中华国际(01064) - 2025 - 中期财报

Table of Contents This section lists the main chapters and their corresponding page numbers within the report Company Information This chapter provides essential corporate details including board members, registered office, auditors, legal advisors, and principal banks - The company's Board of Directors includes Executive Director Ho Kam Hung, Non-executive Director Yeung Kwok Shui, and three Independent Non-executive Directors Wong Kui Fai, Wong Miu Ting, and Tam Kong[10] - The company's registered office is in Bermuda, its Hong Kong head office and principal place of business are in Shun Tak Centre, Central, Hong Kong, and its main office in mainland China is in Gangyu Plaza, Chongqing[10] - The company's auditor is Ernst & Young, and legal advisors include Reed Smith Richards Butler (Hong Kong law) and Conyers Dill & Pearman (Bermuda law)[10] Management Discussion and Analysis This chapter reviews the company's financial performance, business operations, future outlook, and employee policies for the six months ended June 30, 2025 Financial Review The company's financial performance significantly improved, achieving profitability driven by fair value gains on equity interests, while maintaining stable liquidity Performance Overview The company achieved revenue growth and turned a loss into profit in the first half of 2025, primarily due to fair value gains on equity interests | Indicator | H1 2025 (HK$'000) | H1 2024 (HK$'000) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 15,502 | 14,259 | 8.7% Growth | | Profit/(Loss) attributable to ordinary equity holders | 10,165 | (9,583) | Turned from loss to profit | | Adjusted EBITDA | 2,906 | 331 | 777.9% Growth | | Profit/(Loss) before tax | 43,202 | (28,093) | Turned from loss to profit | | Profit/(Loss) after tax | 40,564 | (30,783) | Turned from loss to profit | - The turnaround to profit before tax was mainly due to a fair value gain of HK$40,464,000 on equity interests in an entity (2024: loss of HK$28,255,000), primarily from exchange gains due to RMB appreciation[14] Liquidity and Financial Resources The company's operating cash flow turned positive, cash balances remained stable, and a low gearing ratio indicates a robust financial position | Indicator | H1 2025 (HK$'000) | H1 2024 (HK$'000) | Change | | :--- | :--- | :--- | :--- | | Net cash flow from operating activities | 6,026 | (3,658) | Turned from net outflow to net inflow | | Cash and bank balances (period-end) | 63,564 | 63,573 (2024-12-31) | Largely stable | | Indicator | June 30, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Gearing ratio | 0.10 | 0.10 | Stable | | Net current assets | 11,406,000 | 20,289,000 | Decreased | | Net assets | 1,024,837,000 | 978,126,000 | Increased | | Total assets | 1,452,264,000 | 1,403,511,000 | Increased | - The Group's principal operations are in mainland China, exposing it to exchange rate risk, but no hedging measures were taken in prior years as exchange rate fluctuations were not considered significant[20] Significant Investments, Asset Pledges, and Contingent Liabilities The company's major investment in equity interests at fair value through profit or loss generated significant gains, with no asset pledges or material contingent liabilities | Indicator | June 30, 2025 (HK$'000) | Dec 31, 2024 (HK$'000) | Change | | :--- | :--- | :--- | :--- | | Equity interests at fair value through profit or loss | 1,015,157 | 974,693 | Increased | | % of total assets | Approx. 70% | Approx. 70% | Stable | - This significant investment is held by Hong Kong Zhengda, which owns all equity in Guangzhou Zhengda, and generated a fair value change gain of HK$40,464,000 during the period (2024: loss of HK$28,255,000)[22] - As of June 30, 2025, the Group had no asset pledges or any material contingent liabilities[23][24] Interim Dividends and Share Option Scheme The Board does not recommend an interim dividend, and 5 million share options remain unexercised, representing approximately 0.65% of total issued shares - The Board does not recommend the payment of an interim dividend for the current period (2024: nil)[25] - As of June 30, 2025, 5,000,000 share options remained unexercised, representing approximately 0.65% of the company's total issued shares, with an exercise price of HK$0.09 per share[26][30] Update on Use of Proceeds Of the HK$16.1 million net proceeds from the 2020 share issue, HK$12.0 million remains unutilized for the Guangzhou redevelopment project, pending reallocation | Use Category | Intended Net Proceeds (HK$ million) | Utilized Net Proceeds (HK$ million) | Unutilized Balance (HK$ million) | Expected