CAS - China Automotive Systems Inc.
CAS - China Automotive Systems Inc.
04/22/2026 | Press release | Distributed by Public on 04/22/2026 06:22
Annual Report for Fiscal Year Ending December 31, 2025 (Form 20-F)
Operating and Financial Review and Prospects
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the consolidated financial statements and the related notes included elsewhere in this annual report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Item 3. Key Information - D. Risk Factors" and elsewhere in this annual report.
A. Operating Results
Overview
China Automotive Systems, Inc., including, when the context so requires, its subsidiaries and the subsidiaries' interests in the Sino-foreign joint ventures described below, is referred to herein as the "Company." The Company, through its Sino-foreign joint ventures, engages in the manufacture and sales of automotive systems and components in China. Genesis, a company incorporated on January 3, 2003 under the Companies Ordinance of Hong Kong as a limited liability company, is a wholly-owned subsidiary of the Company. Henglong USA Corporation, "HLUSA," which was incorporated on January 8, 2007 in Troy, Michigan, is a wholly-owned subsidiary of the Company, and mainly engages in marketing of automotive parts in North America, and provides after sales service and research and development support. Furthermore, the Company owns the following aggregate net interests in the subsidiaries incorporated in the PRC, Brazil, Italy and Mexico as of December 31, 2025 and 2024.
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Percentage Interest |
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December 31, |
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Name of Entity |
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2025 |
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2024 |
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Shashi Jiulong Power Steering Gears Co., Ltd., "Jiulong" |
100.00 |
% |
100.00 |
% |
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Jingzhou Henglong Automotive Parts Co., Ltd., "Henglong" |
100.00 |
% |
100.00 |
% |
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Shenyang Jinbei Henglong Automotive Steering System Co., Ltd., "Shenyang" |
70.00 |
% |
70.00 |
% |
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Wuhan Jielong Electric Power Steering Co., Ltd., "Jielong" |
85.00 |
% |
85.00 |
% |
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Wuhu Henglong Automotive Steering System Co., Ltd., "Wuhu" |
100.00 |
% |
100.00 |
% |
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Hubei Henglong Automotive System Group Co., Ltd., "Hubei Henglong" |
100.00 |
% |
100.00 |
% |
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Jingzhou Henglong Automotive Technology (Testing) Center, "Testing Center" |
- |
|
100.00 |
% |
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Chongqing Henglong Hongyan Automotive System Co., Ltd., "Chongqing Henglong" |
70.00 |
% |
70.00 |
% |
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CAAS Brazil's Imports and Trade In Automotive Parts Ltd., "Brazil Henglong" |
94.19 |
% |
94.19 |
% |
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Wuhan Chuguanjie Automotive Science and Technology Ltd., "Wuhan Chuguanjie" |
85.00 |
% |
85.00 |
% |
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Hubei Henglong Group Shanghai Automotive Electronics Research and Development Ltd., "Shanghai Henglong" |
100.00 |
% |
100.00 |
% |
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Hubei Henglong & KYB Automobile Electric Steering System Co., Ltd., "Henglong KYB" |
60.00 |
% |
60.00 |
% |
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Hyoseong (Wuhan) Motion Mechatronics System Co., Ltd., "Wuhan Hyoseong" |
51.00 |
% |
51.00 |
% |
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Wuhu Hongrun New Material Co., Ltd., "Wuhu Hongrun" |
62.00 |
% |
62.00 |
% |
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Changchun Hualong Automotive Technology Co., Ltd., "Changchun Hualong" |
100.00 |
% |
100.00 |
% |
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Hubei Zhirong Automobile Technology Co., Ltd., "Zhirong" |
100.00 |
% |
100.00 |
% |
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CAAS EUROPE S.r.l., "CAAS EUROPE" |
100.00 |
% |
- |
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De Yingrun Industrial Co., Ltd., "De Yingrun" |
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100.00 |
% |
100.00 |
% |
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Derun Industry and Trade Co., Ltd., "Derun" |
|
100.00 |
% |
100.00 |
% |
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Henglong Mexico Automotive Systems S. DE R.L. DE C.V., "Henglong Mexico" |
|
100.00 |
% |
100.00 |
% |
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CHL Mexico Property Management S. DE R.L. DE C.V., "CHL Mexico" |
|
100.00 |
% |
100.00 |
% |
General Factors Affecting Our Results of Operations
The following are key factors that affect our financial condition and results of operations and we believe them to be important to the understanding of our business:
Raw material supply and prices
The Company uses a broad range of manufactured components and raw materials in its products, including castings, electronic components, finished sub-components, molded plastic parts, fabricated metal, aluminum, steel and resins. Because it may be difficult to pass increased prices for these items on to the Company's customers, a significant increase in the prices of the Company's components and materials could materially increase the Company's operating costs and adversely affect its profit margins and profitability. If we experience any shortage of raw materials or if there are huge increases in the prices of our raw materials, we may not be able to fully utilize our production capacity. The supply and market prices of our raw materials may be adversely affected by intense competition and availability and conditions of supply.
Prices of and demand for our products
The Company's business relies on automotive vehicle production and sales by its customers, which are highly cyclical and depend on general economic conditions and other factors, including consumer spending and preferences and the price and availability of gasoline. They also can be affected by labor relations issues, regulatory requirements and other factors. In the last two years, the price of automobiles in China has generally declined. Additionally, the volume of automotive production in China has fluctuated from year to year, which gives rise to fluctuations in the demand for the Company's products. Therefore, any significant economic decline could result in a reduction in automotive production and sales by the Company's customers and could have a material adverse effect on the Company's results of operations. Moreover, if the prices of automobiles keep declining, the selling price of automotive parts also would decrease, which would result in lower revenues and profitability.
Pricing pressure from automobile manufacturers
Recently, pricing pressure from automobile manufacturers has been prevalent in the automotive parts industry in China. Virtually all vehicle manufacturers seek price reductions each year. Although the Company has tried to reduce costs and resist price reductions, these reductions have impacted the Company's sales and profit margins. If the Company cannot offset continued price reductions through improved operating efficiencies and reduced expenditures, price reductions will have a material adverse effect on the Company's results of operations.
Competition
The automobile parts industry is a highly competitive business. The Company's customers consider criteria including:
●quality;
●price/cost competitiveness;
●system and product performance;
●reliability and timeliness of delivery;
●new product and technology development capability;
●excellence and flexibility in operations;
●degree of global and local presence;
●effectiveness of customer service; and
●overall management capability.
The Company's competitors include independent suppliers of parts, as well as suppliers formed by spin-offs from the Company's customers, who are becoming more aggressive in selling parts to other vehicle manufacturers. Depending on the particular product, the number of the Company's competitors varies significantly. Many of the Company's competitors have substantially greater revenues and financial resources than it does, as well as stronger brand names, consumer recognition, business relationships with vehicle manufacturers, and geographic presence than it has. The Company may not be able to compete favorably and increased competition may substantially harm its business, business prospects and results of operations.
Internationally, the Company faces different market dynamics and competition. The Company may not be as successful as its competitors in generating revenues in international markets due to the lack of recognition of its products or other factors. Developing product recognition overseas is expensive and time-consuming and the Company's international expansion efforts may be more costly and less profitable than it expects. If the Company is not successful in its target markets, its sales could decline, its margins could be negatively impacted and it could lose market share, any of which could materially harm the Company's business, results of operations and profitability. See "Item 4.B. Information on the Company; Business Overview; Business; Competition" for more information.
Delayed delivery of raw materials, etc.
The Company purchases various types of equipment, raw materials and manufactured component parts from its suppliers. The Company would be materially and adversely affected by the failure of its suppliers to perform as expected. The Company could experience delivery delays or failures caused by production issues or delivery of non-conforming products if its suppliers fail to perform, and it also faces these risks in the event any of its suppliers becomes insolvent or bankrupt.
Environmental and safety compliance
The Company is subject to the requirements of environmental and occupational safety and health laws and regulations in China. The Company cannot provide assurance that it has been or will be at all times in full compliance with all of these requirements, or that it will not incur material costs or liabilities in connection with these requirements. Additionally, these regulations may change in a manner that could have a material adverse effect on the Company's business, results of operations and financial condition. The capital requirements and other expenditures that may be necessary to comply with environmental requirements could increase and become a material expense of doing business.
