HUASHENG INTL (01323) issues profit warning, estimated annual net loss to increase by not less than around 45%

HUASHENG INTL (01323) announces that the Group expects the unaudited loss attributable to owners of the Company for the year ending March 31, 2026 to increase by no less than approximately 45% compared to the loss for the year ending March 31, 2025, amounting to approximately HK$92.4 million. The increase in the loss attributable to owners of the Company for this year is mainly due to the downturn in the residential real estate market in Hainan Province, as well as delays in fund disbursement leading to a general slowdown in commercial construction projects. The shrinking demand for precast concrete products has sparked fierce price competition among local production lines to secure limited infrastructure and public works contracts. In order to maintain market share, the Company's concrete business has lowered its average selling price and reduced profit margins to keep prices at acceptable levels for customers. As a result, the Company's revenue decreased by approximately HK$91 million or 24% compared to the previous year. Meanwhile, the Company's gross profit margin has been severely squeezed due to the continued high raw material costs, leading to a decrease of approximately HK$54 million in gross profit compared to the previous year. In this challenging operating environment characterized by intensified competition, shrinking demand, and continued high raw material costs, the Company has lowered its forecasted profitability for its concrete business. Therefore, the Company has recognized a non-cash impairment loss of approximately HK$32 million for goodwill in the current year.