Utilization Time | | :--- | :--- | :--- | :--- | :--- | | Guangzhou redevelopment project costs in mainland China | 12.0 | – | 12.0 | On or before June 30, 2027 | | General working capital | 4.1 | 4.1 | – | – | | Total | 16.1 | 4.1 | 12.0 | | - As Guangzhou Zhengda is no longer considered a subsidiary of the Group, the Board will consider reallocating the HK$12,000,000 of proceeds originally earmarked for the Guangzhou Zhengda redevelopment project[33] Business Review The group's core business involves property development, investment, and management in mainland China, with stable cash flow from Chongqing and delays in the Guangzhou redevelopment project due to a winding-up petition Property Investment The group's property investment in Gangyu Plaza, Chongqing, provides stable cash flow with high occupancy and acceptable tenant turnover - The Group holds partial property interests in Gangyu Plaza, Yuzhong District, Chongqing, with a total gross floor area of approximately 24,200 sqm, fully renovated in 2016[39] - Gangyu Plaza is currently a multi-story shopping mall primarily engaged in wholesale and retail of menswear and footwear, with almost full occupancy and acceptable tenant turnover, providing stable cash flow[39] Property Development and Properties Held for Sale The Guangzhou Yuexiu District redevelopment project is planned as a high-end commercial complex with an estimated completion by early 2030, alongside approximately 190 residential units held for sale - The Guangzhou Yuexiu District redevelopment project (formerly Guangzhou Metropolis Shoe City) is planned as a high-end commercial complex with a total gross floor area of approximately 234,000 sqm, including twin towers and a 3-level basement[42] - According to the latest construction timetable, the redevelopment project is expected to take about four years, completed in two to three phases, with the first phase completed by late 2029 at the earliest, and the final phase by Q1 2031, with an expected opening in early 2030[42] - Guangzhou Zhengda owns approximately 190 residential units (total gross floor area of approximately 11,000 sqm) held for sale, used for temporary resettlement of relocated owners, currently vacant or available for spot sale[43] Winding-up Petition Against Guangzhou Zhengda Guangzhou Zhengda faces an ongoing winding-up petition which management believes lacks factual and legal basis, while the company extends the deadline for a significant acquisition - Guangzhou Zhengda has faced a winding-up petition since 2009, but the petitioner (Yuefang Private Enterprise) is neither a registered shareholder nor a verified beneficial shareholder or creditor, thus not meeting the prerequisites for a winding-up application[44][50] - Although the Guangzhou Intermediate People's Court initially dismissed the winding-up application, it was later overturned by the Guangdong High People's Court, which ordered continued proceedings and appointed a new liquidation committee; however, Guangzhou Zhengda's management refused to cooperate, and business continues as usual to date[47][49][50] - The company reiterates that the winding-up petition lacks factual and legal basis and is confident that the lawsuit will be ruled invalid or dismissed in the foreseeable future (e.g., approximately two years)[52] - The Group has further extended the long stop date for a significant acquisition to June 30, 2026, aiming to reach revised terms for the acquisition[52] Outlook The company survived the property market downturn with a low-leverage strategy, remains confident in the Guangzhou redevelopment project, and plans to explore new energy-related investment opportunities - The Group survived the volatile mainland property market due to its low-leverage principle, with a gearing ratio of only 0.1 during the period[54] - The Guangzhou Yuexiu District redevelopment project, leveraging its prime commercial location and subway connectivity, is planned as a cutting-edge commercial complex with environmental, energy-saving, emission-reduction, and humanistic features, aiming to become a national key project[54] - The Guangzhou Yuexiu District redevelopment project timeline will be extended by one year, with full commencement of construction by early 2028, aiming for the first phase to be completed by Q4 2029[55] - The Group intends to spin off a new division within its construction engineering department to provide one-stop photovoltaic power generation, storage, and charging solutions for public and private clients in the Greater Bay Area[58] Employees and Remuneration Policy The group employs approximately 20 staff, with total employee costs of HK$3.767 million, and offers competitive compensation, benefits, and training to attract and retain talent | Indicator | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Number of employees | Approx. 