Shanghai Industrial Holdings (363.HK) monetizes asset optimization, focusing on the environmental health sector

To celebrate the 30th anniversary of its listing, a special dividend of 20 Hong Kong cents per share will be distributed. The total dividend for the year amounts to 1.12 Hong Kong dollars, with the payout ratio significantly increasing to 60.3%

Shanghai Industrial Holdings Limited ('Shanghai Industrial Holdings' or 'the Company', together with its subsidiaries collectively referred to as 'the Group'; Hong Kong Stock Exchange code: 363.HK) announced audited annual results for the fiscal year ended December 31, 2025. Revenue amounted to 20.832 billion Hong Kong dollars, representing a 28.0% decrease from the previous year; profit attributable to shareholders was 2.020 billion Hong Kong dollars, marking a 28.1% year-on-year decline. The board recommends a final dividend of 50 Hong Kong cents per share, and in celebration of the 30th anniversary of its listing, proposes a special dividend of 20 Hong Kong cents per share. Together with the interim dividend of 42 Hong Kong cents per share distributed this year, the total dividend per share for the year is 1.12 Hong Kong dollars, with the payout ratio significantly increased to 60.3% to reward shareholders for their unwavering support.

Breakthrough in capital operations: Focus on core business activities, travel light

During the year, Shanghai Industrial Yangtze River Delta Eco-Development Co., Ltd., in which the company holds a 50% stake, sold all its shares in Shanghai Pharmaceuticals Group and Kangheng Environment at prices of approximately 6.72 billion yuan and 6.587 billion yuan respectively, netting a total cash inflow of about 5.2 billion yuan. This share sale enabled the company’s attributable accumulated profits related to Shanghai Pharmaceuticals Group and Kangheng Environment to be realized smoothly, while also recovering substantial investment funds ahead of schedule. Not only did it effectively enhance the group’s capital efficiency, but it also provided greater flexibility for the group's medium to long-term strategic planning, laying a solid foundation for future asset optimization and capital allocation, and helping the group focus on development in its core sectors.

In addition, Yueda Environment has successfully completed its privatization and delisted from the stock exchange on June 2, 2025. Together with the early redemption of exchangeable bonds, the company has recovered approximately HKD 4.029 billion in cash, further strengthening its cash flow.

Business Highlights: Dual-Driven Resilience Against Cycles, Core Segments Show Strong Robustness

Centered around the 'Environmental Health' sector, the group's infrastructure environmental protection and consumer goods segments have formed a 'dual-driven' structure, becoming the core support for profitability, demonstrating strong resilience amid challenges:

1. Infrastructure Environmental Protection: Stable as a Profit Pillar, Green Business Continues to Expand

As the group's most crucial profit source, the infrastructure environmental protection segment recorded a full-year profit of HKD 1.801 billion, accounting for 93.4% of the group’s net profit, highlighting its strong risk resistance capabilities:

Toll Roads: Traffic volume increased by 2.3% year-on-year, toll revenue rose by 3.6% to HKD 2.103 billion; the Shanghai-Chongqing Expressway piloted 'toll-free passage,' advanced road widening, and further improved operational efficiency.

Water Services: SIIC Environment reported revenue of RMB 7.073 billion, with net profit slightly increasing by 0.9%; three new sewage treatment projects were implemented. China Water Affairs Group saw revenue and net profit grow by 4.6% and 5.5%, respectively, with new signed project investments exceeding RMB 2.7 billion, maintaining its position as one of the 'Top Ten Influential Enterprises in China's Water Industry' for 22 consecutive years.

Renewable Energy: Proactively responding to market-oriented electricity price reforms, enhancing power trading and operational management, laying the groundwork for future synergy with environmental businesses.

2. Consumer Goods: Grew Against the Trend by 17.5%, Achieving Breakthroughs in Niche Markets

Amid macroeconomic pressures, the consumer goods segment achieved a full-year profit of HKD 756 million, representing a year-on-year increase of 17.5%, becoming the driving force behind the group’s profit growth.

Nanyang Tobacco: Overcoming challenges posed by Hong Kong's tobacco control policies and tax reforms, revenue and net profit increased by 12.6% and 16.1%, respectively. Sales in the taxed markets of Hong Kong and Macao were driven by new product launches, while duty-free and export markets achieved breakthroughs against the trend.

Yongfa Printing: Optimizing business structure, pharmaceutical packaging and e-cigarette packaging businesses saw significant growth, with net profit increasing by 15.1%. Gross margin steadily improved as initial results of the transformation towards 'green, low-carbon, technology-driven manufacturing' became evident.

Real Estate: Strategic contraction for steady transformation, focusing on core regional value.

Facing deep industry adjustments, the group adhered to the principle of 'controlling increments and revitalizing existing assets,' focusing on Shanghai as the core and deeply cultivating the Yangtze River Delta region. Shangshi Development’s revenue grew by 35.9%, with projects in Quanzhou and Suzhou contributing the main contract sales. Projects such as 'Shangshi Wanghai' in Shanghai and 'Shangshi Qiyuan' in Xi'an progressed steadily, rental income remained stable, and a gradual transition to light-asset services (property management, elderly care) was made.

2026 Outlook: A year of focused efforts, targeting new opportunities in green development.

The year 2026 marks the beginning of the '15th Five-Year Plan' and is defined by the group as a 'year of focused efforts.' Management stated that they would firmly seize the policy opportunities brought by the national 'green transition' and 'consumption upgrade,' concentrating on three key directions:

Further upgrading of infrastructure and environmental protection: Increasing investment in high-quality water treatment and solid waste treatment projects, promoting synergy between new energy and environmental protection businesses, and consolidating industry leadership.

Improving quality and efficiency in consumer goods: Advancing the premiumization of Nanyang Tobacco and the intelligent transformation of Yongfa Printing, expanding into high-potential domestic and overseas markets.

Steady transformation in real estate: Focusing on 'good cities + good housing,' developing light-asset services, and balancing risks and returns.

Precision in capital operations: Continuously optimizing asset structure, maintaining a robust financial position, and advancing towards becoming a world-class enterprise through the synergistic model of 'technology + finance + industry.'

In the future, Shanghai Industrial Holdings will create long-term value for shareholders and stakeholders with a clearer strategy and more stable operations!

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