ZO Future Group

Comparability warning. FY2021–FY2025 are consolidated figures including the football club. FY2026 revenue and margins are on a continuing-operations basis (NEV plus property), while FY2026 profit attributable includes the discontinued-operations gain. Gross profit was not reported on a comparable basis while the club was consolidated, because the club used an "operating expenses" presentation.

Income statement

Sources and notes:

• FY2021–FY2023 revenue, operating loss, pre-tax loss and attributable loss are per Yahoo Finance (derived from filed accounts).

• FY2023–FY2024 line items are per the FY2024 final results announcement (Chinese version, HKEX 24 Sep 2024).

• FY2025 revenue and attributable loss are per the FY2025 results announcement. FY2025 loss including NCI (about HK$512 M) is per the Tiger Brokers bulletin summarising the annual report and is labelled "approximately".

• FY2025 continuing gross profit is derived from the disclosed FY2026 increase of 36.1%.

• FY2026 is per the FY2026 results (Caiwen and 10jqka summaries; etnet).

• FY2021–FY2023 EPS are derived from attributable loss and weighted shares (737.96 M, 771.56 M and 771.56 M post-consolidation equivalents per Yahoo). FY2024–FY2026 EPS are as reported.

• EBITDA is not reported. One vendor (CNBC) shows TTM EBITDA of -HK$276.3 M at an undefined date; it is not used.

Margin analysis (%)

Revenue CAGR. On a reported basis, revenue grew at a CAGR of about 28.6% from FY2021 (HK$165.0 M) to FY2025 (HK$451.2 M) (derived). This growth was entirely football- and NEV-driven and is not representative of the continuing business. Continuing revenue rose from HK$151.9 M (FY2025 restated) to HK$163.4 M (FY2026), +7.6%.

Commentary.

FY2021–FY2023: Reported losses improved steadily: attributable loss fell from HK$74 M to HK$26 M. The improvement owed much to non-operating items. FY2023 included a HK$179.7 M "football club segment compensation" credit and a gain on the partial club disposal (expected £2.8 M, about HK$27.5 M, pre-tax).

FY2024 inflection: Attributable loss rose sevenfold to HK$182.8 M despite HK$151.7 M of player-sale gains, which included the Jude Bellingham sell-on proceeds and the sale of Tahith Chong (per almajir.net reading of the interim accounts). The drivers were the absence of FY2023's compensation credit, operating expenses rising to HK$570.6 M (FY2023: HK$418.2 M), and finance costs rising 67% to HK$36.8 M.

FY2025 trough: Attributable loss reached HK$313.9 M. Relegation cut broadcasting income, the club's cost base expanded under new operational management, amortisation and depreciation rose, and NEV start-up costs (selling, R&D, administration) rose.

FY2026: The headline profit of about HK$111 M reflects the HK$357.8 M non-recurring disposal gain. This was offset by an NEV segment loss of about HK$124 M, a HK$30.1 M share of losses from the ZO Motors US associate, and the H1 loss of the discontinued club before disposal. Continuing-operations loss attributable widened to about HK$118 M. Gross margin improved 6.6 percentage points to 31.5%, which suggests better pricing, mix (for example leasing and service) or sourcing terms from Weichai.

Balance sheet

Sources and notes: etnet summaries of filed annual results. The FY2024 borrowings figure is per the FY2024 results announcement (HK$532.586 M). Equity is derived by solving the company's disclosed gearing formula and should be treated as approximate. The derived FY2026 debt/equity of about 18.9% reconciles closely with Simply Wall St's 19.0%.

Total assets, goodwill and intangibles (player registrations were the main intangible until disposal), and the short-term / long-term borrowing split are not publicly disclosed in the sources reviewed. The FY2024 results show facilities from: a substantial shareholder (HK$250 M), Oriental Rainbow (HK$300 M), Shelby Companies Limited (amount not disclosed in the excerpt), a further "Great…"-named lender (name truncated in source), and other loans of about HK$10.7 M.

Interim balance sheet checkpoints

Borrowings rose about HK$40 M in H2 FY2026 while cash fell about HK$7 M. The group is funding NEV losses with new debt, likely shareholder or related-party loans, as the pattern of prior facilities suggests (derived).

Cash flow

Notes:

• FY2025 operating cash outflow is per the Tiger Brokers annual-report summary. H1 FY2026 is per the Interim Report 2025/26.

• Equity raised is derived from share issues: 2 × 21,848,739 shares × HK$2.142 = HK$93.6 M (FY2024); 107,526,473 shares × HK$1.86 = HK$200.0 M (FY2025).

• Disposal proceeds: £5.3 M (about HK$52 M) gross in FY2023 (2023 transaction) and about HK$51.8 M net in FY2026.

