Qian Xun Technology Limited (1640.HK) Annual Report 2025: Key Highlights and Investor Insights

1. Record Revenue Growth Driven by E-Commerce Transformation

Qian Xun Technology Limited delivered a remarkable turnaround in 2025, with total revenue soaring to RMB 1,493.6 million, representing a 319% year-on-year increase from RMB 356.8 million in 2024. The Group achieved a substantial shift in its revenue structure, as the pre-owned e-commerce business contributed RMB 1,447.6 million, up 481% from RMB 249.2 million in 2024, now accounting for the overwhelming majority of Group revenue. In contrast, the advertising and other services segment declined by 57% to RMB 46.0 million.
Gross profit doubled to RMB 46.3 million, up 106% from the previous year.

2. Dramatic Reduction in Losses

The Group sharply narrowed its net loss for the year to RMB 12.5 million, a dramatic improvement from the RMB 123.7 million loss recorded in 2024. Loss per share decreased by 91% to RMB 2.23 cents (2024: RMB 25.81 cents). This significant improvement underscores the effectiveness of the Group’s cost restructuring and operational transformation strategies.

3. Financing Activity and Capital Structure Changes

The Company completed a major convertible bond placement on 28 February 2025, raising HK\$256.63 million. The proceeds are earmarked as follows:

• ~HK\$128.15 million for overseas expansion of the used electronics e-commerce business
• ~HK\$51.26 million for PRC operations development
• ~HK\$51.26 million for repayment of bank borrowings
• ~HK\$25.63 million as general working capital

Notably, on 26 February 2026, holders converted HK\$102 million of these bonds into 39,230,768 new shares at HK\$2.60/share, increasing the share base by around 6.55%. This is potentially price sensitive as it dilutes existing shareholders and signals confidence in the company’s growth trajectory.

4. Gearing Ratio and Balance Sheet Developments

The Group’s gearing ratio surged to 125.2% as of 31 December 2025 (2024: 53.3%), primarily due to increased borrowings and the issuance of convertible bonds. This significant change in capital structure is important for shareholders, as it reflects both expanded financial leverage and the Group’s aggressive growth and expansion plans.

5. Key Expenses and Cost Structure Shifts

Selling and Marketing Expenses: These doubled to RMB 12.1 million (up 101.7%), driven by increased sales channels for pre-owned e-commerce.
Administrative Expenses: Climbed 75.4% to RMB 30.0 million, also reflecting the expansion of the e-commerce business.
Finance Costs: More than doubled to RMB 12.4 million (up 153.1%), mainly from new debt and convertible bond issuance.

6. Major Events and Corporate Actions

• Performance-Linked Acquisition Payments: The Group paid HK\$14.6 million to a vendor after the acquired Target Group exceeded its 2024 profit target. However, the 2025 profit target was missed, so no further payment was made. This impacts contingent liabilities and future cash outflows.
• Loss of Control in PRC Subsidiaries: In March 2025, the Company reported that legal representatives of certain PRC subsidiaries were changed without approval, resulting in deconsolidation and a one-time gain. This is a significant risk event, as it affects the Group’s control, asset base, and future earnings from those entities.
• No Final Dividend: The Board did not recommend a final dividend for 2025, in line with the previous year and reflecting the Group’s focus on reinvestment and expansion.

7. Risk Factors for Investors

• Customer and Supplier Concentration: The Group’s largest customer accounted for 35% of revenue, and the top five for 48%. On the supply side, the largest supplier made up 30% of costs. This concentration exposes the Group to counterparty risk and potential volatility in both revenue and cost structures.
• Liquidity Risks: The Group faces cash flow pressure from the advertising industry’s prepayment requirements and uncertain receivables timing from clients, making efficient working capital management vital.
• Competitive and Macroeconomic Risks: The Group operates in a highly competitive and cyclical market, with advertising demand sensitive to macroeconomic trends.
• Foreign Exchange Exposure: The Group holds significant non-RMB cash balances, with a 5% change in FX rates potentially affecting net loss by RMB 860,000 (HKD) and RMB 4,420,000 (USD).

8. Corporate Governance and Compliance

The Company maintained full compliance with the Corporate Governance Code and Listing Rules, including maintaining the required 25% public float. No material litigation, connected transactions, or regulatory breaches were reported.

9. Share Capital, Share Option Scheme, and Dilution

• The Company’s issued share capital increased to 560 million shares after placings and the conversion of bonds in 2025 and early 2026.
• No share options have been granted to date, leaving 40 million shares (10%) available for future incentive grants.
• Recent and potential future equity issuance (e.g., from bond conversions or share options) could dilute existing shareholders but may also support future business growth.

10. Outlook

The Group is doubling down on its technology-driven, circular economy model, with a focus on “Technology + Supply Chain + Finance.” Management expects continued growth in the e-commerce segment, ongoing cost optimization, and further investments in AI and innovation. However, advertising remains challenged, and the Group is actively restructuring to mitigate sector headwinds. Strategic partnerships and overseas expansion are in progress, and the Group aims to solidify its leadership in the pre-owned electronics market.

11. Potential Share Price Movers (Price Sensitive Information)

• Convertible Bond Conversions: The issuance and subsequent conversion of convertible bonds into equity is price sensitive, as it dilutes existing shareholders but also signals investor confidence and delivers significant growth capital.
• Loss of Control in PRC Subsidiaries: The deconsolidation of certain subsidiaries and related legal uncertainties may affect the Group’s earnings and asset base, and is a material risk for investors.
• Strong Revenue Growth and Reduced Losses: The Group’s dramatic improvement in profitability and scale could positively impact market sentiment and share value.
• No Dividend Payout: The continued suspension of dividends may disappoint income-focused shareholders, but also preserves capital for expansion.

12. Conclusion

Qian Xun Technology Limited’s 2025 performance marks a decisive strategic shift towards e-commerce, with robust topline growth and a much-improved bottom line. The Group faces significant risks—especially around capital structure, customer concentration, and PRC subsidiary controls—but also offers upside from aggressive expansion, capital injections, and a clearer technology focus. Investors should closely monitor developments in convertible bond conversions, future capital raising, subsidiary control matters, and the execution of growth strategies in both China and overseas markets.

Disclaimer: This article is for informational purposes only and is not investment advice. Investors should review the full annual report and consult their professional advisers before making investment decisions. The author and publisher assume no liability for actions taken based on this summary.

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