China Technology Group (01725) subsidiary plans to sell all of Steady Elite Limited's shares for HK$3.696 million

According to Zhitong Finance App, China Technology Group (01725) announced that on September 30, 2026 (after the trading period), the seller Total United Holdings Limited (a wholly-owned subsidiary of the Company) signed an agreement with the buyer, Mr. Huang Hu. According to this, the seller conditionally agreed to sell the shares, and the buyer conditionally agreed to acquire the sales shares at a cost of HK$3.696 million, that is, all of the issued shares of the target company Steady Elite Limited.

As of the date of this announcement, the target company is wholly owned by the seller. Upon completion, the seller will no longer hold any shares in the target company, and each member company of the target group will no longer be a subsidiary of the company. Therefore, upon completion, the financial results of the target group will no longer be incorporated into the Group's consolidated financial statements.

Due to the continuous evolution of trade policies, geopolitical tension, supply chain restructuring and increased price competition, the Group's EMS business customers are facing serious operational and macroeconomic challenges — in particular, rising production costs in China and rising global raw material prices. Despite these headwinds, the Group has actively implemented business development initiatives and successfully expanded the revenue base of the EMS business. EMS business revenue increased sharply by about 103.4% from approximately RMB 316 million for the year ended December 31, 2024 to approximately RMB 643 million for the year ended December 31, 2025. This increase was mainly due to a significant increase in demand from the banking and finance sector and the introduction of new products. This upward trend continued until 2026. Revenue for the six months ended June 30, 2026 increased by about 14.0% from approximately RMB 173 million for the six months ended June 30, 2025 to approximately RMB 197 million, and continued to benefit from the demand of the banking and financial sector.

Despite strong revenue growth, the Group's profit margins faced severe compression. Overall gross margin narrowed from about 15.2% for the year ended December 31, 2024 to about 5.9% for the year ended December 31, 2025. This reduction is directly due to the competitive pricing strategy adopted by the Group, which aims to maintain existing customers, deepen market penetration and expand the customer base. This downward trend in gross margin continued until the first half of 2026, and the gross margin of the EMS business fell sharply from about 21.0% in the six months ended June 30, 2025 to about 8.5% in the six months ended June 30, 2026. This contraction was mainly due to the increase in sales costs exceeding revenue growth under the Group's stable pricing strategy.

At the same time, while striving to maintain market competitiveness, the company's management has been actively evaluating various strategic solutions to optimize the profitability of the EMS business and mitigate the impact of rising cost pressure on the Group's overall financial performance. As stated in the Company's annual report for the year ended December 31, 2025, the Group will continue to actively optimize supply chain processes, improve production efficiency, and adjust procurement strategies to maintain the competitiveness and operational efficiency of the EMS business.

In line with the above initiatives, the Group plans to integrate the management resources of Chinese companies in the EMS business into well-performing subsidiaries and outsource production to qualified independent subcontractors to reduce indirect production costs. This strategic transformation further promotes the Group's continued transformation of the EMS business into higher value-added activities, including procuring high-quality and cost-effective materials, developing customized solutions for customers, and carrying out quality control and after-sales support to ensure product reliability and reputation. By selling loss-making Chinese companies, the Group expects to reduce the burden of manufacturing costs and eliminate underperforming subsidiaries, thereby improving the overall profitability and financial performance of the EMS business.

According to the annual report, the Group is also actively seeking growth opportunities in the aerospace business, precision business and energy storage business, including investment and construction of grid-side energy storage power plants, the industrialization of R&D and production energy storage systems and core equipment, aerospace titanium materials and satellite data application projects, and the gradual advancement of the new energy ship industry.

The Company believes that the sale is in line with the Group's development strategy, which focuses on (i) the EMS business to provide customers with high-end electronics manufacturing services; and (ii) the overall development of aerospace, precision and energy storage businesses. Ultimately, the sale aligned the Group's operating strategy with the goals of sustainable long-term growth and maximizing shareholder returns.