JXR (01951) plans to launch an asset-backed special program and is expected to issue asset-backed securities.

JXR (01951) announces that the Company intends to launch an asset-backed special program and is expected to issue asset-backed securities to be listed and transferred on the SSE (subject to SSE approval), aiming to securitize the underlying assets held by Hengyu, an indirectly wholly-owned subsidiary of the Company, and to raise funds for the operation and development of the Group's business. The Company and the Program Manager have submitted an application to the SSE in respect of the Asset-Backed Special Program. The Company will appoint the Program Manager as the program manager of the Asset-Backed Special Program. In connection with the proposed issue of the Asset-Backed Securities, Sanya Jinshu (as seller), an indirectly wholly-owned subsidiary of the Company, the Program Manager (acting as program manager and on behalf of the Asset-Backed Special Program as buyer) and Hengyu (as target company) intend to enter into the Equity Transfer Agreement, pursuant to which Sanya Jinshu shall conditionally agree to transfer all of the equity interest in Hengyu to the Asset-Backed Special Program to be managed by the Program Manager on the terms and subject to the conditions thereof. The total size of the Asset-Backed Securities expected to be issued is approximately RMB1.93 billion, which is estimated by reference to, among other things, the value of the underlying assets to be included in the Asset-Backed Special Program. It is expected that upon completion and the establishment of the Asset-Backed Special Program, the underlying assets of the Asset-Backed Securities will comprise all of the equity interest in Hengyu and any shareholder loans owed by it in respect of the Asset-Backed Special Program; and the Property wholly owned by Hengyu. Upon completion of the Equity Transfer Agreement, Hengyu will cease to be a subsidiary of the Company, and accordingly its financial results, assets and liabilities will no longer be consolidated into the accounts of the Group. This will enable the Group to unlock the value of its investment and optimize its capital allocation, while retaining continuing economic participation in Hengyu through the Company's indirect minority interest under the Asset-Backed Special Program. The net proceeds from the proposed issue of the Asset-Backed Securities will be used to repay the Group's debts and for the Group's general working capital purposes and to raise funds for the operation and development of the Group's business, including but not limited to the continued development of its core medical network, full-cycle patient management system and clinical and digital capabilities. Based on the Company's preliminary assessment, the proposed issue of the Asset-Backed Securities is expected to bring significant financial and strategic benefits to the Group. Specifically, after taking into account the Group's proposed subscription of approximately 20% of the Asset-Backed Securities and other transaction arrangements (which remain subject to SSE approval), the Group expects to receive net proceeds of approximately RMB1.2 billion. Based on the Group's financial position as at June 30, 2026, the proposed issue is expected to significantly strengthen the Group's capital structure, with the Group's net debt to EBITDA ratio decreasing from approximately 2.8 times to approximately 0.9 times, thereby enhancing the Group's financial flexibility and its ability to support future business development. Notwithstanding the financial and strategic benefits of the proposed issue of the Asset-Backed Securities to the Group, assuming the consideration under the Equity Transfer Agreement is RMB1.93 billion, under applicable accounting standards, the Company may recognize an unaudited one-off non-cash accounting loss of approximately RMB121.5 million on a consolidated basis. This estimated loss primarily reflects the difference between the accounting value of the consideration and the carrying value of the relevant assets after taking into account the discounting effect of the payment arrangements under the Equity Transfer Agreement and the capitalized interest attributable to the Property (which capitalized interest forms part of the carrying value of the underlying assets). This estimated loss is determined by comparing the accounting value of the consideration with the unaudited carrying value of the underlying assets of approximately RMB1.997 billion as at June 30, 2026. As this estimated accounting loss only reflects accounting adjustments relating to the final transaction terms and payment arrangements under the Equity Transfer Agreement (which remain subject to SSE approval) and the capitalized interest attributable to the Property, it is non-cash in nature, will not reduce the substantial cash proceeds the Group expects to receive under the Asset-Backed Special Program, and is not expected to affect the commercial benefits of the proposed issue of the Asset-Backed Securities. If any accounting loss arises from the discounting effect of the final payment arrangements, the relevant accounting impact is expected to be gradually reversed over the relevant settlement periods. The Company believes that the Asset-Backed Special Program will bring significant financial and strategic benefits to the Group. Specifically, the Asset-Backed Special Program will enable the Group to realize the value of the Property and enhance the liquidity of its asset base, thereby strengthening its liquidity position, reducing leverage and facilitating more efficient capital allocation. The Asset-Backed Special Program will also broaden the Group's financing channels and enhance the ability of the relevant business and other relevant properties to continue to access the PRC capital market. Through the Asset-Backed Special Program, the Group will be able to unlock the value of the Property and allocate substantial financial resources for the strategic deployment of its core business. This is expected to enhance the efficiency and productivity of the Group's capital allocation and support the continued expansion and upgrading of its business operations. At the same time, the Group will retain an interest in the Asset-Backed Special Program, enabling it to continue to share in the returns generated by the underlying assets in the future and to benefit from their potential value appreciation. In addition, the Asset-Backed Special Program is in line with the PRC's policy framework of encouraging the revitalization of existing assets and optimizing resource allocation. Upon the establishment of the Asset-Backed Special Program, the Group's net debt to EBITDA ratio is expected to decrease significantly, which will substantially strengthen its capital structure, enhance its financial resilience and flexibility, and lay a more solid foundation for the Group's sustainable long-term growth.