20 | 20 | | Indicator | H1 2025 (HK$'000) | H1 2024 (HK$'000) | | :--- | :--- | :--- | | Total staff costs (including directors' emoluments) | 3,767 | 3,870 | - The company offers competitive remuneration packages, medical insurance, provident fund contributions, and discretionary bonuses, while continuously providing training and development resources for employees[61] Disclosure of Interests This chapter details the interests of directors, chief executives, and major shareholders in the company's shares and its associated corporations Directors' and Chief Executive's Interests in Shares of the Company and its Associated Corporations Executive Director Mr. Ho Kam Hung holds a 15.30% long position in the company's shares, including direct and controlled corporate interests, and deferred shares in subsidiaries | Director Name | Capacity and Nature of Interest | Number of Shares Held | % of Company's Share Capital | | :--- | :--- | :--- | :--- | | Ho Kam Hung | Through controlled corporation | 110,600,000 | 14.39% | | | Beneficially owned directly | 7,000,000 | 0.91% | | | Total | 117,600,000 | 15.30% | | Director Name | Name of Associated Corporation | Relationship with Company | Shares/Equity Derivatives | Number | Capacity and Nature of Interest | % of Issued Share Capital of Associated Corporation | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Ho Kam Hung | Superb Holdings Limited | Subsidiary | Non-voting deferred shares | 91 | Beneficially owned directly | 30.13% | | Ho Kam Hung | China Properties Holdings Limited | Subsidiary | Non-voting deferred shares | 91 | Beneficially owned directly | 30.13% | Directors' Rights to Acquire Shares No rights to acquire shares or debentures of the company or any other body corporate were granted to or exercised by directors, their spouses, or minor children during the period - During the period, no rights to acquire benefits by way of acquisition of shares or debentures of the company or any other body corporate were granted to any director, their respective spouses, or minor children, nor were any such rights exercised by them[68] Major Shareholders As of June 30, 2025, several major shareholders, including family members and corporate entities, held significant long positions in the company's shares | Shareholder Name/Entity | Capacity and Nature of Interest | Number of Shares Held | % of Company's Share Capital | | :--- | :--- | :--- | :--- | | Yip Ka Lai | Spouse's interest | 117,600,000 | 15.30% | | Ho Cham Hung | Through controlled corporation | 105,600,000 | 13.74% | | Ho Pak Hung | Through controlled corporation | 99,800,000 | 12.98% | | Leung Kwai Fun | Spouse's interest | 99,800,000 | 12.98% | | Easy Rich Limited | Beneficially owned directly | 87,120,000 | 11.33% | | Lead Talent Investment Limited | Beneficially owned directly | 108,000,000 | 14.05% | | Guangshi Harvest Limited | Through controlled corporation | 108,000,000 | 14.05% | | China Guangshi International Investment Co., Ltd. | Through controlled corporation | 108,000,000 | 14.05% | | Xinjiang Guangshi Han Hong Equity Investment Management Co., Ltd. | Through controlled corporation | 108,000,000 | 14.05% | | Strong Holdings Limited | Beneficially owned directly | 100,000,000 | 13.01% | | Tse Hau Cheung | Through controlled corporation | 100,000,000 | 13.01% | Disclosures Pursuant to Listing Rules The company generally complied with the Corporate Governance Code and Model Code for Securities Transactions, with no trading of listed securities by the company or its subsidiaries - The company has generally complied with the Corporate Governance Code as set out in Appendix C1 to the Listing Rules throughout the period[74] - The company confirms that all directors have complied with the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing Rules throughout the period[75] - During the period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[76] - The company's unaudited condensed consolidated financial statements for the period have been reviewed by the company's Audit Committee and approved by the Board on August 29, 2025[77][78] Unaudited Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements for the six months ended June 30, 2025, including statements of profit or loss, comprehensive income, financial position, changes in equity, cash flows, and explanatory notes Condensed Consolidated Statement of Profit or Loss The company reported increased revenue and