Xinji Shaxi Group Co., Ltd (3603) disclosed a proposed mandate concerning a possible lease of properties in Guangzhou to continue operating the Xinji Hotelex Hospitality Supplies Center. The center is one of the group’s largest hospitality supplies wholesale markets, and the existing lease will expire on 31 May 2026. According to the announcement, the bidding for the new lease will be overseen by the Rural Collective Assets Trading Center and is scheduled for 17 December 2025, with applications accepted from 15 October 2025 to 15 December 2025.
The group seeks shareholder approval in advance to assign a representative to bid for a 20-year lease term at or above the reserve price of RMB3,621,840 per month, subject to a maximum increase of 5% over the valuation. Rent is set to escalate 6% every three years, with a six-month rent-free period. A deposit of RMB20 million is required to secure compliance with the bidding process, which will remain as the performance bond for the lease if the bid is successful.
Based on a preliminary valuation, the monthly market rent of the properties could reach approximately RMB4,930,000, and the potential right-of-use asset recognized by the group—if secured at the maximum permissible bid—would be around RMB840,544,000. Given that this amount could exceed 100% of the applicable percentage ratios under Chapter 14 of the Listing Rules, the lease would be deemed a very substantial acquisition, necessitating shareholder approval.
Financial data shows a net loss after taxation attributable to the properties of about RMB5.86 million in 2023 and RMB14.35 million in 2024, primarily driven by changes in fair value. Excluding fair value adjustments, the properties’ core profit was approximately RMB18.30 million in 2023 and RMB22.58 million in 2024. If the group is the successful bidder, the new lease is expected to be finalized between 25 December 2025 and 31 December 2025, or within five business days of resolving any objections to the bidding process.
No shareholder is required to abstain from voting on this proposed mandate at the upcoming extraordinary general meeting. A circular containing further details, including the lease’s financial impact, a valuation report, and an unaudited profit and loss statement of the properties, is expected to be dispatched on or before 17 November 2025. As the possible lease may or may not proceed, investors are advised to exercise caution when trading in the company’s securities.