KONG CHENG LIMITED

Executive Summary

Kong Cheng Limited is a very small construction company showing a notable decline in liquidity and net assets over the last reported year, which elevates medium-term financial risk. While currently solvent and compliant with filings, the company’s minimal scale and cash reduction warrant further investigation to ensure operational sustainability. Prospective investors should conduct detailed due diligence on financial performance drivers and cash flow stability before committing capital.

KONG CHENG LIMITED - Analysis Report

Company Number: 14406068

Analysis Date: 2025-07-29 15:07 UTC

1. Risk Rating: MEDIUM
   The company shows a significant decline in net current assets and net assets within one year, which raises concerns about its short-term financial stability. However, it remains solvent with positive net assets and no overdue filings, indicating no immediate solvency risk.

2. Key Concerns:

• Sharp reduction in net current assets from £11,712 (2023) to £2,346 (2024), signaling potential liquidity constraints.
• Drastic decrease in current assets, particularly cash, from £20,736 to £4,795 in the latest year, which could impact operational cash flow.
• Minimal operational scale with only one employee (the director) and micro-entity status, which may limit business resilience and growth capacity.

3. Positive Indicators:

• Company status is active with timely filing of accounts and confirmation statements, indicating good compliance with regulatory requirements.
• Positive net assets and shareholder funds, albeit reduced, show the company is not insolvent.
• Director is also the sole significant controller, suggesting clear governance and decision-making lines.

4. Due Diligence Notes:

• Investigate reasons behind the sharp reduction in cash and current assets between 2023 and 2024 to assess sustainability of operations.
• Review turnover and profit/loss trends (not provided) to understand revenue generation and expense management.
• Confirm absence of contingent liabilities or off-balance-sheet obligations that could exacerbate liquidity issues.
• Assess ongoing contracts or project pipeline given the construction SIC code to evaluate future cash flows.
• Verify director’s experience and capacity given the company’s small scale and sole directorship.