a turnaround from loss to profit, primarily driven by fair value changes in equity interests at fair value through profit or loss | Indicator | Six Months Ended June 30, 2025 (HK$'000) | Six Months Ended June 30, 2024 (HK$'000) | | :--- | :--- | :--- | | Revenue | 15,502 | 14,259 | | Fair value change of equity interests at fair value through profit or loss | 40,464 | (28,255) | | Administrative expenses | (12,792) | (14,381) | | Profit/(Loss) for the period | 40,564 | (30,783) | | Attributable to ordinary equity holders of the company | 10,165 | (9,583) | | Basic earnings/(loss) per share | 1.32 HK cents | (1.25) HK cents | Condensed Consolidated Statement of Comprehensive Income Total comprehensive income for the period turned from a loss to a profit, mainly due to the period's profit and positive exchange differences from overseas operations | Indicator | Six Months Ended June 30, 2025 (HK$'000) | Six Months Ended June 30, 2024 (HK$'000) | | :--- | :--- | :--- | | Profit/(Loss) for the period | 40,564 | (30,783) | | Exchange differences arising from translation of overseas operations | 6,147 | (4,644) | | Total comprehensive income/(expense) for the period | 46,711 | (35,427) | | Attributable to ordinary equity holders of the company | 19,051 | (16,543) | Condensed Consolidated Statement of Financial Position Total assets and net assets increased, with equity interests at fair value through profit or loss and investment properties being key non-current assets, despite a decrease in net current assets | Indicator | June 30, 2025 (HK$'000) | Dec 31, 2024 (HK$'000) | | :--- | :--- | :--- | | Total non-current assets | 1,370,633 | 1,317,420 | | - Equity interests at fair value through profit or loss | 1,015,157 | 974,693 | | - Investment properties | 352,440 | 339,624 | | Total current assets | 81,631 | 86,091 | | Total current liabilities | (70,225) | (65,802) | | Net current assets | 11,406 | 20,289 | | Net assets | 1,024,837 | 978,126 | | Total equity | 1,024,837 | 978,126 | Condensed Consolidated Statement of Changes in Equity Total equity increased during the period, primarily attributable to the profit for the period and positive exchange differences related to overseas operations | Indicator | Jan 1, 2025 (HK$'000) | Profit for the period (HK$'000) | Exchange differences (HK$'000) | June 30, 2025 (HK$'000) | | :--- | :--- | :--- | :--- | :--- | | Attributable to equity holders of the company | 320,416 | 10,165 | 8,886 | 339,467 | | Non-controlling interests | 657,710 | 30,399 | (2,739) | 685,370 | | Total Equity | 978,126 | 40,564 | 6,147 | 1,024,837 | Condensed Consolidated Statement of Cash Flows Cash flow from operating activities turned into a net inflow, but a decrease in net cash flow from financing activities led to a slight reduction in cash and cash equivalents at period-end | Indicator | Six Months Ended June 30, 2025 (HK$'000) | Six Months Ended June 30, 2024 (HK$'000) | | :--- | :--- | :--- | | Cash flows from/(used in) operating activities | 6,026 | (3,658) | | Net decrease in cash flows from financing activities | (8,329) | (6,088) | | Net decrease in cash and cash equivalents | (2,303) | (9,746) | | Cash and cash equivalents at end of period | 63,564 | 78,763 | Notes to the Condensed Consolidated Financial Statements These notes detail the basis of preparation, accounting policies, segment information, tax, EPS, receivables/payables, litigation, related party transactions, and valuation methods for equity interests at fair value through profit or loss Basis of Preparation and Principal Accounting Policies The condensed consolidated financial statements are prepared in accordance with HKAS 34 and Listing Rules, with no material impact from the newly adopted HKAS 21 (amended) - The condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34 - Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of the Listing Rules[87] - The revised HKAS 21 (amended) Lack of Exchangeability was adopted for the first time during the period, but it had no significant impact on the results and financial position[88][89] Operating Segment Information The group operates in property investment and development, and corporate and other segments, with over 90% of revenue generated from mainland China customers - The Group has two reportable operating segments: (a) property investment and development segment, and (b) corporate and other segments[90][92] - Over 90% of the Group's revenue is derived from customers in mainland China, hence no geographical segment information is presented[91] | Segment | H1 2025 Revenue (HK$'000) | H1 2024 Revenue (HK$'000) | | :--- | :--- | :--- | | Property investment