XJ INTL HLDGS (01765.HK): Proposes disposal of Sichuan Culture Media Vocational College for RMB 395.72 million, with estimated loss of about RMB 64.3 million

NewTimeSpace News: On 31 August 2026, XJ International Holdings Co., Ltd. (stock code: 01765) issued a circular in respect of the major transaction for the disposal of the target company's equity. Its wholly-owned subsidiary, Sichuan Hope Education Industry Group Co., Ltd., entered into an equity transfer agreement with the purchaser, Qizhi Guoxin (Sichuan) Education Technology Co., Ltd., for the conditional sale of the 100% equity interest in Sichuan Yonghe Education Investment Co., Ltd. (the target company, which operates Sichuan Culture Media Vocational College), at an aggregate consideration of RMB 395,720,000.

According to the announcement, the consideration is payable on a schedule: a deposit of RMB 10,000,000 upon signing the agreement; the first installment of RMB 365,720,000 within seven days after the transaction is approved by shareholders and the vendor; and the remaining equity consideration of RMB 20,000,000 following the vendor's cooperation in completing the handover of management of the target entities. The consideration references the valuation of approximately RMB 377,900,000 for the target equity as at 30 June 2026 determined by independent valuer Jones Lang LaSalle using the asset-based approach under the cost approach (a premium of approximately 4.72%). The target entities recorded revenue of RMB 239.57 million and RMB 213.14 million for the two years ended 31 August 2024 and 2025 respectively, with after-tax profits of RMB 57.71 million and RMB 43.21 million.

In terms of financial impact, following completion the target company will cease to be a subsidiary of the Group, and the Company expects to record an unaudited loss of approximately RMB 64.3 million on the disposal. Estimated net proceeds of no more than approximately RMB 377.2 million will be used as follows: approximately RMB 340 million to repay two borrowings (with principal of RMB 240 million, interest at 4.25% p.a., due 22 December 2026, and RMB 100 million, interest at 6.50% p.a., due 9 October 2026), expected to save approximately RMB 16 million in annual interest; and the remaining approximately RMB 37.2 million for the potential acquisition of land of approximately 80,367 square meters in the university town of Jintang County, Chengdu through public auction to expand student dormitory facilities of one of the Group's existing schools.

In terms of the Listing Rules, as the highest applicable percentage ratio of the disposal exceeds 25% but is below 75%, the disposal constitutes a major transaction subject to reporting, announcement, circular and shareholders' approval requirements. The Company will convene an extraordinary general meeting on 18 September 2026 to approve the transaction. The purchaser is a state-owned enterprise ultimately and beneficially owned as to approximately 34% by the State-owned Assets Supervision and Administration Commission of Hefei Municipal People's Government and approximately 50.2% by the State Council; the purchaser, the purchaser's guarantor (Zhongyu Holdings (Yunnan) Group Co., Ltd.) and their ultimate beneficial owners are independent third parties.

The Directors noted that the Group currently owns and operates 20 colleges (including the target college, of which 16 are located in China), and expects to require approximately RMB 800 million by February 2028 to support regulatory compliance and the continuous development of its schools; retaining the target college would require substantial additional funding, and the disposal will enable the Group to reduce future capital commitments, improve financial flexibility and concentrate resources on its remaining schools, which, despite the expected short-term loss, is in the overall interests of the Company and its shareholders. The announcement also disclosed that, apart from the disposal and the land and property disposal announced on 7 August 2026, the Company has no other plans to dispose of, cease, downsize or materially change any part of its existing business; a potential internal restructuring (to divide the education assets into China and international education clusters) remains under consideration.

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