TONGDA GROUP (00698) announced a profit forecast, expecting a net profit attributable to shareholders of approximately HK$115 million to HK$125 million for the year 2025.

TONGDA GROUP (00698) announces that the group expects to achieve a net profit attributable to owners of the company ranging from approximately HK$1.15 billion to HK$1.25 billion for the year ending December 31, 2025, compared to a net loss attributable to owners of the company of approximately HK$3.942 billion for 2024, reversing the loss to profit. The significant improvement in performance for 2025 is mainly due to: 1. Reduction in one-time non-cash impairment provisions: In 2024, the group made a one-time impairment provision of approximately HK$2.35 billion for its non-cash assets (including fixed assets, investments in associated companies, and provisions for accounts receivable and loans from a jointly controlled entity). It is expected that there will be no significant one-time impairment provisions for 2025. 2. Significant increase in overall gross profit margin: For 2025, the group's sales remained stable, and the overall gross profit margin improved significantly from a gross loss margin of 5.9% in the same period last year to an expected gross profit margin of approximately 15.5% to 16.5% for 2025, mainly due to the following reasons: (i) After recognizing fixed asset provisions in 2024, the expected depreciation expenses for 2025 are estimated to decrease by approximately HK$0.34 billion compared to 2024; (ii) In 2024, due to intensified industry competition and market fluctuations, the group's inventory turnover slowed down, and the difficulty of managing obsolete inventory increased, resulting in a provision of approximately HK$0.51 billion. In 2025, the group adopted a balanced development strategy to strengthen core customer relationships and establish a more rigorous risk assessment framework for all businesses. By continuously optimizing the customer portfolio and actively selecting low-margin orders, the overall quality of orders for the group has significantly improved. This strategic transformation has made the operational structure more resilient. Therefore, the group's profit margin has increased, and compared to 2024, the provision for inventory is expected to decrease by approximately HK$0.5 billion in 2025. 3. Optimization of operating expenses and research and development costs: The overall management expenses, including research and development costs, for 2025 are expected to decrease by approximately HK$0.42 billion to HK$0.43 billion compared to 2024, mainly due to the completion of the sale of the precision components business on April 3, 2024, which no longer generates related research and management expenses. At the same time, the group adopted a rigorous development strategy, focusing research and development resources on core businesses, and new products developed in response to customer requirements have been steadily launched into the market, leading to a decrease in research and development expenses for 2025 compared to 2024.