NEW FOCUS AUTO (00360) issues profit warning, expects a net loss of approximately 50-60 million yuan in the mid-term, widening year-on-year.

NEW FOCUS AUTO (00360) announced that the group is expected to incur a net loss of approximately RMB 50-60 million for the six months ending June 30, 2025 (compared to a net loss of approximately RMB 16.12 million in the same period in 2024). The group's comprehensive income for this period is expected to be around RMB 270 million, an increase of approximately RMB 33 million compared to the same period in 2024, mainly due to growth in the group's manufacturing and trading business, as well as automotive distribution and service business. The increase in net loss for this period compared to the same period in 2024 is estimated to be approximately RMB 34-44 million, mainly due to two reasons: Firstly, the group's administrative expenses increased by about RMB 18 million during this period, mainly due to: (i) The group's manufacturing-related companies increasing professional research and development (R&D) personnel and high-end talent reserves to transition from traditional automotive electronic products to new energy automotive electronic products, leading to a significant increase in personnel expenses. Additionally, the use of consumables and equipment investment in the product transformation process also raised related expenses; and (ii) The initial operating costs incurred by the group's hydrogen-related companies in team building and compliance filing, leading to a significant increase in personnel and other management expenses. Secondly, the group subscribed to approximately 29.03% equity interest in Shihezi Yike Equity Investment Partnership Enterprise (Limited Partnership) on April 3, 2024. This investment incurred a fair value change loss of approximately RMB 18 million during this period, compared to a fair value change loss of approximately RMB 2 million in the same period in 2024. The group's manufacturing transformation and the initial setup of hydrogen-related companies are in the investment stage, leading to increased short-term cost pressures, but the results of operations will take time to materialize. The group has taken measures, including enhancing R&D efficiency and production coordination through digital tools, to gradually control the rate of cost increase and lay the foundation for improving the profitability situation.