Yik Wo International Holdings Limited (Stock Code: 8659) reported a supplemental announcement concerning the disposal of its 100% equity interest in a target company for RMB15.00 million. The transaction references a prior announcement dated 31 December 2025. According to the board of directors, the consideration was reached through arm’s length negotiations and aligned with a valuation as of 30 November 2025 by an independent valuer.

The target company’s principal asset was an interest in a film project subject to approval and potential release delays. Under the film-related agreement, the target company held rights to a profit guarantee of RMB25.57 million and accrued penalty interest of 5% per annum on RMB20.57 million in case of further delays. The valuer calculated discount rates of 28.56% and 28.41% for the projected guarantee and penalty interest, respectively, referencing comparable companies in Chinese film production and a domestic BB-rated yield from ChinaBond data plus an illiquidity premium.

The board noted that prolonged uncertainty in the film’s release timeline influenced the decision to dispose of the target company. Management cited increasing capital requirements to establish a new factory in the PRC for bio-degradable plastic products in light of stricter environmental mandates. With a pressing need for funds and limited clarity on a firm release date for the film, the group maintained that disposing of the equity interest was a prudent move to deploy capital more effectively.

Although the original acquisition cost in 2022 was about RMB20.60 million, the board highlighted the receipt of penalty interest of approximately RMB1.90 million, completed and expected, which partly offset the disposal loss. The directors concluded that the disposal price and accompanying arrangements were reasonable under current circumstances and supported the decision to allocate resources toward core operations.