HK Stock Market Move | FLOWING CLOUD (06610) fell more than 5% after issuing a profit warning, expecting a net loss of 20-50 million yuan in the 2024 fiscal year.

After warning of a profit decline, FLOWING CLOUD (06610) fell more than 5%, dropping 5.56% to HKD 0.425 as of the time of writing, with a turnover of HKD 16.92 million. On the news front, on February 21, FLOWING CLOUD announced that the group expects to achieve revenue of RMB 950 million to 1.05 billion for the fiscal year ending December 31, 2024, compared to revenue of RMB 1.245 billion for the fiscal year ending December 31, 2023; and a net loss of RMB 20-50 million for the fiscal year ending December 31, 2024, compared to a net profit of RMB 264 million for the fiscal year ending December 31, 2023. The announcement stated that the decrease in revenue and the shift from profit to loss was mainly attributed to the following factors: reduced overall Internet advertising budget of clients due to macroeconomic impact, leading to a decrease in revenue for the company's Augmented Reality and Virtual Reality (AR/VR) marketing service business, as well as an increase in traffic costs resulting in a decrease in the business's gross profit margin; more intense competition in the AR/VR content business market, leading to a decrease in revenue and gross profit margin; increased promotion expenses for new emerging C-end business such as "XR (Extended Reality) + content" and overseas markets in 2024; and increased investment in research and development expenses.