ZHENGYE INT'L (03363) issued a profit warning, expecting a decrease in the shareholders' profit attributable to the mid-term to around 1 million to 3 million yuan.

ZHENGYE INT'L (03363) announced that the Group is expected to achieve a net profit attributable to equity holders of approximately RMB 1 million to 3 million for the six months ending on June 30, 2025, while the net profit attributable to equity holders for the six months ending on June 30, 2024 was approximately RMB 15.03 million. The decrease in net profit attributable to equity holders is primarily due to the uncertainty in trade policies, weak domestic consumption, and overcapacity in the paper and paper packaging industry leading to intensified competition. Although the Group's paper segment saw a sales volume growth of over 10% compared to the same period last year, the business orders in the packaging segment remained largely flat compared to last year. However, the selling prices of paper products and paper packaging products dropped significantly by over 8% compared to the same period last year, while the prices of key raw material waste paper increased by about 4% compared to the same period last year. As a result, the Group's overall gross profit margin decreased by around 5% compared to the same period last year. Facing the operational challenges mentioned above, the Group has strengthened management optimization, tightened control over costs, resulting in a year-on-year decrease of about 2% in operating expenses. Additionally, the Group generated income from the sale of renovated properties by the paper segment during the period, leading to a net profit margin decrease of only about 1.3% compared to the same period last year.