VITAL INNO (06133) expects a mid-term net loss of approximately 6.2 million to 6.5 million yuan.

VITAL INNO (06133) announced that the group expects to record no revenue for the six months ending June 30, 2026, while the revenue for the six months ending June 30, 2025, was approximately RMB 449 million. Although revenue has decreased, the net loss for this period is expected to narrow from approximately RMB 8.41 million in the same period last year to between approximately RMB 6.2 million and approximately RMB 6.5 million. The expected reduction in net loss is mainly due to the group implementing effective cost control measures, resulting in reduced rental and human resource expenses. The main business of the company's subsidiaries involves buying and selling mobile devices (including mobile communication-related components and accessories) and smart devices, as well as LED products. Regarding the buying and selling of mobile devices (including mobile communication-related components and accessories) and smart devices: (1) Considering the low profit margins of branded mobile phones and weak consumer demand, the group adopted a prudent approach during this period and did not purchase any branded mobile phone inventory to avoid inventory build-up and clearance sales, which could result in losses for the group. As previously announced, branded mobile phone sales are expected to gradually recover from June 2026. However, the relevant suppliers have failed to provide inventory to the group on terms that would yield a sufficiently high profit margin. As a result, the group did not accept these orders to avoid incurring losses. In the second half of 2026, the company will focus on utilizing its existing channels to sell customized mobile phones in mainland China, which is expected to bring revenue to the group's mobile and smart device trading business; (2) The group has been collaborating with relevant business partners to introduce satellite professional terminals through central procurement and bidding arrangements. Although the group has made progress in the satellite phone business, the shipment of the relevant products is currently expected to begin in the third quarter of 2026. Therefore, the group does not expect this business to contribute any revenue during this period. Regarding the buying and selling of LED products, the group expects no revenue contribution from this business segment during this period, as the group has also been cautiously accepting LED product orders and focusing on profit control. The appreciation of the RMB from the end of 2025 to the first half of 2026 has had a significant impact on LED exports, directly compressing suppliers' profit margins. In June 2026, the company signed a sales contract with a customer for the sale of LED products. However, it is expected that revenue from this contract will be recognized in the second half of 2026. Given the market shift in Western countries toward smart, high-efficiency LED products from traditional lighting products, as well as opportunities arising from the heavy reliance on imports in emerging markets like Southeast Asia, the Middle East, and Latin America for LED products, the group has adopted an overseas expansion strategy to sell LED products to these markets and ensure stable long-term growth. These market trends are expected to demand for the group's LED products, with revenues from LED product sales expected to gradually improve in the second half of 2026.