Core Insights - The marine segment of the company has seen a significant increase in orders, with a revenue of 617 million yuan in H1 2025, representing a 35% year-on-year growth and accounting for 23.7% of total revenue. New effective orders in this segment increased by 63% year-on-year [1] - The fracturing business has experienced a notable increase in gross profit, with revenue reaching 433 million yuan in H1 2025, a 41.1% year-on-year increase, driven by the rapid development of unconventional oil and gas resources [2] - The company has actively adjusted its business structure to focus on core segments, resulting in a decrease in overall revenue but an improvement in profitability metrics, including a reduction in financing costs and sales expenses [2] Marine Segment - The marine segment includes offshore wind power, marine oil and gas equipment, and marine engineering equipment, with a production base located in Jiangsu Province [1] - The revenue from marine oil and gas equipment and marine engineering equipment manufacturing reached 263 million yuan in H1 2025, a substantial increase of 1171.4% year-on-year [1] Fracturing Business - The fracturing segment's gross profit increased by 96.2% in H1 2025, with sales of fracturing equipment and services generating 328 million yuan, a significant rise of 64.7% year-on-year [2] - The company has expanded its customer base by signing a framework contract for coalbed methane fracturing services, further solidifying its market position in the Shanxi coalbed methane sector [2] Strategic Adjustments - The company has streamlined low-margin businesses, focusing on enhancing overall profitability, which has led to a reduction in financing costs by 0.89 percentage points to 2.5% and a 27.5% decrease in interest expenses [2] - The company forecasts net profits of 125 million yuan, 267 million yuan, and 393 million yuan for the years 2025 to 2027, respectively, and has set a target price of 0.29 HKD based on a 9x PE ratio for 2026 [2]

Investment Rating - The report assigns a "Buy" rating for Honghua Group, with a target price of HKD 0.29 based on a PE of 9x for FY26 [3][19]. Core Insights - The company has achieved positive results in improving quality and efficiency, with a focus on core business segments and a reduction in low-margin operations [2][18]. - The marine sector has seen significant growth, with a 35% year-on-year increase in revenue, driven by new orders and investments in offshore equipment [4][21]. - The hydraulic fracturing business has also shown strong performance, with a 41.1% increase in revenue and a 96.2% rise in gross profit year-on-year [4][21]. Financial Performance and Forecast - Revenue for 2025 is projected at 6.32 billion yuan, with net profit expected to reach 125 million yuan, reflecting a substantial increase compared to previous years [5][19]. - The company anticipates continued growth, with net profits forecasted to reach 267 million yuan in 2026 and 393 million yuan in 2027 [3][5]. - The financial metrics indicate a significant improvement in profitability, with a projected EPS of 0.01 in 2025 and 0.04 in 2027 [5][19]. Business Strategy - The company is actively restructuring its business to enhance profitability by focusing on high-margin segments and reducing costs, including a 27.5% decrease in interest expenses [2][18]. - The marine and hydraulic fracturing sectors are prioritized for growth, with substantial investments and new customer acquisitions planned [4][21].

2. 成員 Membership 2.1 委員會之成員由董事會從公司董事中挑選和委任，委員會由最少三名委員組成，成 員中至少一名須為不同性別，其中獨立非執行董事必須超過半數。 HONGHUA GROUP LIMITED 宏華集團有限公司 (Incorporated in the Cayman Islands with limited liability) (Stock Code: 196) 提名委員會職權及責任範圍守則 Terms of Reference of the Nomination Committee （於 2025 年 10 月修訂） (revised in October 2025) 1. 總則 General Rules 1.1 本公司根據《香港聯合交易所有限公司證券上市規則》（"《上市規則》"）及《上 市規則》附錄C1《企業管治守則》規定，成立提名委員會（"委員會"），委員會之權 力、責任及具體職責概述如下。 The Nomination Committee (the "Committee") was established by the Company in accordance with ...