Specific Factors Affecting Our Results of Operations
We believe that our results of operations are more directly affected by specific factors relating to our business, which are primarily as follows:
Product liability and warranty claims
The Company may be exposed to product liability and warranty claims if its products actually or allegedly fail to perform as expected or the use of its products results, or is alleged to result, in bodily injury and/or property damage. A product liability claim, regardless of merit or eventual outcome, or a product recall could result in substantial financial losses, civil and criminal liabilities, administrative sanctions, negative reputational repercussions and loss of customers. If our products are found to be defective and our insurance coverage is insufficient to cover a successful claim against us, our financial position and operations may be materially and adversely affected.
The Company started to pay some of its customers' increased after-sales service expenses due to consumer rights protection policies of "recall" issued by the Chinese government in 2004, such as the recalling flawed vehicles policy. Beginning in 2004, automobile manufacturers unilaterally required their suppliers to pay a "3-R Guarantees" service charge for repair, replacement and refund in an amount of about 1%-5% of the total amount of parts supplied. Accordingly, the Company has experienced and will continue to experience higher after-sales service expenses. Product liability, warranty and recall costs may have a material adverse effect on the Company's financial condition.
Loss of key officers
The Company's ability to operate its business and implement its strategies effectively depends on the efforts of its executive officers and other key employees. The Company depends on the continued contributions of its senior management and other key personnel. The Company's future success also depends on its ability to identify, attract and retain highly skilled technical staff, particularly engineers and other employees with mechanics and electronics expertise, and managerial, finance and marketing personnel. The Company does not maintain a key person life insurance policy on Mr. Hanlin Chen or Mr. Qizhou Wu. The loss of the services of any of the Company's key employees or the failure to attract or retain other qualified personnel could substantially harm the Company's business.
Key Components of Results of Operations
Net Revenues
Net product sales were $765.7 million for the year ended December 31, 2025, as compared to $650.9 million for the year ended December 31, 2024, representing an increase of $114.8 million, or 17.6%, mainly due to the Company's increased sales of electric power steerings, "EPS".
Cost of Revenues and Operating Expenses
Cost of Revenues
For the year ended December 31, 2025, the cost of sales was $620.3 million, compared with $541.8 million for the year ended December 31, 2024, representing an increase of $78.5 million, or 14.5%. The increase in cost of sales was mainly due to the increase in sales volume and increase in unit cost.
Operating Expenses
General and administrative expenses were $29.7 million for the year ended December 31, 2025, compared with $27.7 million for the year ended December 31, 2024, representing an increase of $2.0 million, mainly due to increased labor insurance expenses.
Taxation
Income tax expense was $11.6 million for the year ended December 31, 2025, compared with $5.9 million for the year ended December 31, 2024, representing an increase of $5.7 million, mainly due to the increase in income before income tax expenses and equity in earnings of affiliated companies.
Critical Accounting Estimates
The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amount of revenues and expenses during the reporting periods. Management periodically evaluates the estimates and judgments made. Management bases its estimates and judgments on historical experience and on various factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates as a result of different assumptions or conditions. The following critical accounting policies affect the more significant judgments and estimates used in the preparation of the Company's consolidated financial statements.
The Company considers an accounting estimate to be critical if:
| ● | it requires the Company to make assumptions about matters that were uncertain at the time it was making the estimate; and |
| ● | changes in the estimate or different estimates that the Company could have selected would have had a material impact on the Company's financial condition or results of operations. |
The table below presents information about the nature and rationale for the Company critical accounting estimates:
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Critical |
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Balance Sheet |
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Estimate |
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Assumptions/Approaches |
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Caption |
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Item |
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Nature of Estimates Required |
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Used |
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Key Factors |
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Long-term investments |
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Share of the income or losses from the limited partnerships |
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The Company adjusted the carrying value of these equity method investments based on its share of the income or losses from the limited partnerships. The income or losses of the limited partnerships were primarily attributable to changes in the estimated fair value of the underlying investments held by these limited partnerships. |
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The fair value of the underlying investments was determined using valuation techniques based on market approach with inputs, which required significant judgment. |
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Relevant market Information
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Historical performance and future development prospects of underlying investments to assist the Company in determining an appropriate valuation methodology
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Accrued liabilities and other long-term liabilities |
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Warranty obligations |
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Estimating warranty requires the Company to forecast the resolution of existing claims and expected future claims on products sold. OEMs are increasingly seeking to hold suppliers responsible for product warranties, which may impact the Company's exposure to these costs. |
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The Company bases its estimate on historical trends of units sold and payment amounts, combined with its current understanding of the status of existing claims and discussions with its customers. |
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OEM sourcing
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OEM policy decisions regarding warranty claims
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Property, plant and equipment, intangible assets and other long-term assets |
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Valuation of long- lived assets and investments |
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The Company is required, from time-to-time, to review the recoverability of certain of its assets based on projections of anticipated future cash flows, including future profitability assessments of various product lines. |
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The Company estimates cash flows using internal budgets based on recent sales data, independent automotive production volume estimates and customer commitments. |
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Future production estimates
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Customer preferences and decisions
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Accounts receivable |
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Allowance for doubtful accounts |
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The Company is required, from time to time, to review the credit of customers and make timely provision of allowance for doubtful accounts. |
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The Company estimates the collectability of the receivables based on the future cash flows using historical experiences. |
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Customer credit
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Inventory |
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Provision for inventory impairment |
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The Company is required, from time to time, to review the turnover of inventory based on projections of anticipated future cash flows, including provision of inventory impairment for over market price and undesirable inventories. |
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The Company compares the market selling prices and costs of inventory and using the lower of cost and net realizable value approach. |
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Future production estimates
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Customer preferences and decisions
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Deferred income taxes |
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Recoverability of deferred tax assets |
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The Company is required to estimate whether recoverability of its deferred tax assets is more likely than not based on forecasts of taxable earnings in the related tax jurisdiction. |
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The Company uses historical and projected future operating results, based upon approved business plans, including a review of the eligible carry-forward period, tax planning opportunities and other relevant considerations. |
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Tax law changes
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Variances in future projected profitability, including by taxing entity
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Results of Operations
The following table sets forth a summary of our consolidated results of operations for the periods indicated. The period-to-period comparisons of results of operations should not be relied upon as indicative of future performance.
Selected highlights from our operations (in thousands of U.S. dollars):
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2025 |
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2024 |
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2023 |
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Net product sales |
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$ |
765,736 |
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$ |
650,935 |
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$ |
576,354 |
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Cost of products sold |
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620,273 |
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541,751 |
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472,603 |
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Net gain on other sales |
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3,581 |
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4,303 |
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5,788 |
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Selling expenses |
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20,692 |
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17,855 |
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15,610 |
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General and administrative expenses |
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29,660 |
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27,728 |
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25,503 |
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Research and development expenses |
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45,061 |
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27,649 |
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29,181 |
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Other income, net |
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7,109 |
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5,776 |
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5,345 |
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Interest expense |
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1,702 |
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1,813 |
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|
1,021 |
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Financial (income)/expense, net |
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(2,362) |
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87 |
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(4,666) |
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Income taxes |
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11,576 |
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5,892 |
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5,137 |
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Net income |
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51,912 |
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37,899 |
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42,738 |
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Net income attributable to non-controlling interest |
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9,074 |
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7,897 |
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5,050 |
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Net income attributable to parent company's common shareholders |
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42,838 |
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29,979 |
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37,658 |
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Net Product Sales and Cost of Products Sold
For the years ended December 31, 2025, 2024 and 2023, net sales and cost of sales are summarized as follows (figures are in thousands of USD):
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Net Sales |
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Cost of sales |
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2025 |
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2024 |
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2023 |
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2025 |
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2024 |
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2023 |
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Henglong |
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$ |
365,276 |
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$ |
325,866 |
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$ |
271,501 |
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$ |
331,400 |
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$ |
297,555 |
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$ |
245,733 |
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Jiulong |
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92,268 |
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71,571 |
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69,926 |
81,440 |
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61,957 |
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58,120 |
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Wuhu |
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34,646 |
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44,843 |
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37,851 |
30,142 |
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45,158 |
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36,542 |
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Hubei Henglong |
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121,598 |
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105,426 |
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115,883 |
98,332 |
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87,736 |
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98,210 |
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Henglong KYB |
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234,988 |
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188,221 |
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147,989 |
200,314 |
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164,608 |
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127,713 |
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Brazil Henglong |
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68,708 |
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51,013 |
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48,255 |
54,620 |
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42,490 |
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39,690 |
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Other Entities |
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163,945 |
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138,520 |
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112,131 |
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135,754 |
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114,468 |
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90,491 |
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Total segment |
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1,081,429 |
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925,460 |
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803,536 |
932,002 |
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813,972 |
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696,499 |
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Eliminations |
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(315,693) |
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(274,525) |
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(227,182) |
(311,729) |
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(272,221) |
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(223,896) |
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Total |
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765,736 |
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650,935 |
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576,354 |
620,273 |
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541,751 |
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472,603 |
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Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Net Revenues
Net product sales were $765.7 million for the year ended December 31, 2025, as compared to $650.9 million for the year ended December 31, 2024, representing an increase of $114.8 million, or 17.6%, mainly due to the Company's increased sales of electric power steerings, "EPS".
