Company: FEBO
Filing Date: 2025-05-14
Form Type: 20-F
Source: 0001641172-25-010075
Chunk: 95

Company: Fenbo Holdings Ltd
Filing Date: 2025-05-14
Form: 20-F
Item: Item 5
Chunk 95
---
factors

During the first half of financial
year 2024, the negative impact of the COVID-19 pandemic had greatly subsided, and industries, as well as consumer confidence, returned
to normal as compared to the continued negative impact of the COVID-19 pandemic on businesses during the first half of 2023. However,
geopolitical conflicts, such as the Russia-Ukraine conflict and the Israeli-Palestinian conflict, persisted. The consequent disruption
of the global supply chain affected the recovery of economic activity and drove inflation up significantly. Moreover, major central banks’
aggressive interest rate hikes significantly increased the complexity and uncertainty of the economic development environment. Against
the backdrop of challenging macroeconomic conditions, the consumer goods and manufacturing businesses were affected and the recovery in
consumer demand has been slow. Despite the Company being affected by the weak consumer sentiment and pressure from retail sales, it continued
to put effort into improving the competitiveness of our high quality products together with bolstering our research and development capabilities
with an aim to enhancing our market share in our existing business and maintaining our long-term relationship with our sole customer.

Demand from our one key customer group

We rely
on one key customer and if we fail to retain this customer or attract new customers, our business, financial condition, results of operations
and growth prospects will be harmed. Our aggregate sales generated from this one customer contributed all of our revenue for the financial
years ended December 31, 2022, 2023 and 2024. Accordingly, our sales are significantly affected by the demands of our key customer group,
as well as certain inherent risks, such as changes and developments in local political, regulatory and business conditions that may affect
their purchases from us, many of which are beyond our control. These uncertainties could have a material adverse effect on our business,
results of operations and financial condition, and could affect our ability to remain profitable and to achieve business growth.

Fluctuations in the cost of our materials

Raw materials,
such as electrical components, packaging materials, metal materials, plastic particles and painting materials, are the largest component
of our cost of revenues. As our contract price is fixed once our customer confirms an order for a product, it is difficult for us to manage
the pricing of the product to pass on any increase in costs to our customer. Any fluctuations in the cost of raw materials would affect
our profitability.

The prices
at which we purchase such raw materials are determined principally by market forces, such as the relevant supply