On January 18, 2026, the Company, the buyer (Xiong Ying Group Limited, a wholly-owned subsidiary of the Company), and the sellers (Mr. Huang Jianting and Ms. Li Ziyun) entered into an agreement. Under this agreement, the buyer conditionally agreed to acquire the entire issued share capital of the target company from the sellers for a consideration of approximately HK$9.5 million. The consideration will be satisfied through the issuance of consideration shares under a specific mandate.
The target company, Chance Rich International Trading Limited, is a limited company incorporated in Hong Kong on August 6, 2019. It is primarily engaged in the procurement and sale of plywood products and other construction materials.
The target company's products mainly include: (i) common boards used for building interior decoration and for manufacturing home and office wooden furniture; (ii) packaging boards used as packaging materials; (iii) structural boards used in building construction; (iv) floor base materials used for flooring; and (v) other construction material products, such as concrete boards for external construction.
For the financial year ended March 31, 2025, the Group maintained its plywood sales business at a minimal operational scale due to low gross profit margins caused by intense competition within the plywood industry. Nevertheless, the Group has no intention of terminating its plywood sales operations and is actively developing new types of wood products, which are expected to yield higher profit margins than traditional plywood products.
However, the Group's existing customer base primarily consists of mid-market furniture or building material manufacturers within China. Affected by fierce competition in the plywood industry and shrinking demand in China's mid-market for furniture and building materials, the Group has been unable to sell products to its existing customers at higher profit margins.
In this context, the target company has established a stable customer base for its wood products. This customer base is not only geographically diverse, spanning multiple countries, but also covers a wide range of industries.
Furthermore, the target company's management possesses extensive experience in overseas market operations and has built a network and earned a reputation among frequently patronized clients in those markets. Therefore, the Acquisition will enable the Group to effectively enter overseas markets and expand its plywood business.
Upon completion of the Acquisition, the Group will modernize and upgrade its existing production base located in Heze City, Shandong Province. This facility will be transformed into a production center for the additional plywood products, encompassing most of the plywood products currently procured and sold by the target company.
The modernization of this production facility is expected to be completed, and the production of new products is anticipated to commence by mid-2026. As the target company's senior management will remain and join the Group, their experience and knowledge are expected to help the Group save on the preparation time and costs required for upgrading the production facilities, thereby enhancing the operational efficiency of the plywood business.
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