China High Speed Transmission Returns to Profit in 2025 as Wind-Gear Sales Jump, Auditor Issues Qualified Opinion

Key financials China High Speed Transmission Equipment Group (C TRANSMISSION, 00658) reported a solid turnaround for the year ended 31 December 2025:

• Revenue slipped 10.6% year on year to RMB 19.73 billion, reflecting the cessation of low-margin trading activities.

• Gross profit rose 29.9% to RMB 4.27 billion; gross margin expanded to 21.7% (2024: 14.9%) as product mix shifted toward higher-margin core businesses.

• Net profit reached RMB 934.64 million, reversing a RMB 5.93 billion loss in 2024. Basic EPS came in at RMB 0.129.

• Total assets increased 4.0% to RMB 39.23 billion; net assets grew 6.3% to RMB 13.34 billion. Gearing edged down to 66.0% (-0.7 ppt).

• Cash and bank balances, including pledged deposits, climbed 31.4% to RMB 8.79 billion, while total borrowings stood at RMB 9.35 billion.

Segment developments • Wind gear transmission equipment revenue rose 15.8% to RMB 17.36 billion, underpinned by demand for 13.6–20 MW offshore gearboxes and expanding export sales (overseas contribution up to 14.5% of group revenue).

• Industrial gear revenue declined 10.4% to RMB 2.04 billion amid softer orders.

• Rail-transportation gear revenue was broadly stable at RMB 336.40 million.

• The Group’s trading business, which generated RMB 4.46 billion in 2024, recorded no revenue in 2025 following suspension of activity; this shift supported the margin rebound.

Cost and impairment trends • Selling & distribution and administrative expenses rose 23.6% and 9.7% respectively, reflecting higher logistics costs and professional fees.

• Net impairment losses on financial assets and guarantees fell sharply to RMB 422.42 million (2024: RMB 3.42 billion) as last year’s large write-downs of trading-related receivables and prepayments did not recur.

Audit qualifications Prism Hong Kong Limited issued a qualified opinion citing: 1) inability to verify legacy trade receivables and prepayments (RMB 6.64 billion, fully provided for in 2024) tied to the discontinued trading business; 2) insufficient evidence on costs and progress of an EPC project with RMB 467.76 million contract liabilities and related prepayments/inventories; 3) lack of historical data for opening balances of certain equity investments.

An emphasis of matter highlights uncertainty over the Group’s control of key subsidiary Nanjing High Speed Gear Manufacturing (contributing 98% of 2025 revenue) due to reliance on a potentially terminable acting-in-concert agreement following changes to that unit’s articles of association.

Cash flow & liquidity Operating cash flow benefited from lower impairments and improved working-capital management, lifting net current assets to RMB 7.17 billion. The interest burden eased as finance costs halved to RMB 363.28 million, aided by lower borrowing rates and absence of prior-year option-related charges.

Capital commitments and pledges Outstanding capital commitments for plant and equipment total RMB 526.11 million. Assets pledged for bank facilities amount to RMB 6.41 billion, including property, plant, equipment and deposits.

Dividend & outlook No final dividend was proposed. Management signalled ongoing investment in R&D, intelligent manufacturing and overseas expansion but cautioned that overcapacity, price pressure and potential loss of control over Nanjing High Speed could weigh on future performance.

Trading resumption Trading in C TRANSMISSION shares resumed on 18 June 2026 following publication of the audited results.