TANG PALACE (01181) issued a profit warning, expecting the annual net loss attributable to shareholders to increase by 55 million to 60 million compared to the previous year.

TANG PALACE (01181) announces that the expected share of losses for the company's owners for the year ending December 31, 2025 is estimated to be between approximately RMB 55 million to RMB 60 million, compared to approximately RMB 19 million for the year ending December 31, 2024. The increase in expected losses for the reporting year is mainly due to the following factors: (i) As announced by the company on August 8, 2025, the Chinese government recently introduced a series of measures to promote thrift and curb waste, including strict bans on alcohol consumption by public officials, which has negatively impacted consumer spending for certain customer groups. Additionally, consumers in mainland China and Hong Kong have continued to maintain a cautious spending trend, leading to a decrease in both average customer spending and dine-in traffic for the group. As a result, the group's revenue decreased by approximately 12% compared to the previous year. (ii) For restaurants experiencing continuous losses, management conducted impairment assessments based on prudent and appropriate accounting principles, resulting in impairment losses of property, plant and equipment, and right-of-use assets of approximately RMB 5 million to RMB 10 million. (iii) According to an independent external valuer's valuation report prepared in accordance with applicable accounting standards, an increase in credit risk has led to an estimated fair value loss of financial assets recognized at fair value through profit or loss of approximately RMB 18 million to RMB 20 million. In order to adapt to the changing market landscape, the group has implemented a series of measures for each operating region, including focusing on family gatherings and festive-themed dining experiences, offering online discounts and vouchers to increase customer engagement, expanding through investments in lightly renovated restaurants, and stabilizing costs through measures such as leveraging centralized purchasing advantages and optimizing labor costs. The board of directors is confident that, through its excellent management team, adjustments to various operating models, and effective cost control measures, the group will achieve desirable outcomes for its continued development.