Xiangxing Technology (01732) issued a profit warning, expecting a net loss of approximately 5 million yuan in the first half of the year, a year-on-year turnaround from profit to loss.

Xiangxing Technology (01732) announced that the Group anticipates a net loss of approximately RMB 5 million for the six months ending June 30, 2026, compared to a net profit of approximately RMB 6.9 million for the six months ended June 30, 2025. The announcement stated that this loss is primarily due to: an increase in tax expenses of approximately RMB 8.1 million, mainly due to the tax authority's additional tax assessment on a subsidiary of the Group regarding previously unrecognized interest on inter-company balances during the relevant period. The tax authorities believe that interest should be recognized on these inter-company balances, resulting in presumed interest income subject to corporate income tax, additional tax, and overdue tax interest; and the Group's cost of sales increasing at a rate greater than its revenue, leading to a decrease in gross profit for the relevant period.