MANAGEMENT DISCUSSIONS AND ANALYSIS
The Group consists of two major businesses: Trading and Distribution and OEM Manufacturing.

MARKET OVERVIEW
The macroeconomic environment in 2025 remains increasingly complex, influenced by evolving geopolitical developments and ongoing inflationary pressures. Following a period of significant global disruptions and the highest effective tariff levels seen in a century, the broader outlook continues to reflect elevated downside risks. Governments worldwide are adjusting and redefining policy priorities, contributing to a more dynamic and challenging operating landscape. Despite these headwinds, the Group has applied disciplined strategic decisions to reinforce resilience, strengthen customer alignment, and drive operational improvements, ensuring continued progress throughout 2025.

BUSINESS REVIEW
The Group’s revenue for the year ended 31 December 2025 was HK$3.67 billion, reflecting an increase of approximately 6.6% compared to 2024. The Group’s loss attributable to owners of the Company for the year was HK$55.3 million, representing a substantial narrowing of 70.9% as compared to the loss attributable to owners of the Company of HK$190.2 million for last year.

This substantial improvement was primarily driven by the strong performance of the Trading and Distribution Division, strategic response to persistent geopolitical headwinds and the prevailing volatility in the global economic landscape within the OEM Manufacturing Division, as well as a reduction in net financing costs attributable to lower interest expenses on bank borrowings amid an overall decrease in interest rates.

Trading and Distribution Division

The revenue of the Group’s Trading and Distribution Division for the year ended 31 December 2025 was HK$1.8 billion, representing an increase of approximately 17% compared to 2024. This was primarily driven by increased demand for products distributed by the Trading and Distribution Division’s subsidiaries in the PRC and Taiwan throughout 2025, as customers expanded inventory levels and increased capital expenditure in support of their production capacity expansion plans. The key driver of this demand was the increased capital expenditure by customers in the PCB manufacturing and semiconductor sectors, primarily attributable to investment requirements arising from artificial intelligence related demand. As a result, the Trading and Distribution Division achieved an operating profit of HK$159.2 million as compared to an operating profit of HK$65 million for 2024.

OEM Manufacturing Division

The Group’s OEM Manufacturing Division recorded a moderate increase in revenue by 7.5% in the second half of 2025 compared with the first half of 2025. Nevertheless, an unexpected short-term supply chain shortage in the fourth quarter of 2025, which has since been resolved, resulted in a slight decline in revenue by 0.6% to HK$1.82 billion for the year ended 31 December 2025 compared to 2024. Despite this, the OEM Manufacturing Division’s operating loss was reduced to HK$106.1 million for the year ended 31 December 2025 compared to an operating loss of HK$169.2 million for 2024. This improvement was primarily attributable to the OEM Manufacturing Division’s effective execution of its operational cost reduction plan and ongoing initiatives to enhance operational efficiency, strengthen labor productivity, and reduce indirect overhead expenses. These measures demonstrate the OEM Manufacturing Division’s strategic response to persistent geopolitical headwinds and continued volatility in the global economic landscape throughout 2025.

DNP Voluntary Liquidation: Progressing as Planned

As announced on 2 January 2026, the Group initiated the voluntary liquidation of Dongguan Nissin Plastic Products Co., Ltd. (“DNP”), an indirectly wholly-owned subsidiary of the Company as at 31 December 2025. The liquidation is proceeding as planned. The Group recognised HK$31.3 million as a cost on restructuring, which comprised of: (i) severance payments under employee benefit expenses; (ii) shutdown-related costs under other expenses; and (iii) inventory write-off under changes in inventories of finished goods and work in progress. Excluding this one-off restructuring cost of HK$31.3 million, the loss attributable to owners of the Company for the year ended 31 December 2025 would be reduced to approximately HK$24 million.

FINANCIAL REVIEW

Revenue
The Group recorded a revenue of HK$3.67 billion, an increase of 6.6% compared to 2024. Trading and Distribution Division delivered strong revenue growth of 17%, while OEM Manufacturing Division revenue was slightly lower by 0.6%.

Employee benefit expenses and other expenses
Employee benefit expenses for the year ended 31 December 2025 were reduced by 5.9% to HK$585.1 million.

Other expenses for the year ended 31 December 2025 were increased by 12.8% to HK$227.4 million.
(Please refer to Note 4 to the consolidated financial information).