• Capex and free cash flow are not publicly disclosed in sources reviewed. Free cash flow has been structurally negative given operating outflows.

Ratios

ROA, ROIC, interest coverage, asset turnover, net debt/EBITDA and the cash conversion cycle cannot be computed reliably because total assets, EBITDA and working-capital detail are not publicly disclosed in sources reviewed. Interest coverage was negative throughout, since operating losses exceeded finance costs. Net debt/EBITDA is not meaningful because EBITDA is negative.

Balance-sheet commentary. The disposal transformed the balance sheet. Gearing fell from 74.7% to 15.9% and borrowings from about HK$1.07 bn to HK$108 M, because club-level debt and liabilities left the group on deconsolidation. Liquidity, however, did not improve in cash terms: cash fell from HK$242 M to HK$37 M. The H1 FY2026 interim report again disclosed a material uncertainty about going concern, citing the HK$199.6 M operating cash outflow. Working capital depends on support from substantial shareholders.

Management guidance

There is no quantified forward guidance. Management's stated direction (circular, June 2026; FY2026 results) is to channel resources into ZO MOTORS and ZM TRUCKS, selling electric commercial vehicles in Japan, Southeast Asia and the United States, while retaining the property portfolio. No consensus forecasts exist.

Bull case

1. Clean slate and deleveraging. With the club gone, gearing fell to 15.9% and the group's losses are now bounded by the NEV segment alone (HK$124 M in FY2026), not by an open-ended club funding obligation (FY2025 club segment loss HK$409 M).

2. Operating leverage is emerging. Gross margin rose to 31.5%. The implied H2 FY2026 NEV loss ratio of about -75% is a marked improvement on H1's -130%. If volumes keep compounding (+32.7% in FY2026) on an asset-light cost base, segment breakeven could come into view.

3. Committed sponsors. The controlling group has repeatedly funded the company (about HK$294 M of equity in FY2024–FY2025 plus loan facilities), which reduces near-term insolvency risk and gives time to scale.

Bear case

1. Uneconomic core. The NEV segment loses about 92 cents per dollar of revenue, and revenue growth slowed to 9.3% in FY2026. At about 420 units per year the business lacks the scale to absorb fixed costs.

2. Liquidity and dilution. Cash of about HK$37 M against an annual continuing loss of about HK$118 M, plus a disclosed going-concern uncertainty, implies further capital raises, likely dilutive at depressed prices or reliant on related-party loans.

3. No moat, rich valuation. Core technology belongs to Weichai, which is also a potential competitor, and the US arm is only an associate. The shares nonetheless trade at about 10x EV/Sales on continuing revenue, a multiple that assumes a turnaround with no evidence yet.

Key catalysts and monitorables (next 12 months)

Analyst verdict

ZO Future Group has completed the hardest part of its restructuring: it has exited Birmingham City Football Club, an asset that had consumed hundreds of millions of Hong Kong dollars and pushed group gearing to almost 75%. The November 2025 disposal brought in little cash (about £5 M), but it removed a funding obligation that had become existential. The resulting balance sheet shows low leverage (15.9% gearing) and a headline FY2026 profit of about HK$111 M. Investors should look past both, because the profit is entirely the product of a HK$357.8 M non-recurring gain.

What remains is a very small business. ZO Motors delivered about 420 electric commercial vehicles in FY2026 and generated HK$135 M of segment revenue at a segment loss of HK$124 M. Its manufacturing, platform technology and much of its IP are sourced from Weichai New Energy. Its most visible Western asset, ZM Trucks, sits in an associate that a third party controls 80%. The rental portfolio contributes a dependable HK$28 M per year but cannot offset the cash burn. With roughly HK$37 M of cash at year-end, a disclosed going-concern uncertainty and no external analyst coverage, the company's survival in its current form depends on the continued support of a concentrated, low-profile controlling shareholder group.

There are genuine positives. Gross margin is improving, second-half loss ratios narrowed sharply, and the RHD-market focus is a defensible niche against left-hand-drive-centric Chinese exporters. A market capitalisation of about HK$1.6 bn (about 10x EV/Sales) nonetheless discounts a successful scale-up for which the company has not yet provided volume targets, a breakeven timeline or evidence of durable customer wins.

Verdict. Speculative and high-risk; not investable on fundamentals at current levels. The equity behaves as a sponsor-dependent option on an asset-light NEV start-up, with dilution and governance risk the dominant considerations. A re-assessment would be warranted on any of the following: (i) disclosed multi-year volume and breakeven targets; (ii) two consecutive halves of narrowing NEV losses in absolute terms; (iii) funding secured on arm's-length terms; or (iv) clarity on consolidation of, or the path to control of, the US business.

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Data gaps flagged throughout as blank cells or "not publicly disclosed" should be closed against the full text of Annual Report 2025/26 once it is published on HKEXnews.