39%, primarily due to RMB appreciation and higher raw material, packaging, and production costs. This margin compression is a key focus for investors as it could indicate future profitability risks if cost pressures persist.
• Stable Gearing: The gearing ratio remained steady at 0.80, suggesting that the Group’s leverage position is unchanged and manageable. No material contingent liabilities were reported.
• No Dividend Declared: The Board resolved not to declare any dividend for the year, citing the need to retain capital for working capital requirements and future business development. This may disappoint income-focused investors.
• Share Capital Changes: During the year, a share consolidation was executed (20:1), reducing the number of issued shares from 540,000,000 to 32,400,000. Additionally, the Company raised approximately HK\$4.86 million by issuing 5,400,000 new shares under general mandate. These changes may affect share liquidity and price dynamics post-consolidation.
• Business Diversification and R&D: The Group is actively exploring specialty batteries for medical and healthcare devices, leveraging new technologies and patents. It also plans to diversify into other energy-related businesses to secure long-term growth and stability.
• ESG and Sustainability: The Group has reinforced its commitment to environmental, social, and governance (ESG) practices, including reducing carbon emissions, energy, and water consumption. It is investing in machinery upgrades to improve energy efficiency and reduce plastic packaging.
• Supply Chain and Customer Concentration: The top five customers accounted for 42.32% of revenue, with the largest customer alone making up 21.80%. The top five suppliers accounted for 40.57% of purchases. This concentration poses a risk if relationships or terms change.
• Corporate Governance and Compliance: The Company reports full compliance with Hong Kong and PRC laws, as well as the Corporate Governance Code and Model Code for Directors’ Securities Transactions. No connected transactions requiring shareholder approval occurred.

Important Shareholder Information and Price-Sensitive Issues

• No Dividend for 2025: The decision to withhold dividends for a second consecutive year could be viewed negatively by some shareholders and may affect share price if the market was expecting a resumption of payouts.
• Share Consolidation and New Share Issue: The 20-for-1 share consolidation and new share issuance under general mandate may impact trading liquidity and could be price sensitive, especially if investors interpret these actions as either strengthening or diluting shareholder value.
• Profitability Recovery but Margin Risk: The return to profitability is positive, but ongoing cost pressures and lower gross profit margins signal that earnings could remain volatile, impacting investor sentiment and share price stability.
• Business Diversification: The Group’s push into specialty batteries and other energy segments could drive future growth and re-rate the stock if successful, but execution risk remains high as these are still early-stage initiatives.
• Customer and Supplier Concentration: Heavy reliance on a small number of customers and suppliers increases operational risk, and any change in these relationships could materially impact revenue or costs.
• ESG and Climate-Related Disclosures: The Group is in the early stages of developing climate scenario analysis and value chain risk assessment. Future regulatory requirements or ESG investment flows could impact valuation, especially as the Company’s climate-related disclosures and targets are not yet comprehensive.
• No Major Events Post-Year-End: The Company confirmed no major subsequent events up to the report date, reducing near-term event risk.
• Risk Factors: The Group is exposed to fluctuations in commodity prices (steel, zinc, manganese dioxide, copper, separator, plastics), exchange rates, and shifts in market demand, all of which could impact future earnings and share price volatility.

Other Noteworthy Details

• No material contingent liabilities or connected transactions were reported.
• No charitable donations were made during the year.
• Corporate governance, whistleblowing, anti-corruption, and board diversity policies are in place and regularly reviewed.
• Full compliance with Listing Rules and public float requirements was maintained.

Summary Table: Key Financials (2025 vs. 2024)

Potential Share Price Drivers

1. Return to profitability could boost investor confidence, but is tempered by margin pressures.
2. No dividend and share consolidation may create volatility and could be perceived negatively by some market participants.
3. Ongoing business transformation (specialty batteries, energy diversification, ESG investments) could support long-term re-rating, subject to execution.
4. High customer and supplier concentration remains a critical risk and could trigger sharp price movements if circumstances change.
5. ESG and regulatory compliance are increasingly important for institutional investors and could influence capital flows and valuation multiples.