Net sales of traditional steering products were $448.2 million for the year ended December 31, 2025, compared to $397.9 million for 2024, representing an increase of $50.3 million, or 12.6%. Net sales of EPS were $317.5 million for the year ended December 31, 2025, compared to $253.0 million for 2024, representing an increase of $64.5 million, or 25.5%. As a percentage of net sales, the sales of EPS were 41.5% for the year ended December 31, 2025, compared to 38.9% for 2024.
The increase in net product sales was mainly due to the offsetting effects of the increase in sales volume of passenger vehicles and decline in demand of commercial vehicles.
Further analysis is as follows:
| - | Henglong mainly engages in providing passenger vehicle steering systems. Net sales for Henglong were $365.3 million for the year ended December 31, 2025, compared with $325.9 million for the year ended December 31, 2024, representing an increase of $39.4 million, or 12.1%. The increase was mainly due to the increase in sales volume of products used in passenger vehicles. |
| - | Jiulong mainly engages in providing commercial vehicle steering systems. Net sales for Jiulong were $92.3 million for the year ended December 31, 2025, compared with $71.6 million for the year ended December 31, 2024, representing an increase of $20.7 million, or 28.9%. The increase was mainly due to the growth demand of commercial vehicles. |
| - | Wuhu mainly engages in providing vehicle steering systems to Chery Automobile Co., Ltd., "Chery", one of the major automotive manufacturers in China. Net sales for Wuhu were $34.6 million for the year ended December 31, 2025, compared with $44.8 million for the year ended December 31, 2024, representing a decrease of $10.2 million, or 22.7%. The decrease was mainly due to the decrease sales volume of products used in passenger vehicles from Chery. |
| - | Hubei Henglong mainly engages in providing vehicle steering systems to Stellantis N.V. and Ford. Net sales for Hubei Henglong were $121.6 million for the year ended December 31, 2025, compared with $105.4 million for the year ended December 31, 2024, representing an increase of $16.2 million, or 15.3%. The increase was mainly due to the increase in sales volume of products used in passenger vehicles from Ford. |
| - | Henglong KYB mainly engages in providing passenger EPS products. Net sales for Henglong KYB were $235.0 million for the year ended December 31, 2025, compared with $188.2 million for the year ended December 31, 2024, representing an increase of $46.8 million, or 24.8%. The increase was mainly due to the increase in sales volume of EPS products used in passenger vehicles. |
| - | Brazil Henglong mainly provides steering systems to Stellantis in Brazil. Net product sales for Brazil Henglong were $68.7 million for the year ended December 31, 2025, compared to $51.0 million for the year ended December 31, 2024, representing an increase of $17.7 million, or 34.7%. The increase was mainly due to the increase in demand of Stellantis in Brazil. |
| - | Net product sales for other entities were $163.9 million for the year ended December 31, 2025, compared with $138.5 million for the year ended December 31, 2024, representing an increase of $25.4 million, or 18.4%. The increase was mainly due to the increases in sales volume from Wuhan Hyoseong. |
Operating Costs and Expenses-Costs of Sales
For the year ended December 31, 2025, the cost of sales was $620.3 million, compared with $541.8 million for the year ended December 31, 2024, representing an increase of $78.5 million, or 14.5%. The increase in cost of sales was mainly due to the increase in sales volume and increase in unit cost. Further analysis is as follows:
| - | Cost of sales for Henglong was $331.4 million for the year ended December 31, 2025, compared to $297.6 million for the year ended December 31, 2024, representing an increase of $33.8 million, or 11.4%. The increase was mainly due to the increase in sales volumes and the increase in unit cost. |
| - | Cost of sales for Jiulong was $81.4 million for the year ended December 31, 2025, compared to $62.0 million for the year ended December 31, 2024, representing an increase of $19.4 million, or 31.4%. The increase was mainly due to the increase in sales volumes and the increase in unit cost. |
| - | Cost of sales for Wuhu was $30.1 million for the year ended December 31, 2025, compared to $45.2 million for the year ended December 31, 2024, representing a decrease of $15.1 million, or 33.3%. The decrease was mainly due to the decrease in sales volumes and the increase in unit cost. |
| - | Cost of sales for Hubei Henglong was $98.3 million for the year ended December 31, 2025, compared to $87.7 million for the year ended December 31, 2024, representing an increase of $10.6 million, or 12.1%. The increase was mainly due to the increase in sales volumes and the increase in unit cost. |
| - | Cost of sales for Henglong KYB was $200.3 million for the year ended December 31, 2025, compared to $164.6 million for the year ended December 31, 2024, representing an increase of $35.7 million, or 21.7%. The increase was mainly due to the increase in sales volumes and the increase in unit cost. |
| - | Cost of products sold for Brazil Henglong was $54.6 million for the year ended December 31, 2025, compared to $42.5 million for the year ended December 31, 2024, representing an increase of $12.1 million, or 28.5%. The increase was mainly due to the increase in sales volumes. |
| - | Cost of products sold for other entities was $135.8 million for the year ended December 31, 2025, compared to $114.5 million for the year ended December 31, 2024, representing an increase of $21.3 million, or 18.6%. The increase was mainly due to the increase in sales volumes. |
Gross margin was 19.0% for the year ended December 31, 2025, which has increased compared with 16.8% for the year ended December 31, 2024, mainly due to the change in product mix.
Selling Expenses
For the years ended December 31, 2025 and 2024, selling expenses are summarized as follows (figures are in thousands of USD):
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Year Ended December 31, |
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2025 |
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2024 |
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Increase/(Decrease) |
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Percentage |
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Transportation expense |
|
$ |
6,052 |
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$ |
6,106 |
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$ |
(54) |
(0.9) |
% |
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Marketing and office expense |
|
7,413 |
|
4,839 |
|
2,574 |
53.2 |
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Salaries and wages |
|
3,603 |
|
3,510 |
|
93 |
2.6 |
|
||||
|
Warehousing and inventory handling expenses |
|
3,468 |
|
3,028 |
|
440 |
14.5 |
|
||||
|
Other expense |
|
156 |
|
372 |
|
(216) |
(58.1) |
|
||||
|
Total |
|
$ |
20,692 |
|
$ |
17,855 |
|
$ |
2,837 |
15.9 |
% |
|
Selling expenses were $20.7 million for the year ended December 31, 2025, compared to $17.9 million for the year ended December 31, 2024, representing an increase of $2.8 million, or 15.9%, which was mainly due to an increase in marketing and office expense caused by the increased sales in 2025.