and development | 15,502 | 14,259 | | Corporate and other | – | – | | Total | 15,502 | 14,259 | Profit/(Loss) Before Tax and Income Tax Profit before tax was significantly influenced by fair value changes in equity interests at fair value through profit or loss, with income tax primarily from mainland China subsidiaries at a 25% rate | Indicator | H1 2025 (HK$'000) | H1 2024 (HK$'000) | | :--- | :--- | :--- | | Depreciation of property, plant and equipment | 168 | 169 | | Fair value change of equity interests at fair value through profit or loss | (40,464) | 28,255 | | Interest income | (28) | (68) | - The Group did not generate any assessable profits in Hong Kong during the period, and mainland China subsidiaries are subject to income tax at a rate of 25%[98] | Income Tax Category | H1 2025 (HK$'000) | H1 2024 (HK$'000) | | :--- | :--- | :--- | | Current - Mainland China enterprise income tax | 1,967 | 1,924 | | Deferred | 671 | 766 | | Total tax expense for the period | 2,638 | 2,690 | Interim Dividends and Earnings/(Loss) Per Share The Board does not recommend an interim dividend, and basic earnings per share for the period was 1.32 HK cents, a significant improvement from the prior year's loss - The Board does not recommend the payment of an interim dividend for the current period (2024: nil)[99] | Indicator | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Profit/(Loss) attributable to ordinary equity holders of the company | HK$10,165,000 | (HK$9,583,000) | | Number of ordinary shares in issue | 768,616,520 shares | 768,616,520 shares | | Basic earnings/(loss) per share | 1.32 HK cents | (1.25) HK cents | - As of June 30, 2025 and 2024, the Group had no potential dilutive ordinary shares in issue[102] Trade Receivables and Payables Trade receivables decreased and are all current, while trade payables, primarily over one year old, remained stable | Trade Receivables Ageing | June 30, 2025 (HK$'000) | Dec 31, 2024 (HK$'000) | | :--- | :--- | :--- | | Within 6 months | 13,343 (100%) | 13,997 (67%) | | Over 6 months but less than 1 year | – | 6,862 (33%) | | Total | 13,343 | 20,859 | - The Group generally grants credit terms of 3 to 12 months to customers, and trade receivables are interest-free[103] | Trade Payables Ageing | June 30, 2025 (HK$'000) | Dec 31, 2024 (HK$'000) | | :--- | :--- | :--- | | Over 1 year | 1,914 (100%) | 1,844 (100%) | | Total | 1,914 | 1,844 | Litigation and Related Party Transactions Significant litigation details are in the MD&A, and related party transactions include office usage fees paid to a private company controlled by an executive director - Details of the Group's significant litigation are disclosed in the "Management Discussion and Analysis" section of this report[106] - During the period, a subsidiary of the company obtained the right to use an office in Hong Kong from a private company controlled by an executive director, incurring a license fee of HK$899,000 (2024: HK$922,000)[107] - As of June 30, 2025, amounts payable to related companies were HK$4,181,000 (December 31, 2024: HK$3,283,000), included in "Other payables and accrued liabilities"[107] Equity Interest in an Entity at Fair Value Through Profit or Loss The equity interest in Guangzhou Zhengda, valued at fair value through profit or loss, increased in carrying amount due to significant fair value gains, estimated using discounted net realizable value | Indicator | H1 2025 (HK$'000) | H1 2024 (HK$'000) | | :--- | :--- | :--- | | Carrying amount at January 1 | 974,693 | 1,030,472 | | Fair value change recognized in profit or loss | 40,464 | (28,255) | | Carrying amount at June 30 | 1,015,157 | 1,002,217 | - Fair value measurement is classified as Level 3, using the discounted net realizable value method, with a discount rate of 3.5% (December 31, 2024: 3.6%) for cash flow projections[109] - A 1% increase in the discount rate would result in a decrease in fair value of approximately HK$42,989,000, while a 1% decrease would result in an increase of approximately HK$45,335,000[109] | Asset Category | Valuation Technique | Significant Unobservable Input Data | Weighted Average/Range June 30, 2025 | Weighted Average/Range Dec 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Investment properties | Residual method | Unit price per sqm | HK$28,270 to HK$50,380 | HK$27,242 to HK$48,548 | | | | Estimated completion cost per sqm | HK$7,150 to HK$9,790 | HK$6,890 to HK$9,434 | | | | Discount rate for recovery | 25% | 25% | | Properties held for sale | Market approach | Unit price per sqm | HK$12,474 to HK$14,058 | HK$12,020 to HK$13,547 | | | | Discount rate for recovery | 25% | 25% |