The variance in employee benefit expenses and other expenses was combined effects driven by the reduction in overall operational costs through active streamlining of underperforming business units and optimizing internal resources to maximize efficiency during the year ended 31 December 2025.

The Group recognised HK$31.3 million as a cost on restructuring, which comprised of: (i) severance payments under employee benefit expenses; (ii) shutdown-related costs under other expenses; and (iii) inventory write-off under changes in inventories of finished goods and work in progress regarding the voluntary liquidation of Dongguan Nissin Plastic Products Co., Ltd. (“DNP”), excluding this one-off restructuring cost of HK$31.3 million, the employee benefit expenses and other expenses for the year ended 31 December 2025 would be reduced to HK$575.8 million and HK$210.6 million, respectively.

Finance costs, net
Finance costs, net for the year ended 31 December 2025 were reduced by 25.4% to HK$24.3 million. This was mainly attributable to lower interest expenses on bank borrowings amid an overall decrease in interest rates.

Income tax expense
Income tax expense of the Group was calculated based on the assessable profits of the subsidiaries at the rates prevailing in the relevant jurisdictions. Income tax expense for year ended 31 December 2025 amounted to HK$47.8 million, representing an increase of 17.5% from HK$40.6 million in 2024. The increase was primarily attributable to tax charges on assessable profits from subsidiaries within the Trading and Distribution Division.

Inventories, Trade Receivables and Trade Payables
Inventories levels amounted to HK$651.2 million as of 31 December 2025, increased from HK$624.4 million as of 31 December 2024. Trade receivables amounted to HK$1,041.9 million as of 31 December 2025, increased from HK$1,031.9 million as of 31 December 2024. Trade payables amounted to HK$602.1 million as of 31 December 2025, increased from HK$524.9 million as of 31 December 2024. These increments were driven by the Group’s disciplined working capital management in response to market dynamics, including procurement planning, sales expansion and supplier settlement schedules.

Bank balances and cash
The Group’s bank balances and cash amounted to HK$614.3 million as of 31 December 2025, increased from HK$526.5 million as of 31 December 2024, which comprised cash and cash equivalents of HK$534 million (31 December 2024: HK$467.4 million) and short-term bank deposits of HK$80.3 million (31 December 2024: HK$59.1 million), with net debt at HK$50.4 million compared to HK$112.5 million as of 31 December 2024. These figures demonstrate effective cash flow management and a stable liquidity position.

Overall, in the face of a volatile external environment, the Group delivered steady revenue, achieved improved financial performance, and maintained a solid consolidated balance sheet.

LIQUIDITY AND FINANCIAL RESOURCES
The Group has committed bank and other financing facilities totaling HK$2,550.7 million, of which HK$706.8 million was drawn down on 31 December 2025.

As of 31 December 2025, total interest-bearing bank borrowings were HK$608.8 million (31 December 2024: HK$567.9 million), comprising mainly bank loans repayable within one year and the interest rates applied were primarily subject to floating rate terms.

Gearing Ratio
As at 31 December 2025, the Group’s consolidated net borrowings amounted to HK$50.4 million and its total equity amounted to HK$1,434.3 million, resulting in a net gearing ratio of 3.5%. The net gearing ratio was calculated as net debt divided by total equity. Net debt is calculated as total bank borrowings and lease liabilities less cash and cash equivalents and short-term bank deposits.

Charges on Group Assets
Apart from pledged short-term bank deposits of HK$4.1 million as of 31 December 2025 (31 December 2024: HK$3.8 million), no other group assets were charged to any financial institutions.

FOREIGN EXCHANGE AND RISK MANAGEMENT
The Group’s reporting currency is Hong Kong dollars (“HK$”). Given the Group’s global operations and presence, the Group faces foreign exchange exposures including transaction and translation exposures and is exposed to exchange rate risks that could impact financial reporting results. As far as possible, the Group aims to achieve natural hedge by conducting sales and corresponding purchase transactions in the same currencies. Where a natural hedge is not possible, the Group will use foreign exchange contracts to hedge foreign exchange risks.

CAPITAL STRUCTURE

The Group’s capital structure consists of bank borrowings, cash and cash equivalents, short-term bank deposits and equity attributable to owners of the Company, comprising issued share capital and reserves.

CAPITAL EXPENDITURE AND COMMITMENTS

During the year ended 31 December 2025, the Group incurred total capital expenditure of approximately HK$11 million (Year ended 31 December 2024: HK$34.1 million) for additions to property, plant and equipment.

