STRONG PETRO (00852) has announced that the group expects to incur a loss of approximately $10.7 million from a recent asphalt product trade transaction.

In November 2025, the company, through its wholly-owned subsidiaries Nantong Strait International Trade Co., Ltd. and STRONG PETRO (Hong Kong) Limited, entered into a framework agreement with an independent third-party supplier agent for the planned import of asphalt products. Accordingly, the subsidiaries collectively purchased approximately 1.65 million barrels of asphalt products in batches during 2026, intended for domestic sale as raw material for road asphalt production.

However, during the transaction process, extended customs inspection times and unexpected product classification issues at the import location led to a significant increase in the group's sales costs. Concurrently, the sudden outbreak of geopolitical conflict in the Middle East during the product's detention period caused a rise in transportation costs, a surge in crude oil price structures, and a decline in purchasing enthusiasm from mainland Chinese users. These rapid changes in the market environment posed severe challenges to the group's cost and risk management.

Ultimately, after considering factors such as the spread between the purchase and sale prices of these asphalt products, storage and demurrage costs, and the comprehensive impact of related hedging arrangements, the group expects to record a loss of approximately $10.7 million from the aforementioned transaction.

This amount is based on a preliminary assessment by the group's management and has not been reviewed or audited by the company's auditors. The board of directors believes this loss will not have a material adverse impact on the group's continuing operations.

The group will continue to handle the follow-up matters of this transaction and complete the closing work according to the relevant agreements. Moving forward, the group will improve business processes such as commodity import compliance, closely monitor the ongoing evolution of international situations including geopolitical conflicts in the Middle East, exercise greater caution in responding to price volatility and structural risks within the complex and changing global business environment, and further enhance the overall risk management level of its commodity trading business.