SHENGLI PIPE (01080) issues profit warning: it is expected that the annual net loss attributable to shareholders will not exceed approximately 45 million yuan.

SHENGLI PIPE (01080) announced that the Group expects to incur a net loss attributable to owners of the Company of approximately RMB 45 million for the fiscal year 2024, while a net loss of approximately RMB 98.4 million was incurred for the year ended December 31, 2023. The Board of Directors believes that the decrease in the expected net loss attributable to owners of the Company for the fiscal year 2024 is mainly due to the following reasons: (1) In the fiscal year 2023, an impairment loss related to an investment in a joint venture company, Xin Feng Energy Group Limited ("Xin Feng Energy"), was recorded, which will not occur in the fiscal year 2024. After selling 2% equity interest in Xin Feng Energy on December 27, 2023, the Group no longer accounts for the remaining 19.95% equity interest in Xin Feng Energy as an investment in a joint venture, but has reclassified it as a financial asset designated at fair value through other comprehensive income. Consequently, any change in the fair value of the financial asset designated at fair value through other comprehensive income related to Xin Feng Energy will be recognized in other comprehensive income. After analyzing the performance of Xin Feng Energy and referring to a draft valuation report from an independent professional valuer, the Group expects that the net loss arising from the change in fair value of the financial asset designated at fair value through other comprehensive income related to Xin Feng Energy will not exceed RMB 36 million for the fiscal year 2024. Therefore, the expected total comprehensive loss attributable to owners of the Company for the fiscal year 2024 is not expected to exceed RMB 81 million, compared to a total comprehensive loss of approximately RMB 98.4 million for the fiscal year 2023; and (2) The Group's high-margin national pipeline and anti-corrosion treatment business significantly increased in the fiscal year 2024, leading to a gross profit of approximately RMB 59 million, compared to approximately RMB 33.5 million in the fiscal year 2023. However, due to a decrease in sales of materials to third parties in the fiscal year 2024 compared to 2023, other income decreased from approximately RMB 178 million in 2023 to approximately RMB 77 million in 2024, partially offsetting the increase mentioned above.