As of 31 December 2025, the Group had HK$0.6 million capital commitments contracted but not provided for (31 December 2024: Nil).

On 10 March 2026, the Group commenced to conduct a preliminary assessment of a potential acquisition of property in Taiwan for the operational use of its partially owned subsidiary, Taiwan Kong King Co., Ltd, with no concrete plan finalized at this stage. The Group plans to meet its relevant capital expenditure requirements and the needs of its daily operations primarily through its working capital, reserves and available banking facilities when necessary.

CONTINGENT LIABILITIES

As of 31 December 2025, the Group had no significant contingent liabilities (31 December 2024: Nil).

HUMAN RESOURCES

As at 31 December 2025, the Group had a total of 3,236 employees, of whom 163 were based in Hong Kong, 2,332 in the PRC and 741 overseas. Employee benefit expenses for the year ended 31 December 2025 amounted to HK$585.1 million (Year ended 31 December 2024: HK$621.9 million). The remuneration packages of the Group’s employees are mainly based on their performance and experience, taking into accounts current industry practices. Provident fund scheme, medical allowance and in-house and external training programs are available to employees. Share options and discretionary bonus may be provided to employees according to the performance of the individual and the Group. The remuneration policy and packages of the Group’s employees are regularly reviewed.

 

ENVIRONMENTAL MANAGEMENT

The Group is committed to making contributions in various areas of sustainable development, including environment protection. The Group has established a green council to lead and organize various environmental protection activities and programs.

The Group has set up various systems, including a sewage treatment plant, solar panels for warming water supplies for workers, LED and solar energy lighting systems, computerized filing systems to limit paper usage, lead-free soldering systems, an ISO14001 certified environmental management system since 2002, an IECQ QC080000 hazardous substance process management system, as well as an ISO50001 energy management system for the monitoring and improvement of greenhouse gas emissions and energy consumption.

The Group applies environmentally friendly designs and packaging and complies with green procurement policies. Moreover, the supply chain and the entire product life-cycle are in keeping with a clean and green manufacturing policy, thus producing consistently high-quality green products from start to finish. The Group constantly instils an awareness of environmental protection in its employees, the main internal stakeholders, thereby setting a good example to external stakeholders.

The Group’s success in the field of environmental protection has earned recognition from the Government, industry, customers and suppliers.

SOCIAL RESPONSIBILITY

Corporate social responsibility is one of the core management philosophies in the Group. The Group has made donations to various charities, and also provided scholarships to eligible students who otherwise cannot afford to further their studies at university.

The Group has been awarded the “15 Years Plus Caring Company” logo by the Hong Kong Council of Social Service.

The Group’s staff have formed a volunteer team who contributed their free time in the service of society by visiting and organizing activities at centers for elderly people.

LEGAL AND REGULATORY COMPLIANCE

The Group complies with all relevant laws and regulations that have a significant
impact on the operations of the Group.

STRATEGIES OUTLOOK AND PROSPECTS

In 2025, the Group reinforced strategic resilience, aligned closely with evolving customer needs, and implemented cost reduction and resource optimization initiatives. From 2026 onwards, the focus will shift to monitoring the outcomes of these measures and making timely adjustments to sustain efficiency and resilience. Against the backdrop of ongoing geopolitical tensions and heightened macroeconomic environment, the Group will intensify its integrated local global market approach, leverage global resources while embed deeper regional insights to sharpen customer responsiveness and business relationships. Hong Kong will continue to act as the Group’s coordination centre, delivering strategic support and driving resource efficiency across regional operations to secure broad market reach.

Looking ahead, the Trading and Distribution Division is well-placed to pursue expansion, supported by emerging business opportunities in newly targeted geographic markets and technological trends, such as artificial intelligence and new energy. Building on its intensified integrated local global market approach, the Trading and Distribution Division is expected to maintain stable development and reinforce its competitive positioning.

Similarly, the OEM Manufacturing Division is expected to drive margin improvement by strengthening pricing discipline and reducing procurement costs, while continuously evaluating the operating environment and preparing forecasts under different scenarios. This proactive approach will enable the OEM Manufacturing Division to adapt to the evolving economic conditions, capture new opportunities, and enhance resilience.

On behalf of the Board, I wish to thank all employees for their loyalty, support and hard work throughout the year.

By Order of the Board

Wong Senta
Chairman
Hong Kong, 26 March 2026