Jiujiuwang Food International Limited: 2025 Annual Report – Investor Highlights

Executive Summary

Jiujiuwang Food International Limited, a leading manufacturer and seller of confectionary products in the PRC, has released its annual report for the year ended 31 December 2025. The report presents a comprehensive overview of the financial performance, principal risks, corporate governance, and future strategies of the Group. Key developments and financial figures are highlighted below for investors and shareholders, with attention to matters that may influence share value.

Financial Performance

• Increased Net Loss: The Group recorded a net loss of approximately RMB7.6 million in 2025, compared to a loss of RMB3.6 million in 2024. The larger loss was primarily due to increased write-downs in inventories, which is a notable deterioration and could be price-sensitive as it may reflect operational inefficiencies or changing market demand.
• Finance Costs: Finance costs decreased to RMB12.3 million from RMB13.8 million in the previous year, mainly due to lower interest expenses on borrowings. This reduction is positive but offset by the net loss.
• Cash Position: Cash and cash equivalents increased to RMB33.1 million, up 14.1% from RMB29.0 million, primarily due to increased borrowings. This reflects improved liquidity but also growing debt.
• Borrowings: Total borrowings rose to RMB264.5 million (up from RMB254.7 million). The gearing ratio remained high and stable at approximately 73.0% (vs 70.2% in 2024), indicating significant leverage.
• Dividend: The Board does not recommend any dividend for 2025, consistent with 2024. This is material for investors seeking returns via dividends.
• Employee Numbers: The Group’s workforce slightly decreased to 382 employees in 2025 from 386 in 2024.

Principal Risks and Uncertainties

• Customer Concentration: A substantial portion of revenue comes from a limited number of OEM customers. Loss of major customers could materially impact revenue.
• Distributor Reliance: Sales of owned-branded products depend on third-party distributors. Termination or failure to renew distribution agreements could sharply decrease sales.
• Short-Term Contracts: The Group generally avoids long-term contracts or minimum purchase commitments, increasing volatility and uncertainty in revenue streams.
• Raw Material Volatility: Unfavorable changes in the price, availability, and quality of raw materials could lead to production delays and higher costs.
• Food Safety and Liability: Susceptibility to food-borne illness claims and product liability could result in reputational risk and financial losses.

Corporate Governance & Internal Controls

• Chairman and CEO Dual Role: Mr. Zheng Zhenzhong serves as both Chairman and CEO, which is a deviation from standard governance best practices. The Board believes adequate safeguards are in place, but investors should note this.
• Internal Control Review: An independent consultant identified certain internal control deficiencies. The Company has agreed to implement remedial measures, including establishing formal ESG policies, improving Board communications, enhancing compliance manuals, strengthening data backup and recovery, and periodic tax assessments. This is a positive step but signals previous weaknesses.
• No Internal Audit Function: The Board currently sees no immediate need for a dedicated internal audit function, given the Group’s size and complexity. This could be seen as a risk by some investors.
• Directors and Officers Liability Insurance: The Company maintains insurance for legal actions against Directors, protecting leadership and shareholders.

Key Shareholder Information

• Share Structure: 792,000,000 shares in issue as of 31 December 2025. Minimum 25% public float is maintained.
• Share Option Scheme: No options have been granted, exercised, cancelled, or lapsed under the scheme since adoption. The scheme allows for up to 10% of shares to be granted as options, but currently none are outstanding.
• Major Shareholders: Significant holdings by Xiejia, Haisen, and Jianeng, with related parties and spouses deemed interested in large blocks of shares, up to 72.75% held collectively. This concentration could influence share price and control.
• Disclosure and Communication: The Company commits to transparency, with all corporate communications promptly published online. Shareholders are encouraged to use AGMs and the Company’s contact points for enquiries and proposals.

Operational Overview

• Business Strategy: Focus on leveraging production and product development capabilities, enhancing product quality, expanding marketing via e-commerce, and strengthening distribution networks. These initiatives are aimed at capturing growth in the PRC market and increasing brand awareness.
• Product Range: Manufacture and sale of aerated candies, gum-based candies, hard candies, tablet candies, and chocolate-made products. No mention of plans for material investments or capital assets as of year-end.
• Supplier Concentration: Top five suppliers accounted for 48.8% of purchases, with the largest at 28.1%. No directors or major shareholders have interests in these suppliers.
• ESG Reporting: A separate ESG report will be published, reflecting the Group’s commitment to environmental, social, and governance standards.
• Donations: RMB562,000 donated in 2025, up from RMB315,000 in 2024.

Audit and Internal Review

• Audit Committee: The Audit Committee reviewed and approved the financial statements, confirming compliance with accounting standards and adequate disclosures.
• External Auditor: HLB Hodgson Impey Cheng Limited audited the accounts and will retire and offer themselves for reappointment at the next AGM. No change in auditor for the last four years.

Price Sensitive Matters & Potential Share Price Movers

• Growing Net Loss: The increase in annual net loss, driven by inventory write-downs, may be viewed negatively by investors and could pressure the share price.
• High Leverage: The Group’s gearing ratio is high (73%), indicating reliance on debt and exposure to financial risk, especially if cash flow deteriorates.
• Customer and Distributor Risks: Heavy reliance on a few OEM customers and third-party distributors poses concentration risk. Any contract termination or loss could sharply affect revenues and share price.
• Internal Control Deficiencies: Previous deficiencies (now being addressed) may concern investors, especially regarding risk management and governance.
• No Dividend: The continued suspension of dividend payments may negatively affect market perception for income-focused investors.
• Governance Deviation: Chairman/CEO dual role could be seen as a governance risk, especially for institutional investors.
• Supplier Concentration: Dependency on a few key suppliers for raw materials may impact production if supply disruptions occur.

Conclusion

The 2025 Annual Report of Jiujiuwang Food International Limited presents a mixed outlook: while liquidity has improved, losses have increased and risks remain high, especially around customer concentration, distributor dependence, and leverage. The Company is taking steps to address internal control deficiencies and improve governance, but operational challenges and governance structure deviations could be viewed negatively by the market. Investors should closely monitor future developments, especially regarding major customers, distributor agreements, and internal controls.

Disclaimer: This article is based on the 2025 Annual Report of Jiujiuwang Food International Limited and is intended for informational purposes only. It does not constitute investment advice. Investors are urged to conduct their own due diligence and consult professional financial advisors before making any investment decisions. The author and publisher assume no liability for any losses or actions taken based on this article.

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