General and Administrative Expenses
For the years ended December 31, 2025 and 2024, general and administrative expenses are summarized as follows (figures are in thousands of USD):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
|
|
|||||
|
|
|
2025 |
|
2024 |
|
Increase/(Decrease) |
|
Percentage |
|
|||
|
Salaries and wages |
|
$ |
12,817 |
|
$ |
12,802 |
|
$ |
15 |
0.1 |
% |
|
|
Allowances for credit losses |
|
|
(594) |
|
|
(953) |
|
|
359 |
|
(37.7) |
|
|
Office expense |
|
4,783 |
|
5,806 |
|
(1,023) |
(17.6) |
|
||||
|
Labor insurance expense |
|
4,215 |
|
2,299 |
|
1,916 |
83.3 |
|
||||
|
Depreciation and amortization expense |
|
1,761 |
|
1,782 |
|
(21) |
(1.2) |
|
||||
|
Listing expenses (1) |
|
1,308 |
|
1,384 |
|
(76) |
(5.5) |
|
||||
|
Property and other taxes |
|
|
2,031 |
|
|
2,717 |
|
|
(686) |
|
(25.2) |
|
|
Maintenance and repair expenses |
|
1,640 |
|
1,431 |
|
209 |
14.6 |
|
||||
|
Other expense |
|
1,699 |
|
460 |
|
1,239 |
269.3 |
|
||||
|
Total |
|
$ |
29,660 |
|
$ |
27,728 |
|
$ |
1,932 |
7.0 |
% |
|
| (1) | Listing expenses consisted of the costs associated with legal, accounting and auditing fees for operating a public company. |
General and administrative expenses were $29.7 million for the year ended December 31, 2025, compared to $27.7 million for the year ended December 31, 2024, representing an increase of $2.0 million, or 7.0%, which was mainly due to the increased labor insurance expenses.
Research and Development Expenses
Research and development expenses, "R&D" expenses, were $45.1 million for the year ended December 31, 2025, as compared to $27.6 million for the year ended December 31, 2024, representing an increase of $17.5 million, or 63.0%, which was mainly due to the increase in salary expenses and miscellaneous expenses related to R&D, caused by the increase in R&D actives and increased headcount of R&D departments.
Interest Expense
Interest expense was $1.7 million for the year ended December 31, 2025, which remains stable compared with $1.8 million for the year ended December 31, 2024.
Other income, net
Other income, net was $7.1 million for the year ended December 31, 2025, as compared to $5.8 million for the year ended December 31, 2024, representing an increase of $1.3 million, or 23.1%, which was mainly due to the increase from government subsidies.
Financial (Income)/Expense, net
Financial income, net was $2.4 million for the year ended December 31, 2025, as compared to financial expense, net of $0.09 million for the year ended December 31, 2024, representing an increase in financial income of $2.4 million, which was primarily due to an increase in foreign exchange gains due to foreign exchange volatility.
Income Taxes
Income tax expense was $11.6 million for the year ended December 31, 2025, as compared to $5.9 million for the year ended December 31, 2024, representing an increase of $5.7 million, mainly due to the increase of income before income tax expenses and equity in earnings of affiliated companies and effective tax rate.
Net Income/(loss) Attributable to Non-controlling Interests
Net income attributable to non-controlling interests amounted to $9.1 million for the year ended December 31, 2025, compared to net loss attributable to non-controlling interests of $7.9 million for the year ended December 31, 2024, representing an increase in net income attributable to non-controlling interests of $1.2 million.
Net Income Attributable to Parent Company's Common Shareholders
Net income attributable to parent company's common shareholders was $42.8 million for the year ended December 31, 2025, compared to $30.0 million for the year ended December 31, 2024, representing an increase in net income attributable to parent company's common shareholders of $12.8 million.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Net Revenues
Net product sales were $650.9 million for the year ended December 31, 2024, as compared to $576.4 million for the year ended December 31, 2023, representing an increase of $74.5 million, or 12.9%, mainly due to the Company's increased sales of electric power steerings, "EPS".
Net sales of traditional steering products were $397.9 million for the year ended December 31, 2024, which is generally consistent with $381.6 million for 2023. Net sales of EPS were $253.0 million for the year ended December 31, 2024, compared to $194.8 million for
2023, representing an increase of $58.2 million, or 29.9%. As a percentage of net sales, the sales of EPS were 38.9% for the year ended December 31, 2024, compared to 33.8% for 2023.
The increase in net product sales was mainly due to the offsetting effects of the increase in sales volume of passenger vehicles and decline in demand of commercial vehicles.
Further analysis is as follows:
| - | Henglong mainly engages in providing passenger vehicle steering systems. Net sales for Henglong were $325.9 million for the year ended December 31, 2024, compared with $271.5 million for the year ended December 31, 2023, representing an increase of $54.4 million, or 20.0%. The increase was mainly due to the increase in sales volume of products used in passenger vehicles. |
| - | Jiulong mainly engages in providing commercial vehicle steering systems. Net sales for Jiulong were $71.6 million for the year ended December 31, 2024, compared with $69.9 million for the year ended December 31, 2023, representing an increase of $1.7 million, or 2.4%. The increase was mainly due to the increasing demand of commercial vehicles. |
| - | Wuhu mainly engages in providing vehicle steering systems to Chery Automobile Co., Ltd., "Chery", one of the major automotive manufacturers in China. Net sales for Wuhu were $44.8 million for the year ended December 31, 2024, compared with $37.9 million for the year ended December 31, 2023, representing an increase of $6.9 million, or 18.2%. The increase was mainly due to the increase sales volume of products used in passenger vehicles from Chery. |
| - | Hubei Henglong mainly engages in providing vehicle steering systems to Stellantis N.V. and Ford. Net sales for Hubei Henglong were $105.4 million for the year ended December 31, 2024, compared with $115.9 million for the year ended December 31, 2023, representing a decrease of $10.5 million, or 9.0%. The decrease was mainly due to the decrease in sales volume of products used in passenger vehicles from Stellantis N.V. |
| - | Henglong KYB mainly engages in providing passenger EPS products. Net sales for Henglong KYB were $188.2 million for the year ended December 31, 2024, compared with $148.0 million for the year ended December 31, 2023, representing an increase of $40.2 million, or 27.2%. The increase was mainly due to the increase in sales volume of EPS products used in passenger vehicles. |
| - | Brazil Henglong mainly provides steering systems to Stellantis N.V. Net product sales for Brazil Henglong were $51.0 million for the year ended December 31, 2024, compared to $48.3 million for the year ended December 31, 2023, representing an increase of $2.7 million, or 5.7%. The increase was mainly due to the increase in demand of Stellantis N.V. |
| - | Net product sales for other entities were $138.5 million for the year ended December 31, 2024, compared with $112.1 million for the year ended December 31, 2023, representing an increase of $26.4 million, or 23.5%. The increase was mainly due to the increases in sales volume from Wuhan Hyoseong. |
Operating Costs and Expenses-Cost of Sales
For the year ended December 31, 2024, the cost of sales was $541.8 million, compared with $472.6 million for the year ended December 31, 2023, representing an increase of $69.2 million, or 14.6%. The increase in cost of sales was mainly due to the increase in sales volume and increase in unit cost. Further analysis is as follows:
| - | Cost of sales for Henglong was $297.6 million for the year ended December 31, 2024, compared to $245.7 million for the year ended December 31, 2023, representing an increase of $51.9 million, or 21.1%. The increase was mainly due to the increase in sales volumes and the increase in unit cost. |
| - | Cost of sales for Jiulong was $62.0 million for the year ended December 31, 2024, compared to $58.1 million for the year ended December 31, 2023, representing an increase of $3.9 million, or 6.6%. The increase was mainly due to the increase in sales volumes and the increase in unit cost. |
| - | Cost of sales for Wuhu was $45.2 million for the year ended December 31, 2024, compared to $36.5 million for the year ended December 31, 2023, representing an increase of $8.7 million, or 23.6%. The increase was mainly due to the increase in sales volumes and the increase in unit cost. |
| - | Cost of sales for Hubei Henglong was $87.7 million for the year ended December 31, 2024, compared to $98.2 million for the year ended December 31, 2023, representing a decrease of $10.5 million, or 10.7%. The decrease was mainly due to the decrease in sales volumes and the increase in unit cost. |
| - | Cost of sales for Henglong KYB was $164.6 million for the year ended December 31, 2024, compared to $127.7 million for the year ended December 31, 2023, representing an increase of $36.9 million, or 28.9%. The increase was mainly due to the increase in sales volumes and the increase in unit cost. |
| - | Cost of products sold for Brazil Henglong was $42.5 million for the year ended December 31, 2024, compared to $39.7 million for the year ended December 31, 2023, representing an increase of $2.8 million, or 7.1%. The increase was mainly due to the increase in sales volumes. |
| - | Cost of products sold for other entities was $114.5 million for the year ended December 31, 2024, compared to $90.5 million for the year ended December 31, 2023, representing an increase of $24.0 million, or 26.5%. The increase was mainly due to the increase in sales volumes. |
Gross margin was 16.8% for the year ended December 31, 2024, which has decreased compared with 18.0% for the year ended December 31, 2023, mainly due to the price cutting requirements from OEMs.