Group 1 - The company announced the sale of approximately 6.9152% equity in Chengdu Jinkong Financing Leasing for a total consideration of approximately RMB 85.764 million [1] - Following the completion of the sale, the company will no longer hold any equity in the target company [1] - The target company primarily engages in financing leasing and related leasing services [1] Group 2 - The sale aligns with the company's strategic development plan to optimize asset structure and focus on core business while divesting non-core and non-advantageous enterprises [2] - This transaction will help the company comply with the State-owned Assets Supervision and Administration Commission's requirements regarding central enterprises holding stakes in financial companies [2] - The sale is expected to enhance resource allocation efficiency, reduce financial risks associated with non-core financial businesses, and improve the company's capital structure [2]

Core Viewpoint - Honghua Group (00196) has announced the sale of approximately 6.9152% equity in Chengdu Jiaozi Financial Leasing Co., Ltd. for a total consideration of approximately RMB 85.764 million, aligning with its strategic development plan to optimize asset structure and focus on core business [1][1][1] Group 1: Transaction Details - Honghua Holdings and Sichuan Honghua have entered into agreements with Chengdu Jiaozi to sell a combined 6.9152% stake in Chengdu Jiaozi Financial Leasing Co., Ltd. [1] - The total consideration for the sale is approximately RMB 85.764 million [1] Group 2: Strategic Implications - The sale will result in the group no longer holding any equity in the target company, which is part of a strategy to divest non-core and non-advantageous enterprises [1][1] - This transaction is expected to help the company comply with the State-owned Assets Supervision and Administration Commission's management requirements regarding central enterprises holding stakes in financial companies [1] - The divestment aims to reduce risks associated with non-core financial operations and optimize the group's equity structure and capital allocation [1][1] - By transferring the equity through a public listing, the company aims to realize asset monetization, increase liquidity, improve the asset-liability structure, and lower financial costs, thereby supporting the focus on core business and promoting transformation and high-quality development [1][1]

Core Viewpoint - Honghua Group (00196) announced the sale of approximately 6.9152% equity in Chengdu Jiaozi by its subsidiaries for a total consideration of approximately RMB 85.764 million, aligning with its strategic development plan to optimize asset structure and focus on core business [1] Group 1: Transaction Details - The agreement involves Honghua Holdings and Sichuan Honghua selling a combined 6.9152% stake in Chengdu Jinkong Financing Leasing Co., Ltd. to Chengdu Jiaozi [1] - The total consideration for the sale is approximately RMB 85.764 million [1] - Post-transaction, the group will no longer hold any equity in the target company [1] Group 2: Strategic Implications - The sale is part of the company's strategy to optimize asset structure, focusing on core business and divesting non-core and non-advantageous enterprises [1] - This move is expected to help the company comply with the State-owned Assets Supervision and Administration Commission's management requirements regarding central enterprises holding stakes in financial companies [1] - The transaction aims to reduce risks associated with non-core financial businesses and improve the group's equity structure and capital allocation [1] Group 3: Financial Impact - The public transfer of the equity stake is anticipated to realize asset monetization, increase liquidity, and improve the asset-liability structure [1] - The sale is expected to lower financial costs, supporting the group's focus on core responsibilities, transformation, and high-quality development [1] - The board believes that the transaction aligns with the overall interests of the company and all shareholders [1]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性或完 整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部份內容而產生或因倚賴該等內 容而引致的任何損失承擔任何責任。 HONGHUA GROUP LIMITED 宏華集團有限公司 上市規則的涵義 由於出售事項相關的最高適用百分比率（定義見上市規則）超過5%但低於25%，根據上市規則第 十四章，出售事項構成本公司的須予披露交易。因此，出售事項須遵循上市規則第十四章的申報 及公告規定。 1 A. 出售事項 於2025年10月16日，本公司附屬公司宏華控股與成都交子訂立宏華控股協議，而本公司另一附 屬公司四川宏華亦於同日與成都交子訂立四川宏華協議。根據該等協議，宏華控股及四川宏華 分別同意向成都交子出售，而成都交子則同意收購目標公司合計約6.9152%的股權，總代價約人 民幣85,764,000元。出售事項的主要條款概述如下。 （於開曼群島註冊成立的有限公司） （股份代號：196) 須予披露的交易 出售目標公司權益 出售事項 於2025年10月16日，本公司附屬公司宏華控股與成都交子訂立宏華控股協議，而本公司另一附屬 公司四 ...

