减值亏损及拨备上升

Our trade and bills receivables increased from RMB3,827.6 million as of December 31, 2023 to RMB4,493.2 million as of December 31, 2024 a, primarily due to an increase in trade receivables resulting from longer settlement cycles of certain customers of our new energy battery key materials.

Our trade and bills receivables turnover days increased from 97 days in 2023 to 113 days in 2024, primarily due to longer payment settlement cycle resulting from (i) longer payment settlement cycles of our downstream customers amid intensified market competition in the new energy battery industry and (ii) our relatively flexible credit terms granted for certain key strategic customers to maintain long-term cooperation.

Our net impairment losses on financial and contract assets increased significantly from RMB7.2 million in 2023 to RMB36.9 million in 2024, primarily due to an increase in impairment losses on trade receivables (i) an increase in our trade receivables in line with our sales growth and (ii) extended settlement cycle of our certain customers amid intensified market competition.

Our impairment losses under ECL model, net, amounted to RMB566.1 million, RMB389.9 million, RMB276.6 million and RMB222.6 million in 2023, 2024 and for the ten months ended October 31, 2024 and 2025, respectively, accounting for 4.5%, 2.6%, 2.6% and 2.0% of our total revenue for the same periods, respectively.

Our impairment losses under expected credit loss decreased by 31.1% from RMB566.1 million in 2023 to RMB389.9 million 2024, primarily attributable to (i) a decrease in impairment losses on other receivables in 2024, compared with 2023 when we recorded a significant impairment provision on subsidy-related receivables due from government authorities, and (ii) reversal of impairment losses on bills receivable of RMB51.2 million recognized in 2024 primarily due to a decrease in the balance of bills receivable.

Our prepayments and other receivables decreased by 10.1% from RMB1,203.2 million as of December 31, 2023, to RMB1,081.3 million as of December 31, 2024, primarily due to (i) a decrease in deposits and other receivables attributable to refund of certain bid deposits upon the bidding results, and (ii) an increase in impairment provision on receivables due from a local government regarding its subsidies for the EV sector prior to the Track Record Date which had not been fully paid to us.

Our trade receivables turnover days increased from 138.6 days in 2022 to 179.3 days in 2023 and further increased to 284.8 days in 2024, primarily as an increase in trade receivable balance caused by the prolonged payment from certain downstream customers, which can be attributed to their taking additional time to manage their financial commitments effectively during their industries’ downturn, which led to a delay in their payment schedules.

We had a relatively large amount of trade receivables aged over one year, primarily because (i) the industry environment in the downstream market has been increasingly competitive; and (ii) our products are generally subject to a one-year warranty period, after which such amount are included in our trade receivables with aging more than one year if not paid.

As of December 15, 2025, RMB2,157.8 million, or approximately 21.0% of our trade receivables as of September 30, 2025 had been settled.

As at 31 December 2023, our trade receivables were not secured by any collaterals and were not subject to significant risk of concentration, except for amounts due from Bridgex, constituting approximately 51.0% of our total trade and other receivables (excluding prepayments).

A reversal of impairment losses on our trade receivables of approximately RM16.7 million was made for FY2024, as a result of the settlement of a long-outstanding progress payment due from a major customer, Bridgex, during the year, for which the provision of impairment loss was made in 2022, as a result of the impairment assessment on the project, which upstream client of our customer (i.e. the project’s employer) was in significant financial difficulty at the material time and being filed a winding up petition.

As at the Latest Practicable Date, approximately 81.5% of our trade receivables as at 30 June 2025 were subsequently settled.

The significant increase in our loss allowance as of December 31, 2023 and December 31, 2024 was primarily attributable to delay in payments by certain downstream customers due to their worsened operational performance.

Our trade and bills receivables turnover days increased from 87 days in 2023 to 199 days in 2024, primarily attributable to an increase in trade receivable balance caused by the delayed payments from certain downstream customers due to their worsened operational performance, as well as a decrease in revenue.

During the six months ended June 30, 2025, we had recovered RMB20.7 million from Customer F and RMB110,000 from another customer.

Our trade receivables turnover days increased from 96 days in 2022 to 249 days in 2023, as we continued to grow our customer base and granted credit periods to accommodate customers' payment practices.