Selling Expenses
For the years ended December 31, 2024 and 2023, selling expenses are summarized as follows (figures are in thousands of USD):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
|
|
|||||
|
|
|
2024 |
|
2023 |
|
Increase/(Decrease) |
|
Percentage |
|
|||
|
Transportation expense |
|
$ |
6,106 |
|
$ |
5,705 |
|
$ |
401 |
7.0 |
% |
|
|
Marketing and office expense |
|
4,839 |
|
3,526 |
|
1,313 |
37.2 |
|
||||
|
Salaries and wages |
|
3,510 |
|
3,249 |
|
261 |
8.0 |
|
||||
|
Warehousing and inventory handling expenses |
|
3,028 |
|
2,508 |
|
520 |
20.7 |
|
||||
|
Other expense |
|
372 |
|
622 |
|
(250) |
(40.2) |
|
||||
|
Total |
|
$ |
17,855 |
|
$ |
15,610 |
|
$ |
2,245 |
14.4 |
% |
|
Selling expenses were $17.9 million for the year ended December 31, 2024, compared to $15.6 million for the year ended December 31, 2023, representing an increase of $2.2 million, or 14.4%, which was mainly due to an increase in marketing and office expense.
General and Administrative Expenses
For the years ended December 31, 2024 and 2023, general and administrative expenses are summarized as follows (figures are in thousands of USD):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
|
|
|
||||
|
|
|
2024 |
|
2023 |
|
Increase/(Decrease) |
|
Percentage |
|
|||
|
Salaries and wages |
|
$ |
12,802 |
|
$ |
11,216 |
|
$ |
1,586 |
14.1 |
% |
|
|
Allowances for credit losses |
|
(953) |
|
1,564 |
|
(2,517) |
(160.9) |
|
||||
|
Office expense |
|
5,806 |
|
4,121 |
|
1,685 |
40.9 |
|
||||
|
Labor insurance expense |
|
2,299 |
|
2,199 |
|
100 |
4.5 |
|
||||
|
Depreciation and amortization expense |
|
1,782 |
|
1,928 |
|
(146) |
(7.6) |
|
||||
|
Listing expenses (1) |
|
1,384 |
|
1,303 |
|
81 |
6.2 |
|
||||
|
Property and other taxes |
|
2,717 |
|
1,597 |
|
1,120 |
70.1 |
|
||||
|
Maintenance and repair expenses |
|
1,431 |
|
1,012 |
|
419 |
41.4 |
|
||||
|
Other expense |
|
460 |
|
563 |
|
(103) |
(18.3) |
|
||||
|
Total |
|
$ |
27,728 |
|
$ |
25,503 |
|
$ |
2,225 |
8.7 |
% |
|
| (1) | Listing expenses consisted of the costs associated with legal, accounting and auditing fees for operating a public company. |
General and administrative expenses were $27.7 million for the year ended December 31, 2024, as compared to $25.5 million for the year ended December 31, 2023, representing an increase of $2.2 million, or 8.7%, which was mainly due to the increase of salaries and wages, office expense, property and other taxes.
Research and Development Expenses
Research and development expenses, "R&D" expenses, were $27.6 million for the year ended December 31, 2024, as compared to $29.2 million for the year ended December 31, 2023, representing a decrease of $1.6 million, or 5.2%, which was mainly due to the decreased miscellaneous expenses related to R&D.
Other Income, Net
Other income, net was $5.8 million for the year ended December 31, 2024, as compared to $5.3 million for the year ended December 31, 2023, representing an increase of $0.5 million, which was mainly due to the increase from government subsidies.
Interest Expense
Interest expense was $1.8 million for the year ended December 31, 2024, which increases $0.8 million compared with $1.0 million for the year ended December 31, 2023.
Financial Expense/(Income), net
Financial expense, net was $0.09 million for the year ended December 31, 2024, as compared to financial income, net of $4.7 million for the year ended December 31, 2023, representing an increase in financial expense of $4.8 million, which was primarily due to an increase in the foreign exchange losses due to the foreign exchange volatility.
Income Taxes
Income tax expense was $5.9 million for the year ended December 31, 2024, as compared to $5.1 million for the year ended December 31, 2023, representing an increase of $0.8 million, or 14.7%, which was mainly due to the valuation allowance reversed and a one-time income tax expense settlement for the subsidiaries in the PRC and the U.S. this year.
Net Income/(loss) Attributable to Non-controlling Interests
Net income attributable to non-controlling interests amounted to $7.9 million for the year ended December 31, 2024, compared to net income attributable to non-controlling interests of $5.1 million for the year ended December 31, 2023, representing an increase in net income attributable to non-controlling interests of $2.8 million.
Net Income Attributable to Parent Company's Common Shareholders
Net income attributable to parent company's common shareholders was $30.0 million for the year ended December 31, 2024, compared to $37.7 million for the year ended December 31, 2023, representing a decrease in net income attributable to parent company's common shareholders of $7.7 million.
Inflation
China's economy has experienced rapid growth recently, mostly through the issuance of debt. Debt-induced economic growth can lead to growth in the money supply and rising inflation. If prices for the Company's products rise at a rate that is insufficient to compensate for the rise in the cost of supplies, it may harm the Company's profitability. In order to control inflation, the Chinese government has imposed controls on bank credit, limits on loans for fixed assets and restrictions on state bank lending. Such policies can lead to a slowing of economic growth. Rises in interest rates by the central bank would likely slow economic activity in China which could, in turn, materially increase the Company's costs and also reduce demand for the Company's products. Inflation does not materially affect our business or the results of our operations.
Recent Accounting Pronouncements
Information regarding new accounting pronouncements is included in Note 2 to the Consolidated Financial Statements.
B. Liquidity and Capital Resources
Cash Flows and Working Capital
Capital Resources and Use of Cash
The Company has historically financed its liquidity requirements from a variety of sources, including short-term borrowings under bank credit agreements, bankers' acceptances, issuances of capital stock and notes and internally generated cash. As of December 31, 2025, the Company had cash and cash equivalents and short-term investments of $177.9 million, compared with $84.5 million as of December 31, 2024, representing an increase of $93.4 million.
The Company had working capital, total current assets less total current liabilities, of $196.7 million as of December 31, 2025, compared with $146.2 million as of December 31, 2024, representing an increase of $50.5 million, or 34.6%.
Except for the expected distribution of dividends from the Company's PRC subsidiaries to the Company in order to fund the payment of the one-time transition tax due to the U.S. Tax Reform and the special cash dividend in August 2024, the Company intends to indefinitely reinvest the funds in subsidiaries established in the PRC.
Based on our liquidity assessment, we believe that our current cash position, cash flow from operations and proceeds from our financing activities will be sufficient to meet our anticipated cash needs, including our cash needs for working capital and capital expenditures, for the foreseeable future and for at least 12 months subsequent to the filing of this annual report.
Capital Source
The Company's capital source is multifaceted, such as bank loans and banks' acceptance facilities. In financing activities and operating activities, the Company's banks require the Company to sign line of credit agreements and repay such facilities within one to two years. On the condition that the Company can provide adequate mortgage security and has not violated the terms of the line of credit agreement, such facilities can be extended for another one to two years.
The Company had short-term loans of $81.3 million, long-term loans of $5.7 million (See Note 11) and bankers' acceptance notes payable of $128.3 million as of December 31, 2025.
The Company currently expects to be able to obtain similar bank loans, i.e., RMB loans, and bankers' acceptance facilities in the future if it can provide adequate mortgage security following the termination of the above-mentioned agreements, see the table under "Bank Arrangements" below for more information. If the Company is not able to do so, it will have to refinance such debt as it becomes due or repay that debt to the extent it has cash available from operations or from the proceeds of additional issuances of capital stock. Due to a depreciation of assets, the value of the mortgages securing the above-mentioned bank loans and banker's acceptances is expected to be reduced by approximately $18.4 million over the next 12 months. If the Company wishes to maintain the same amount of bank loans and banker's acceptances in the future, it may be required by the banks to provide additional mortgages of $18.4 million as of the maturity date of such line of credit agreements, see the table under "Bank Arrangements" below for more information. The Company can still obtain lines of credit with a reduction of $12.2 million, which is 66.1%, the mortgage ratio, of $18.4 million, if it cannot provide additional mortgages. The Company expects that the reduction in bank loans will not have a material adverse effect on its liquidity.
