HUAJIN INTL (02738) issues a profit warning, expecting a net loss attributable to shareholders of approximately 11.8 billion to 12.8 billion in fiscal 2025, a year-on-year increase.

HUAYIN INTL (02738) announces that the Group is expected to incur a net loss attributable to the owners of the Company for the year ending December 31, 2025 (the reporting period) ranging from RMB 11.80 billion to RMB 12.80 billion. This is in comparison to the audited net loss attributable to the owners of the Company of approximately RMB 91.20 million for the year ending December 31, 2024. The Group's expected net loss for the year ending December 31, 2025, is mainly due to the following factors: (i) weak market demand and intense competition, compounded by pressures from domestic and international markets, slowdown in downstream industry investments, export difficulties, and price competition within the industry leading to a compression of gross profit margins, resulting in decreased revenue and profits; (ii) fluctuations in the trade environment and increased tariffs, leading to a decrease in sales volume for the Group's downstream customers, as well as commitments and deposits of RMB 3.90 billion confiscated by the Group for failing to meet minimum procurement terms; (iii) instability in international trade leading to high raw material costs (e.g. hot-rolled coils), with the Group unable to adjust product prices accordingly, thus increasing production costs; (iv) low capacity utilization rate (significantly decreased from the previous year), with fixed manufacturing expenses allocated to a significantly reduced output, leading to a rise in unit processing costs; (v) provision for impairment losses on fixed assets based on the prudence principle of approximately RMB 2.975 billion; (vi) provision for credit losses on trade and other receivables based on the prudence principle of approximately RMB 46 million; (vii) provision for inventory write-down at the end of the year based on the prudence principle of approximately RMB 12.70 million, further expanding the Group's net loss; and (viii) in order to effectively mitigate risks from fluctuations in raw material prices and reduce pressure on funds utilization, the Group has optimized its business structure since the second half of 2025, expanding its operation model focusing on processing raw materials. However, due to the adaptation cycle of its customer base, there has been a temporary adjustment in production capacity, leading to a corresponding decrease in revenue and further exacerbating the current net loss.