ECO-TEK HLDGS (08169) issues a profit warning, expecting a net loss attributable to shareholders of approximately HK$2.5 million to HK$3.5 million for the year, representing a reversal from profit to loss year-on-year.

ECO-TEK HLDGS (08169) announced that the group is expected to incur a net loss of approximately 2.5 million to 3.5 million Hong Kong dollars for the year ending October 31, 2024 (current year), compared to a net profit of approximately 5.6 million Hong Kong dollars for the year ending October 31, 2023 (previous year). The anticipated net loss for the current year is mainly attributed to a decrease in gross profit of approximately 6 million Hong Kong dollars, primarily due to a decrease in revenue and gross margin. The decrease is a result of a decline in the weighted average selling price of water from the water treatment plant business and depreciation of the Chinese Renminbi. Changes in the customer structure, with an increase in the proportion of rural residents (paying lower water prices) and a decrease in the proportion of industrial and commercial customers (paying higher water prices), have led to a decrease in the weighted average selling price. Additionally, challenges related to delayed payments from some customers in the water treatment plant business have prompted the group to actively take measures to expedite the collection of outstanding accounts receivable, a process that is still ongoing. To ensure prudent financial management, the group is considering establishing an expected credit loss provision of approximately 2 to 3 million Hong Kong dollars for accounts receivable.