Can CAQ Holdings Bounce Back After 35% Revenue Slide?
CAQ Holdings reported a significant 35% decline in leasing revenue for the June 2025 quarter amid tenant contract changes and high vacancy rates. The company is optimistic about a turnaround following new customs policies in Hainan Free Trade Port set to take effect in December.
- Leasing revenue fell 35% to AUD 277k in June quarter
- Warehouse tenant changed lease terms, leading to nil income in June
- Vacancy rates remain elevated across all property types
- Hainan Free Trade Port customs reforms expected to stimulate leasing demand
- Cash reserves low at AUD 55k with positive operating cash flow
Quarterly Performance Highlights
CAQ Holdings Limited has reported a challenging June 2025 quarter, with property leasing revenue dropping by approximately 35% to RMB1.3 million (AUD 277,100) compared to the previous quarter. This decline primarily stems from a change in lease charging methodology by a key warehouse tenant, who shifted from paying based on occupied area to volume of goods stored. Since April 2025, no new goods have been stored, resulting in zero lease income from this tenant in the latest quarter.
Vacancy rates across CAQ’s portfolio remain stubbornly high, with warehouses at 37%, factories at 66%, the exhibition centre at 95%, and administrative buildings at 46%. These figures have not improved since the March quarter, underscoring ongoing leasing challenges.
Operational and Regulatory Context
The exhibition centre’s system integration testing remains suspended, awaiting new government customs requirements. However, a significant development emerged late in the quarter, the National Development and Reform Commission of China announced that the Hainan Free Trade Port will implement island-wide independent customs operations starting December 18, 2025. This reform will increase tariff-free product lines from 21% to 74%, allowing goods processed with at least 30% value addition in Hainan to enter mainland China tariff-free. Additionally, certain previously restricted goods will benefit from more open policies.
CAQ anticipates that these regulatory changes will accelerate tenant contract negotiations and reduce vacancy rates, thereby boosting future leasing income. The company’s optimism hinges on the timely and effective implementation of these policies and the market’s response.
Financial Position and Outlook
Financially, CAQ ended the quarter with cash at bank of just AUD 55,000, reflecting a tight liquidity position. Despite this, the company reported a positive net cash flow from operating activities of AUD 108,000 for the quarter. No payments were made to directors or related parties during this period. The group maintains financing facilities totaling AUD 3.757 million, with AUD 2.654 million drawn, secured against commercial properties.
While the current financials highlight short-term pressures, the company’s strategic positioning in Hainan Free Trade Port could offer a pathway to recovery. Investors will be watching closely to see if the anticipated policy-driven leasing demand materializes in coming quarters.
Bottom Line?
CAQ’s near-term leasing struggles underscore the importance of Hainan’s trade reforms as a potential catalyst for recovery.
Questions in the middle?
- How quickly will new customs policies translate into tangible leasing demand?
- Can CAQ reduce its high vacancy rates amid evolving market conditions?
- What steps will management take to strengthen liquidity beyond existing facilities?