Bank Facilities
As of December 31, 2025, the principal outstanding under the Company's credit facilities and lines of credit was as follows (figures are in thousands of USD).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assessed |
|
|
|
|
|
|
Due |
|
Amount |
|
Amount |
|
Mortgage |
|||
|
|
|
Bank |
|
Date |
|
Available (2) |
|
Used (3) |
|
Value (4) |
|||
|
1. Comprehensive credit facilities |
China CITIC Bank (1) |
Jun-26 |
|
101,013 |
|
85,067 |
|
25,637 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2. Comprehensive credit facilities |
Shanghai Pudong Development Bank(1) |
Dec-26 |
|
56,909 |
|
8,856 |
|
20,929 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3. Comprehensive credit facilities |
Hubei Bank(1) |
Aug-26 |
|
24,187 |
|
13,487 |
|
26,530 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4. Comprehensive credit facilities |
Agricultural Bank of China |
Mar-26 |
|
14,227 |
|
1,280 |
|
- |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5. Comprehensive credit facilities |
|
China Constitution Bank(1) |
|
Dec-26 |
|
|
22,052 |
|
|
6,025 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6. Comprehensive credit facilities |
|
China Merchants Bank(1) |
|
Jun-26 |
|
|
14,227 |
|
|
14,419 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7. Comprehensive credit facilities |
|
Bank of China(1) |
|
Nov-25 |
|
|
14,227 |
|
|
12,787 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8. Comprehensive credit facilities |
|
China Everbright Bank(1) |
|
Dec-25 |
|
|
4,268 |
|
|
- |
|
|
4,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9. Comprehensive credit facilities |
|
Hankou Bank(1) |
|
Sep-26 |
|
|
14,227 |
|
|
813 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13. Comprehensive credit facilities |
|
Industrial and Commercial Bank of China(1) |
|
Jul-26 |
|
|
18,211 |
|
|
8,252 |
|
|
- |
|
Total |
|
|
|
|
|
$ |
283,548 |
|
$ |
150,986 |
|
$ |
77,364 |
| (1) | The comprehensive credit facilities with China CITIC Bank are guaranteed by Henglong and Hubei Henglong in addition to the above pledged assets. The comprehensive credit facilities with Shanghai Pudong Development Bank are guaranteed by Henglong and Hubei Henglong in addition to the above pledged assets. The comprehensive credit facilities with Hubei Bank are guaranteed by Chen Hanlin in addition to the above pledged assets. The comprehensive credit facilities with China Merchants Bank are guaranteed by Hubei Henglong. The comprehensive credit facilities with Bank of China are guaranteed by Hubei Henglong. The comprehensive credit facilities with Hankou Bank are guaranteed by Hubei Henglong. The comprehensive credit facilities with China Everbright Bank are guaranteed by Hubei Henglong in addition to the above pledged assets. |
| (2) | "Amount available" is used for the drawdown of bank loans and issuance of bank notes at the Company's discretion. If the Company elects to utilize the facility by issuance of bank notes, additional collateral is requested to be pledged to the bank. |
| (3) | "Amount used" represents the credit facilities used by the Company for the purpose of bank loans, notes payable or derivatives during the facility contract period. The loans or notes payable under the credit facilities will remain outstanding regardless of the expiration of the relevant credit facilities until the separate loans or notes payable expire. The amount used includes bank loans of $36.4 million, notes payable of $76.3 million and letter of credit of $38.3 million as of December 31, 2025. |
| (4) | In order to obtain lines of credit, the Company needs to pledge certain assets to banks. As of December 31, 2025, the pledged assets included property, plant and equipment and land use rights with an aggregate assessed value of $117.1 million. |
The Company may request the banks to issue notes payable or bank loans within its credit line using a 365-day revolving line.
The Company renewed its existing short-term loans and borrowed new loans during 2025 at annual interest rates ranging from 0.45% to 7.44%, and the Company's loan terms range from 3 months to 36 months. The large spread in interest rates was due to the different lenders. Pursuant to the comprehensive credit line arrangement, the Company pledged and guaranteed:
|
1. |
Land use rights and buildings with an assessed value of approximately $27.2 million as security for its comprehensive credit facility with China CITIC Bank Wuhan Branch. |
|
2. |
Land use rights and buildings with an assessed value of approximately $14.6 million as security for its revolving comprehensive credit facility with Shanghai Pudong Development Bank. |
|
3. |
Equipment with an assessed value of approximately $66.3 million as security for its revolving comprehensive credit facility with Hubei Bank. |
|
4. |
Land use rights and buildings with an assessed value of approximately $9.0 million as security for its revolving comprehensive credit facility with China Everbright Bank. |
Cash Requirements
The following table summarizes the Company's expected cash outflows resulting from financial contracts and commitments. The Company has not included information on its recurring purchases of materials for use in its manufacturing operations. These amounts are generally consistent from year to year, closely reflecting the Company's levels of production, and are not long-term in nature (being less than three months in length).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands of USD) |
|||||||||||||
|
|
|
|
|
|
Less than 1 |
|
|
|
|
|
|
|
More than 5 |
||
|
|
|
Total |
|
year |
|
1-3 years |
|
3-5 years |
|
Years |
|||||
|
Loans including interest payable |
|
$ |
87,742 |
|
$ |
81,963 |
|
$ |
5,779 |
|
$ |
- |
|
$ |
- |
|
Notes payable (1) |
|
128,293 |
|
128,293 |
|
- |
|
- |
|
- |
|||||
|
Obligation for investment contract (2) |
|
2,703 |
|
1,992 |
|
711 |
|
- |
|
- |
|||||
|
Other contractual purchase commitments, including service agreements |
|
34,427 |
|
30,746 |
|
3,681 |
|
- |
|
- |
|||||
|
Total |
|
$ |
253,165 |
|
$ |
242,994 |
|
$ |
10,171 |
|
$ |
- |
|
$ |
- |
| (1) | Notes payable do not bear interest. |
| (2) | In July 2024, Hubei Henglong entered into an agreement with other parties to establish an associate company, Shanghai IAT. According to the agreement, Hubei Henlong shall contribute a total capital of RMB 20.0 million, equivalent to approximately $2.8 million. As of December 31, 2025, Hubei Henglong has paid RMB 10.0 million, equivalent to approximately $1.4 million, representing 25.0% of Shanghai IAT's equity. The remaining consideration of RMB 10.0 million, equivalent to approximately $1.4 million, will be paid within two years after December 31, 2025. |
In June 2023, Hubei Henglong entered into an agreement with other parties to establish a limited partnership, Suzhou Mingzhi. According to the agreement, Hubei Henlong shall contribute a total capital of RMB 30.0 million, equivalent to approximately $4.2 million. As of December 31, 2025, Hubei Henglong has paid RMB 21.0 million, equivalent to approximately $2.9 million, representing 19.74% of Suzhou Mingzhi's equity. The remaining consideration of RMB 9.0 million, equivalent to approximately $1.3 million, will be paid in 2026.
