SHENGUAN HLDGS (00829) issues profit warning, expecting shareholders to have a net loss of approximately 65 to 78 million yuan for the year, turning from profit to loss year-on-year.

SHENGUAN HLDGS (00829) announced that it is expected to record a loss of approximately RMB 65-78 million attributable to the owners of the parent company for the year ended December 31, 2025, compared to a profit of approximately RMB 26.7 million for the year ended December 31, 2024. The Board of Directors believes that the main factors contributing to the unfavorable performance for the year include: 1. The overall business environment remains challenging, with the group's sales revenue roughly flat compared to the previous year. However, increased inventory write-offs and provisions were mainly due to large-scale product trials and equipment upgrades conducted by the group for R&D and new production lines during the period from 2022 to 2024. These trial product finished goods inventory has not been fully absorbed by the market. The daily operating activities have recorded an after-tax loss of approximately RMB 22-35 million. 2. The remaining after-tax losses are mainly due to adjustments in the overall financial planning between the group's companies in the People's Republic of China and Hong Kong. One of the group's Hong Kong companies has repaid all interest-bearing loans to another group company in China, with the repayment funds from the Hong Kong subsidiary coming from dividends paid by one of its Chinese subsidiaries, resulting in expenses for Chinese dividend tax deductions and provisions.