As of December 31, 2022, 2023, and 2024 and June 30, 2025, we recorded loss allowances for trade receivables of RMB10.3 million, RMB35.5 million, RMB65.4 million (US$9.1 million) and RMB63.4 million (US$8.9 million), respectively.

As of August 31, 2025, RMB73.7 million (US$10.3 million), or 29.4% of our trade receivables and amounts due from related parties as of June 30, 2025, had been settled.

We had trade and bills receivables of RMB31,841.4 million, RMB29,423.9 million, RMB31,256.8 million and RMB33,984.6 million as of December 31, 2022, 2023 and 2024 and April 30, 2025, respectively.

The increase in impairment of trade and bills receivables during the Track Record Period was primarily due to the rise in the balance of trade and bills receivables, driven by the significant increase in overseas revenue contribution, as overseas sales were mainly settled through credit sales.

Our trade and bills receivables turnover days increased from 133 days in 2022 to 151 days in 2023, primarily due to an increase in overseas sales, which typically involve more installment payment arrangements.

In 2022, 2023, 2024, and the three months ended March 31, 2025, our average trade receivable turnover days were 194, 248, 231 and 163 days, respectively.

The increase of provision for impairment from December 31, 2023 to December 31, 2024 was primarily due to a default by a single customer, resulting in noncollectable accounts receivable.

Our overall cash conversion cycle is 96 days, 130 days, 127 days and 81 days as of December 31, 2022, 2023, 2024, and March 31, 2025.

As of December 31, 2022, 2023 and 2024, the balance of our trade and bills receivables were RMB373.3 million, RMB708.3 million and RMB713.6 million, respectively.

Our trade and bills receivables turnover days further increased to 107.7 days in 2024, which is in line with our increased sales volume and adjustment to credit management to support business expansion.

As a result, as of April 30, 2025, RMB320.9 million, RMB622.3 million and RMB291.0 million, or 80.4%, 83.6% and 38.2% of our trade and bills receivables outstanding as of December 31, 2022, 2023 and 2024, had been subsequently collected.

The average turnover days of our accounts receivable increased from 54 days in 2021 to 91 days in 2022, primarily due to the economic downturn caused by COVID-19, which slowed customer payments.

As of April 30, 2025, approximately RMB32.2 million, or 96.0%, of our accounts receivable outstanding as of December 31, 2024, had been subsequently settled.

To maintain a sustainable business model, we closely monitor our accounts receivable and assess our working capital needs from time to time.

We recorded impairment loss on trade and other receivables of RMB26.8 million, RMB37.8 million and RMB80.5 million, in 2022, 2023 and 2024, respectively. As of December 31, 2022, 2023 and 2024, we had trade and other receivables of RMB257.8 million, RMB435.1 million and RMB555.8 million, respectively.

Our trade receivables turnover days increased from 176 days in 2022 to 239 days in 2023, primarily attributable to (i) an increase in sales volume in the second half of 2023 due to our sales efforts to leverage the development of new energy engineering machinery industry, (ii) an increase in sales to customers who used the finance lease services to make the payment, which we usually grant certain credit terms to the finance lease companies, and (iii) our favorable credit terms to secure customers.

Additionally, we intend to improve the management of trade receivables by implementing multi-layer credit risk monitoring strategies, which will help reduce the impairment loss on trade and other receivables.

In June 2020, we made a payment amount of RMB43.6 million for a cellphone order to Supplier X without verifying delivery receipt of the cellphone order. However, we did not receive the cellphones.

The incident is under investigation by the relevant authority since 2020; therefore, there were no movements of the "receivable from a supplier" item from 2020 and throughout the Track Record Period.

Subsequently, our Company conducted an internal review of the internal control mechanisms and adopted corresponding internal control measures.

As of January 1, 2021, we recorded a specific provision of RMB34.4 million for our trade receivables under ECL model, mainly due to financial difficulties of a prior-Track Record Period provincial-dealer.

As of January 1, 2021, the total amount due from this provincial-dealer was RMB32.6 million, for which we made provision of RMB25.6 million.

As of December 31, 2023, the amount due from this provincial-dealer was RMB24.0 million, which had been fully impaired.

