Jia Yao Holdings (01626) reported a sharp earnings decline for the year ended 31 December 2025, as tightening global e-cigarette regulations and weaker Asian and European orders weighed on performance.

Revenue and Profitability • Group revenue fell 16.3% year on year to RMB644.94 million, with sales of electronic cigarettes sliding 22.4% to RMB534.43 million. Electronic-cigarette ancillary services partly offset the shortfall, rising 35.0% to RMB110.51 million. • Gross profit contracted 26.6% to RMB153.23 million; group gross margin narrowed to 23.8% from 27.1%. Gross margin in the core e-cigarette segment slipped to 26.8% (2024: 29.4%). • Profit attributable to shareholders plunged 96.4% to RMB1.80 million, while basic EPS dropped to RMB0.003 (2024: RMB0.084). • The decline reflected weaker sales, lower margins and the absence of RMB44.35 million profit from discontinued paper-packaging operations booked in 2024.

Cost and Expense Trends • Distribution costs decreased 24.3% to RMB43.27 million as the group curtailed travel and promotional spending. • Administrative expenses fell 9.4% to RMB103.74 million, aided by lower staff and amortisation charges. • Net finance costs were largely stable at RMB4.04 million (2024: RMB4.14 million). • The group booked a RMB5.80 million impairment on financial assets, down from RMB10.43 million a year earlier.

Balance Sheet and Liquidity • Cash and cash equivalents stood at RMB105.87 million (31 December 2024: RMB275.14 million) after payment of a HK$180.00 million special dividend in early 2025. • Interest-bearing borrowings declined to RMB55.88 million, leaving the group in a net cash position of RMB49.99 million. • Total equity fell to RMB329.41 million from RMB492.30 million, reflecting dividend distribution and lower earnings.

Dividend • The board proposed no final dividend for FY25, unchanged from FY24.

Operational Highlights • Asia remained the largest market, contributing RMB413.01 million in e-cigarette sales (-19.3% YoY). Europe posted a 37.8% decline to RMB68.92 million amid stricter flavour and marketing curbs. • The group’s e-cigarette solution boards and chips recorded revenue growth of RMB72.10 million, up 117% YoY, helped by stronger customer recognition. • Production line utilisation stayed above 80%, with product qualification rates exceeding 98%.

Strategic Moves and Outlook • Following the October 2024 divestment of its traditional paper-packaging unit, Jia Yao is now fully focused on e-cigarette design, manufacturing and distribution. • In March 2026 the group completed the acquisition of a 57% stake in XK Biotech Holding to broaden its exposure to tobacco-related technologies. • Management expects continued regulatory tightening worldwide but views higher compliance thresholds as a competitive moat for established players. Key 2026 priorities include proactive regulatory alignment, supply-chain enhancements, global market expansion (with recent entries into Canada, Germany and Southeast Asia), and development of next-generation nicotine products.

No significant contingent liabilities were reported, and the company continues to monitor foreign-exchange exposure, with most transactions denominated in RMB and HKD.