Short-term Loans and Long-term Loans
The following table summarizes the contract information of short-term borrowings between the banks and the Company as of December 31, 2025 (figures are in thousands of USD).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowing |
|
|
|
|
Annual |
|
Date of |
|
|
|
Bank |
|
|
|
Borrowing |
|
Term |
|
|
|
|
Interest |
|
Interest |
|
|
|
Government |
|
Purpose |
|
Date |
|
(Months) |
|
Principal |
|
Rate |
|
Payment |
|
Due Date |
|
|
Bank of China (1) |
Working Capital |
|
31-Mar-25 |
|
4,268 |
|
2.30 |
% |
Pay monthly |
|
30-Mar-26 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial and Commercial Bank of China (1) |
Working Capital |
|
27-Jan-25 |
|
3,984 |
|
2.30 |
% |
Pay monthly |
|
26-Jan-26 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank |
Working Capital |
|
27-Nov-25 |
|
5,122 |
|
2.35 |
% |
Pay monthly |
|
27-Nov-26 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank |
Working Capital |
|
14-Jul-25 |
|
5,122 |
|
2.45 |
% |
Pay monthly |
|
14-Jul-26 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank |
Working Capital |
|
16-Jun-25 |
|
5,122 |
|
2.45 |
% |
Pay quarterly |
|
16-Jun-26 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
Working Capital |
|
22-Jan-25 |
|
4,268 |
|
2.35 |
% |
Pay monthly |
|
21-Jan-26 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank of China |
Working Capital |
|
30-Apr-25 |
|
2,843 |
|
2.30 |
% |
Pay semiannually |
|
30-Apr-26 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank |
Working Capital |
|
14-Jul-25 |
|
712 |
|
2.50 |
% |
Pay semiannually |
|
13-Jul-27 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank |
Working Capital |
|
28-Jul-25 |
|
712 |
|
2.50 |
% |
Pay semiannually |
|
13-Jul-27 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank |
Working Capital |
|
26-Aug-25 |
|
4,268 |
|
2.45 |
% |
Pay semiannually |
|
26-Aug-27 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank |
Working Capital |
|
29-Aug-25 |
|
7,967 |
|
1.10 |
% |
Pay semiannually |
|
27-Aug-26 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
Working Capital |
|
18-Mar-25 |
|
6,829 |
|
1.40 |
% |
Pay semiannually |
|
18-Mar-26 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank of China (1) |
Working Capital |
|
25-Mar-25 |
|
4,780 |
|
1.40 |
% |
Pay semiannually |
|
24-Mar-26 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial and Commercial Bank of China (1) |
Working Capital |
|
1-Apr-25 |
|
4,268 |
|
1.65 |
% |
Pay semiannually |
|
19-Mar-26 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
Working Capital |
|
20-Jan-25 |
|
4,553 |
|
1.45 |
% |
Pay semiannually |
|
20-Jan-26 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
Working Capital |
|
18-Mar-25 |
|
3,784 |
|
1.40 |
% |
Pay semiannually |
|
18-Mar-26 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank |
|
Working Capital |
|
29-Aug-25 |
|
|
|
4,837 |
|
1.10 |
% |
Pay semiannually |
|
28-Aug-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank of China |
Working Capital |
|
1-Sep-25 |
|
1,280 |
|
1.20 |
% |
Pay in arrear |
|
24-Aug-26 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Aug-25 |
|
142 |
|
0.95 |
% |
Pay in arrear |
|
31-Jan-26 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
15-Aug-25 |
|
|
|
179 |
|
0.95 |
% |
Pay in arrear |
|
23-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
15-Aug-25 |
|
|
|
144 |
|
0.95 |
% |
Pay in arrear |
|
8-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank |
|
Working Capital |
|
15-Aug-25 |
|
|
|
284 |
|
0.95 |
% |
Pay in arrear |
|
28-Nov-25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank |
|
Working Capital |
|
25-Aug-25 |
|
|
|
142 |
|
1.00 |
% |
Pay in arrear |
|
30-Nov-25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
25-Sep-25 |
|
|
|
799 |
|
0.80 |
% |
Pay in arrear |
|
8-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
25-Sep-25 |
|
|
|
381 |
|
0.80 |
% |
Pay in arrear |
|
8-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
17-Oct-25 |
|
|
|
709 |
|
0.65 |
% |
Pay in arrear |
|
28-Mar-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
23-Oct-25 |
|
|
|
426 |
|
0.63 |
% |
Pay in arrear |
|
28-Mar-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
13-Nov-25 |
|
|
|
57 |
|
0.58 |
% |
Pay in arrear |
|
22-Feb-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
13-Nov-25 |
|
|
|
17 |
|
0.58 |
% |
Pay in arrear |
|
22-Feb-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
13-Nov-25 |
|
|
|
3 |
|
0.58 |
% |
Pay in arrear |
|
5-Feb-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
13-Nov-25 |
|
|
|
8 |
|
0.58 |
% |
Pay in arrear |
|
20-Feb-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
13-Nov-25 |
|
|
|
7 |
|
0.58 |
% |
Pay in arrear |
|
28-Feb-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
13-Nov-25 |
|
|
|
2 |
|
0.58 |
% |
Pay in arrear |
|
22-Feb-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
13-Nov-25 |
|
|
|
810 |
|
0.58 |
% |
Pay in arrear |
|
28-Feb-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
13-Nov-25 |
|
|
|
96 |
|
0.58 |
% |
Pay in arrear |
|
28-Feb-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
13-Nov-25 |
|
|
|
142 |
|
0.58 |
% |
Pay in arrear |
|
28-Feb-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
13-Nov-25 |
|
|
|
736 |
|
0.58 |
% |
Pay in arrear |
|
28-Feb-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
50 |
|
0.65 |
% |
Pay in arrear |
|
31-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
9 |
|
0.65 |
% |
Pay in arrear |
|
31-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
227 |
|
0.65 |
% |
Pay in arrear |
|
31-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
43 |
|
0.65 |
% |
Pay in arrear |
|
31-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
282 |
|
0.65 |
% |
Pay in arrear |
|
31-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
695 |
|
0.45 |
% |
Pay in arrear |
|
25-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
2 |
|
0.45 |
% |
Pay in arrear |
|
23-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
194 |
|
0.45 |
% |
Pay in arrear |
|
23-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
713 |
|
0.45 |
% |
Pay in arrear |
|
29-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
2 |
|
0.45 |
% |
Pay in arrear |
|
23-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
105 |
|
0.45 |
% |
Pay in arrear |
|
29-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
68 |
|
0.45 |
% |
Pay in arrear |
|
28-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
189 |
|
0.45 |
% |
Pay in arrear |
|
18-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
13 |
|
0.45 |
% |
Pay in arrear |
|
18-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
8 |
|
0.45 |
% |
Pay in arrear |
|
22-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
178 |
|
0.45 |
% |
Pay in arrear |
|
22-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
621 |
|
0.45 |
% |
Pay in arrear |
|
17-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
1 |
|
0.45 |
% |
Pay in arrear |
|
17-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
5 |
|
0.45 |
% |
Pay in arrear |
|
18-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
46 |
|
0.45 |
% |
Pay in arrear |
|
22-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
11 |
|
0.45 |
% |
Pay in arrear |
|
30-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
28 |
|
0.45 |
% |
Pay in arrear |
|
22-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
4 |
|
0.45 |
% |
Pay in arrear |
|
29-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
237 |
|
0.45 |
% |
Pay in arrear |
|
17-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
68 |
|
0.45 |
% |
Pay in arrear |
|
21-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
11-Oct-25 |
|
|
|
114 |
|
0.45 |
% |
Pay in arrear |
|
24-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
28-Sep-25 |
|
|
|
14 |
|
0.00 |
% |
Pay in arrear |
|
31-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
20-Nov-25 |
|
|
|
142 |
|
0.70 |
% |
Pay in arrear |
|
13-Apr-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
20-Nov-25 |
|
|
|
142 |
|
0.50 |
% |
Pay in arrear |
|
29-Mar-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
20-Nov-25 |
|
|
|
426 |
|
0.50 |
% |
Pay in arrear |
|
28-Mar-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
20-Nov-25 |
|
|
|
142 |
|
0.50 |
% |
Pay in arrear |
|
5-Mar-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
20-Nov-25 |
|
|
|
284 |
|
0.70 |
% |
Pay in arrear |
|
11-Apr-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
20-Nov-25 |
|
|
|
284 |
|
0.70 |
% |
Pay in arrear |
|
12-Apr-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
24-Sep-25 |
|
|
|
184 |
|
0.80 |
% |
Pay in arrear |
|
18-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
24-Sep-25 |
|
|
|
397 |
|
0.80 |
% |
Pay in arrear |
|
22-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China CITIC Bank (1) |
|
Working Capital |
|
24-Sep-25 |
|
|
|
142 |
|
0.80 |
% |
Pay in arrear |
|
24-Jan-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank of China (1) |
|
Working Capital |
|
24-Dec-25 |
|
|
|
142 |
|
1.08 |
% |
Pay in arrear |
|
13-Apr-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank of China (1) |
|
Working Capital |
|
24-Dec-25 |
|
|
|
284 |
|
1.08 |
% |
Pay in arrear |
|
13-Apr-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank of China |
|
Working Capital |
|
24-Dec-25 |
|
|
|
118 |
|
1.08 |
% |
Pay in arrear |
|
27-Apr-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank of China |
|
Working Capital |
|
24-Dec-25 |
|
|
|
283 |
|
1.08 |
% |
Pay in arrear |
|
13-May-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank of China (1) |
|
Working Capital |
|
24-Dec-25 |
|
|
|
170 |
|
1.08 |
% |
Pay in arrear |
|
20-Apr-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banco Safra S/A |
|
Working Capital |
|
6-Jul-23 |
|
|
|
107 |
|
7.21 |
% |
Pay monthly |
|
6-Jul-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banco Safra S/A |
|
Working Capital |
|
29-Jun-23 |
|
|
|
55 |
|
7.44 |
% |
Pay monthly |
|
29-Jun-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
87,032 |
|
|
|
|
|
|
| (1) | These bank loans were repaid during January to April 2026 when they became due. |
The Company must use the loans for the purpose described and repay the principal outstanding on the specified date in the table. If it fails to do so, it will be charged additional 30% to 100% penalty interest.
