BAIWANG CO issued a profit warning, expecting a mid-term net profit of approximately 3 million to 5 million yuan, turning a profit compared to the same period last year

According to the announcement from BAIWANG CO (06657), the group expects to achieve (1) total revenue of approximately RMB 330 million to RMB 380 million for the six months ending June 30, 2025, compared to total revenue of RMB 282 million for the six months ending June 30, 2024. The group's current business includes artificial intelligence and core businesses (including cloud-based financial and tax digital solutions, locally deployed financial and tax digital solutions, and data-driven analytical services). The group's total revenue includes AI business revenue of approximately RMB 58 million to RMB 63 million for the six months ending June 30, 2025, while AI business revenue for the six months ending June 30, 2024, was zero; (2) a gross margin of approximately 45.0% to 50.0% for the six months ending June 30, 2025, compared to a gross margin of 39.2% for the six months ending June 30, 2024; and (3) a net profit of approximately RMB 3 million to RMB 5 million for the six months ending June 30, 2025, compared to a net loss of RMB 446 million for the six months ending June 30, 2024. Based on currently available information, the board believes that compared to the same period in 2024, (i) the increase in total revenue is mainly due to the growth in AI business and financial and tax digital solution revenues; (ii) the increase in gross margin is primarily due to the company's strategic reduction of marketing efforts for low-margin businesses and savings in sales costs through refined cost management; and (iii) the increase in net profit is mainly attributed to the overall revenue increase achieved through the implementation of scenario-based data intelligence strategies. Additionally, the group has achieved an expansion in gross margin, improved operational efficiency, and reduced operating expenses through refined operations. Furthermore, after the company completes its H-share listing on the main board of the Hong Kong Stock Exchange, the fair value change of financial liabilities measured at fair value with changes recognized in profit or loss related to the preferred shares issued by the company will be zero for the six months ending June 30, 2025. The group's adjusted net profit/loss (non-International Financial Reporting Standards measurement) refers to the net profit for the six months ending June 30, 2025, and the net loss for the six months ending June 30, 2024, adjusted by adding back share-based payment expenses, listing expenses, and the fair value changes of financial liabilities measured at fair value with changes recognized in profit or loss related to the preferred shares issued by the company (all of which are non-cash or non-recurring in nature). For the six months ending June 30, 2025, the group expects to achieve an adjusted net profit of approximately RMB 4 million to RMB 6 million, while for the six months ending June 30, 2024, it recorded an adjusted net loss of RMB 81.2 million. The increase in adjusted net profit is mainly attributed to the overall revenue increase achieved through the implementation of scenario-based data intelligence strategies. Additionally, the group has achieved an expansion in gross margin, improved operational efficiency, and reduced operating expenses through refined operations