Our trade and note receivables increased from RMB169.4 million as of December 31, 2021 to RMB420.7 million as of December 31, 2022, and further to RMB541.1 million as of December 31, 2023.

Our trade and note receivables turnover days decreased from 122 days in 2021 to 119 days in 2022, and to 113 days in 2023, as a result of our management of trade receivables and enhanced collection efforts.

we are of the view that there is no material recoverability issue for our trade and note receivables.

Given that the turnover days are linked to and affected by check and acceptance and/or fiscal review process by our customers, the upward trend in our turnover days from 2021 to 2023 mainly reflected the growth of our landscaping and engineering projects and engineering and lighting system operation projects.

As of December 31, 2021, 2022 and 2023, the loss allowance of trade receivables amounted to RMB16.1 million, RMB21.3 million and RMB22.0 million, respectively.

As of the Latest Practicable Date, RMB95.9 million, or 92.3% of our trade receivables outstanding as of December 31, 2021 had been subsequently settled, RMB120.9 million, or 86.7% of our trade receivables outstanding as of December 31, 2022 had been subsequently settled, and RMB51.5 million, or 48.3% of our trade receivables outstanding as of December 31, 2023 had been subsequently settled.

We recorded impairment losses on trade receivables of RMB0.5 million, RMB1.2 million and RMB3.9 million for the years ended December 31, 2021, 2022 and 2023, respectively, which was primarily due to the increase in the amount and aging of trade receivables.

During the Track Record Period, we had generally granted credit terms ranging from 0−90 days.

According to CIC, our industry consultant, the ECL rates as of the end of each period comprising the Track Record Period were in line with the industry overall trend.

Ageing of our trade receivables from 6 months to 12 months increased from approximately RMB11.5 million as at 31 December 2022 to approximately RMB41.8 million as at 30 September 2023.

Our Group’s expected loss rate of ageing of trade receivables from 12 months to 24 months was approximately 6.9%, 13.9%, 22.1% and 30.2% as at 31 December 2020, 2021 and 2022 and 30 September 2023, respectively.

The average trade receivable turnover days increased from approximately 71 days for the year ended 31 December 2020 to approximately 83 days for the year ended 31 December 2021, and decreased to approximately 75 days for the year ended 31 December 2022 and further decreased to approximately 59 days for the nine months ended 30 September 2023.

As at 31 December 2020, 2021, 2022 and 30 September 2023, our gross retention receivables amounted to approximately HK$50.5 million, HK$53.4 million, HK$55.9 million and HK$63.0 million, respectively.

Our gross contract assets amounted to approximately HK$145.6 million as at 30 September 2023, out of which approximately 55.1% (which amounted to approximately HK$80.2 million) had been settled up to the Latest Practicable Date.

As at 30 September 2023, the trade receivables and retention receivables owing from this customer amounted to approximately HK$2.6 million and HK$1.5 million, respectively, for which impairment provision has been fully provided.

Our trade receivables turnover days was 127 in 2020, which was higher than our general credit terms, primarily due to the delayed payment of our customers resulting from their extended payment cycle in light of the outbreak of COVID-19 pandemic.

As of December 31, 2020, 2021, 2022 and June 30, 2023, we recorded allowance for impairment of trade receivables of RMB5.0 million, RMB4.6 million, RMB24.3 million and RMB21.4 million, respectively.

Our senior management regularly reviews our trade receivables balance and overdue balance, and we follow up with customers with past due trade receivables.

According to the announcement published by the holding company of Customer Group A, given the property sector of the PRC has undergone profound adjustments, since the beginning of 2023, the sales of the holding company of Customer Group A and its subsidiaries have been under remarkable pressure and recorded a significant decline in contracted sales during the period from January to September 2023 as compared to the same period in 2021 and 2022.

The expected credit loss rate of Customer Group A as at 31 December 2022 was determined to be 11.83% and further increased to 12.23% as at 30 June 2023.

Our Directors are of the view that the contract assets and trade receivables due from Customer Group A does not have any material potential recoverability issues nor any material potential impact of the phased liquidity pressures experienced by Customer Group A on our financial position and performance and results of operation subsequent to the Track Record Period.