The Company had complied with such financial covenants as of December 31, 2025.
Notes Payable
The following table summarizes the contract information of issuing notes payable between the banks and the Company as of December 31, 2025 (figures are in thousands of USD):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount Payable on |
|
|
Purpose |
|
Term (Months) |
|
Due Date |
|
Due Date |
|
|
Working Capital (1) |
Jan-2026 |
|
|
21,016 |
|||
|
Working Capital (1) |
Feb-2026 |
|
19,094 |
||||
|
Working Capital (1) |
Mar-2026 |
|
19,669 |
||||
|
Working Capital |
Apr-2026 |
|
17,069 |
||||
|
Working Capital |
May-2026 |
|
23,396 |
||||
|
Working Capital |
Jun-2026 |
|
28,049 |
||||
|
Total |
|
|
|
|
$ |
128,293 |
|
| (1) | The notes payable were repaid in full on their respective due dates. |
The Company must use notes payable for the purpose described in the table. If it fails to do so, the banks will no longer issue the notes payable, and it may have an adverse effect on the Company's liquidity and capital resources. The Company has to deposit a sufficient amount of cash on the due date of notes payable for payment to the suppliers. If the bank has advanced payment for the Company, it will be charged an additional 50% penalty interest. The Company complied with such financial covenants as of December 31, 2025, and management believes it will continue to comply with them.
Cash flows
(a)Operating Activities
Net cash provided by operating activities for the year ended December 31, 2025 was $111.6 million, compared to net cash provided by operating activities of $9.8 million for the year ended December 31, 2024, representing an increase in net cash inflows by $101.8 million, which was mainly due to the offsetting impact of (1) the increase in net income by $14.0 million, (2) the decrease in the cash inflows from movements of accounts and notes receivable by $68.1 million, (3) the increase in the cash outflows from movements of accounts and notes payable by $9.7 million, and (4) a combination of other factors contributing an increase of cash inflows by $10.0 million, including the increase in the cash outflows from movements of accrued expenses and other payables by $4.2 million.
Net cash provided by operating activities for the year ended December 31, 2024 was $9.8 million, compared to net cash provided by operating activities of $19.9 million for the year ended December 31, 2023, representing a decrease in net cash inflows by $10.1 million, which was mainly due to the offsetting impact of (1) the decrease in net income excluding non-cash items by $4.8 million, (2) the decrease in the cash inflows from movements of accounts and notes receivable by $27.0 million, (3) the increase in the cash outflows from movements of accounts and notes payable by $18.4 million, and (4) a combination of other factors contributing an increase of cash outflows by $3.3 million, including the increase in the cash outflows from movements of accrued expenses and other payables by $15.9 million.
(b) Investing Activities
Net cash used in investing activities for the year ended December 31, 2025 was $31.5 million, as compared to net cash used by investing activities of $77.9 million in 2024, representing a decrease in cash outflows by $46.4 million, which was mainly due to the net effect of (1) a decrease in purchase of short-term investments and long-term time deposits of $45.7 million, (2) a decrease in cash received from property, plant and equipment sales $20.3 million, (3) an increase in proceeds from maturities of short-term investments by $9.1 million, (4) a decrease in the investment under equity method by $4.8 million, and (5) a combination of other factors contributing to an increase of cash inflows by $7.1 million, including a decrease in the payment to acquire property, plant and equipment by $6.5 million.
Net cash used in investing activities for the year ended December 31, 2024 was $77.9 million, as compared to net cash used by investing activities of $28.6 million in 2023, representing an increase in cash outflows by $49.3 million, which was mainly due to the net effect of (1) an increase in purchase of short-term investments and long-term time deposits by $9.3 million, (2) a decrease in proceeds from maturities of short-term investments by $33.8 million, (3) a decrease in cash received from long-term investments by $3.0 million , (4) a combination of other factors contributing to a decrease of cash inflows by $3.2 million, including an increase in the payment to acquire property, plant and equipment by $25.4 million, and an increase in cash received from property, plant and equipment sales by $17.7 million.
(c) Financing Activities
Net cash provided in financing activities for the year ended December 31, 2025 was $11.5 million, as compared to net cash provided in financing activities of $17.4 million for 2024, representing a decrease in inflows by $5.9 million, which was mainly due to the net effect of (1) a decrease in proceeds from bank loans by $48.1 million, (2) an increase in repayment of bank loans and loans by $37.6 million, (3) an increase in dividends payment to the common shareholders by $20.2 million, (4) a decrease in cash received from capital contributions by a non-controlling interest holder by $15.5 million, and (5) a combination of other factors contributed an increase of cash inflows by $0.1 million.
Net cash provided in financing activities for the year ended December 31, 2024 was $17.4 million, as compared to net cash provided in financing activities of $6.8 million for 2023, representing an increase in inflows by $10.6 million, which was mainly due to the net effect of (1) an increase in proceeds from bank loans by $18.6 million, (2) an increase in dividends payment to the common shareholders by $22.4 million, (3) an increase in cash received from capital contributions by a non-controlling interest holder by $12.0 million, and (4) a combination of other factors contributed an increase of cash inflows by $2.3 million.
Material Cash Requirements
None.
Holding Company Structure
Overview
The Company almost has no operations independent of those of Genesis and its subsidiaries, and the Company's principal assets are its investments in Genesis and its subsidiaries and affiliates. As a result, the Company is dependent upon the performance of Genesis and its subsidiaries and will be subject to the financial, business and other factors affecting Genesis as well as general economic and financial conditions. As substantially all of the Company's operations are, and will be, conducted through its subsidiaries, the Company will be dependent on the cash flow of its subsidiaries to meet its obligations.
Because virtually all of the Company's assets are, and will be, held by operating subsidiaries, the claims of the Company's shareholders will be structurally subordinate to all existing and future liabilities, obligations and trade payables of such subsidiaries. In the event of the Company's bankruptcy, liquidation or reorganization, its assets and those of its subsidiaries will be available to satisfy the claims of the Company's shareholders only after all of its and its subsidiaries' liabilities and obligations have been paid in full.
Dividend Distributions
Although the Company announced and paid a special cash dividend of $0.80 per common share to the Company's shareholders of record as of the close of business on July 30, 2024, it does not anticipate paying any other cash dividends in the foreseeable future. The Company currently intends to retain future earnings, if any, to finance operations and the expansion of its business. Any future determination to pay cash dividends will be at the discretion of the Company's board of directors and will be based upon the Company's financial condition, operating results, capital requirements, plans for expansion, restrictions imposed by any financing arrangements and any other factors that the Company's board of directors deems relevant.
C. Research and Development, Patents and Licenses, etc.
See "Item 4. Information on the Company; B. Business Overview; Technology, Research and Development" and "Item 4. Information on the Company; B. Business Overview; Intellectual Property."
D. Trend Information
Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2025 to December 31, 2025 that are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
E. Critical Accounting Estimates
For our critical accounting estimates, see "Item 5. Operating and Financial Review and Prospects; A. Operating Results; Critical Accounting Estimates."
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