股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 截至月份: 2025年9月30日 狀態: 新提交 致：香港交易及結算所有限公司 公司名稱: HONGHUA GROUP LIMITED 宏華集團有限公司 (於開曼群島註冊成立之有限公司) 呈交日期: 2025年10月8日 I. 法定/註冊股本變動 | 1. 股份分類 | 普通股 | 股份類別 | 不適用 | | 於香港聯交所上市 (註1) | | 是 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 00196 | 說明 | 普通股 | | | | | | | | | 法定/註冊股份數目 | | | 面值 | | 法定/註冊股本 | | | 上月底結存 | | | 10,000,000,000 | HKD | | 0.1 HKD | | 1,000,000,000 | | 增加 / 減少 (-) | | | 0 | | | HKD | | 0 | | 本月底結存 | | | 10,000,000,000 | HKD | | 0.1 ...

Financial Performance - For the first half of 2025, the company recorded revenue of RMB 2,601.07 million, a decrease of RMB 174.93 million or 6.3% compared to RMB 2,776.00 million in the same period last year[11]. - The company's gross profit was RMB 338.59 million, an increase of 12.3% year-on-year, resulting in a gross profit margin of 13.0%, up 2.1 percentage points from the previous year[12]. - Net profit attributable to shareholders was RMB 37.10 million, a significant increase of RMB 34.68 million compared to the same period last year[12]. - Revenue for the period was approximately RMB 2.601 billion, a decrease of RMB 175 million or 6.3% compared to RMB 2.776 billion in the same period last year[47]. - Gross profit was approximately RMB 339 million, an increase of RMB 37 million or 12.3% from RMB 302 million in the previous year, with a gross margin of 13.0%, up from 10.9%[46][50]. - The company reported a net profit margin of 1.4%[54]. - The company’s earnings for the period were RMB 37,095,000, compared to a loss of RMB 548,000 in the previous period, indicating a turnaround in profitability[102]. Revenue Breakdown - Revenue from the Chinese market was RMB 1,295.53 million, a slight decrease of 0.06%, accounting for 49.8% of total revenue[13]. - Revenue from overseas markets was RMB 1,305.55 million, down 11.8%, accounting for 50.2% of total revenue[13]. - Revenue from the Middle East market increased by 32.1% to RMB 1,029.81 million, representing 39.6% of total revenue for the first half of 2025[13]. - Revenue from land drilling machines was RMB 801.45 million, a decrease of 7.8% year-on-year, accounting for 30.8% of total revenue for the first half of 2025[20][21]. - Revenue from the marine segment increased by 35.0% year-on-year to RMB 616.94 million, representing 23.7% of total revenue[20][21]. - The drilling engineering services segment generated revenue of RMB 174.51 million, accounting for 6.7% of total revenue, a slight increase of 0.4% compared to RMB 173.80 million in the same period of 2024[28]. - Revenue from the offshore wind power business generated revenue of RMB 353.75 million, accounting for 57.3% of the marine segment's revenue, a decline of 18.9% from RMB 436.38 million in 2024[32]. Cost Management - The company reduced financing costs by 0.89 percentage points to 2.5%, with interest expenses decreasing by 27.5%[12]. - Sales costs were approximately RMB 2.262 billion, a decrease of RMB 212 million or 8.6% from RMB 2.474 billion in the previous year[48]. - The group's distribution expenses for the period were approximately RMB 75 million, a decrease of RMB 5 million or 6.8% compared to the same period last year[51]. - The group's financial expenses net amount was approximately RMB 41 million, a decrease of RMB 28 million or 40.5% compared to the same period last year, due to improved financing structure[51]. Operational Efficiency - The average turnover days for accounts receivable decreased by 67 days to 201 days, while inventory turnover days decreased by 18 days to 126 days[12]. - Operating cash flow net amount increased significantly by 132.4% year-on-year, reaching approximately RMB 93.67 