NEW SPARKLEROLL (00970) issues profit warning, expecting the mid-term loss attributable to owners of the company to increase to approximately HK$570 million.

New Sparkleroll (00970) announced that the group is expected to incur a net loss attributable to owners of approximately 570 million Hong Kong dollars for the 6 months ending September 30, 2024, compared to a net loss of approximately 52 million Hong Kong dollars for the same period in 2023. The board believes that the increase in expected net loss attributable to owners is mainly due to a decrease in revenue and gross profit of approximately 40% and 48% respectively during this period. The decrease in revenue and gross profit is mainly attributed to (i) the continued weak market atmosphere and intense competition in the automotive business segment of the group, leading to a decline in revenue and gross profit margin of that business segment; (ii) impairments of properties, machinery, and equipment in the automotive distribution business totaling approximately 329 million Hong Kong dollars, due to the unsatisfactory performance of the automotive distribution business, as well as impairment of goodwill in the property management business of approximately 30 million Hong Kong dollars; and (iii) impairments of other intangible assets related to movie copyrights totaling approximately 90 million Hong Kong dollars.