CHINA WOOD INT (01822) plans to sell 100% equity of Asia Pacific Forest Development (Hong Kong) for HK$100,000.

CHINA WOOD INT(01822) announced that on July 9, 2026, the seller (the direct wholly-owned subsidiary of the company, Yubu Limited) intends to sell 100% of the issued share capital of the target company (Asia Pacific Timber Development (HK) Limited) to the buyer Yang Lei for a consideration of 100,000 Hong Kong dollars. The target company is mainly engaged in investment and holding. The target company directly holds all the equity of Qingdao Jinhui Feng Wood Industry Co., Ltd. (a limited company registered and established in China, mainly engaged in wood products processing and distribution). In the Group's timber-related business, the processing and distribution of household wood products generally have lower profit margins, while antique wood furniture and other wood products are considered by the company to have relatively higher profit margins. The target group's current business mainly involves the processing and distribution of pine/spruce wood products, with lower profit margins. These products are usually used as construction materials or general-purpose materials, and compared to furniture or high-end hardwood products, they have lower unit selling prices, less value-added processing space, higher standardization, and substitutability. As of the fiscal year ended on December 31, 2025, the target group's gross profit margin was approximately 2.9%. The demand for pine/spruce wood products from the target group is closely related to property development, construction, and decoration activities in China. According to data from the National Bureau of Statistics of China, as of May 31, 2026, national real estate development investment, new construction area, completed construction area, and sales area of new commercial housing decreased by 16.2%, 22.6%, 23.4%, and 10.8% respectively compared to the same period last year, and sales of building and decoration materials from above-quota companies and furniture retail also declined year-on-year. Given the weak demand environment, as well as the standardization and substitutability of pine/spruce wood products, participants in this segment continue to face fierce price competition and have limited bargaining power. Taking into account the above factors, the directors believe that the market environment for the target group's business segment is challenging, with limited profit potential and uncertain prospects. Therefore, the company believes that exiting the low-profit margin segment will be a prudent business decision to preserve financial and management resources to maintain and further develop the group's remaining timber-related business (including antique wood furniture and other high value-added wood products). The remaining timber-related business typically involves the purchase of higher-end wood products such as mahogany, sandalwood, or rosewood, with higher requirements for craftsmanship, product differentiation, marketing capabilities, and relationships with high-end customers. Compared to the target group's pine/spruce wood processing and distribution business (which has a closer relationship with building and general demand), the company believes that the remaining higher value-added timber-related business may be less directly impacted by the downturn in the real estate and construction market. Additionally, the board of directors believes that the sale is part of the group's business development strategy adjustment, aimed at optimizing its business structure by selling the low-profit margin pine/spruce wood processing and distribution segment and focusing resources on the remaining higher value-added timber-related business. The group will continue to seek further business opportunities for the group's timber-related business and other business segments.