CMGE (00302) issues profit warning, expecting the net loss in 2025 to narrow by not more than 1.5 billion yuan compared to the previous year.

CMGE (00302) announced that it expects the Group to incur a net loss of not more than RMB 1.5 billion for the year ending December 31, 2025. The Group incurred a net loss of approximately RMB 2.1 billion for the year ending December 31, 2024. The improvement in the Group's performance is mainly due to a decrease in non-operating expenses from approximately RMB 1.7 billion for the year ending December 31, 2024 to approximately RMB 1.1 billion for the year ending December 31, 2025. This is mainly attributed to the following factors: (i) it is expected that the impairment of goodwill acquired by the Group's subsidiary, Beijing Wenmai Interactive Technology Co., Ltd. (Wenmai Interactive), in the cash generating unit acquired by the end of the year ending December 31, 2025 will decrease significantly compared to the year ending December 31, 2024. In the year ending December 31, 2024, the cash generating unit of Wenmai Interactive experienced a significant impairment of goodwill due to a substantial reduction in the projected income growth rate based on actual income for the relevant financial year and projected income for the next five years, ranging from 2% to 157% (year ending December 31, 2023: 16% to 213%); (ii) although the write-off amount of advance payment has increased for the year ending December 31, 2025 compared to the year ending December 31, 2024, the impairment of other intangible assets acquired by the Group (such as intellectual property rights authorization, content provider authorization, and research and development expenses) is expected to decrease, offsetting the impairment of its overall assets; and (iii) it is expected that the fair value loss on financial assets accounted for at fair value through profit or loss will decrease for the year ending December 31, 2025. The Group recognized a significant fair value loss in the year ending December 31, 2024 due to the confirmation of fair value losses on several investee companies facing operational difficulties. Additionally, the investment environment improved during the year ending December 31, 2025, which also reduced the fair value losses on the Group's financial assets measured at fair value.