million[12]. - The company aims to optimize its business structure and focus on core business areas to enhance overall profitability[47]. - The company has successfully passed the API Q2 certification, enhancing its service quality in the oil and gas industry[43]. Research and Development - The group applied for 55 patents during the reporting period, including 30 invention patents, bringing the total effective patents to 859 as of June 30, 2025[18]. - The group's R&D expenses were approximately RMB 77 million, an increase of RMB 19 million or 31.8% year-on-year, reflecting a continued investment in automation and digitalization[51]. - The company will maintain a research and development investment intensity of about 5% to support technological innovation and high-end development[45]. Market Strategy - The company plans to strengthen its market position in the Middle East and expand into emerging markets, particularly in offshore drilling platforms and marine wind power[42]. - The company is focusing on technological breakthroughs in core areas such as drilling and completion equipment, marine engineering equipment, and digital products[44]. - The group aims to enhance its core competitiveness in high-end shipbuilding by entering the high-end scientific research vessel construction market[17]. Corporate Governance - The company has adopted the Corporate Governance Code as a standard for its corporate governance practices, emphasizing a high-quality board and effective internal controls[72]. - As of June 30, 2025, the board has complied with the requirement of having at least three independent non-executive directors, constituting at least one-third of the board[76]. - The Audit Committee, consisting of three members including two independent non-executive directors, is responsible for reviewing the adequacy and effectiveness of the company's financial reporting and internal control systems[77]. Shareholder Information - Major shareholders include Tricor Equity Trustee Limited with 491,576,295 shares (5.44% of issued share capital) and Dongfang Electric Group International Investment Co., Ltd. with 5,290,494,251 shares (58.52% of issued share capital)[84]. - The company has authorized a total of 513,742,090 stock options under the 2017 stock option plan, which represents approximately 5.68% of the issued share capital as of June 30, 2025[87]. - The company did not recommend the distribution of interim dividends for the six months ended June 30, 2025, consistent with the decision for the same period in 2024[127]. Financial Position - As of June 30, 2025, the group's total liabilities were approximately RMB 9.055 billion, with a debt-to-asset ratio of 71.2%, an increase of 1.9 percentage points from December 31, 2024[62]. - The group's total equity as of June 30, 2025, was approximately RMB 3.655 billion, a decrease of RMB 10 million from December 31, 2024[63]. - The company reported a significant increase in procurement of components from related parties, totaling RMB 332,488,000 for the six months ended June 30, 2025, compared to RMB 189,944,000 in the same period of 2024, representing an increase of approximately 75%[151].

股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 截至月份: 2025年8月31日 狀態: 新提交 致：香港交易及結算所有限公司 公司名稱: HONGHUA GROUP LIMITED 宏華集團有限公司 (於開曼群島註冊成立之有限公司) 呈交日期: 2025年9月2日 I. 法定/註冊股本變動 | 1. 股份分類 | 普通股 | 股份類別 不適用 | | | 於香港聯交所上市 (註1) | 是 | | | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 00196 | 說明 普通股 | | | | | | | | | 法定/註冊股份數目 | | 面值 | | 法定/註冊股本 | | | 上月底結存 | | 10,000,000,000 | HKD | | 0.1 HKD | | 1,000,000,000 | | 增加 / 減少 (-) | | | 0 | | HKD | | 0 | | 本月底結存 | | 10,000,000,000 | HKD | | 0.1 HKD | | 1,000,000,0 ...