KANGHUA HEALTH issues a profit warning, expecting a mid-term profit of HKD 32 million to 33 million, turning a loss into a profit year-on-year
KANGHUA HEALTH expects to achieve a profit of HKD 32 million to 33 million within the six months ending June 30, 2025, turning a loss into a profit, mainly due to the sale of 55% equity in Kangxin Hospital, with expected revenue of approximately HKD 19.5 million. After the sale, the losses of Kangxin Hospital will no longer be included in the group's financial performance, with an expected share of losses of approximately HKD 18.4 million, resulting in a positive impact on the group's financial performance
According to the announcement from KANGHUA HEALTH (03689), the group expects to report a loss of approximately RMB 24.7 million for the six months ending June 30, 2024, compared to a profit of RMB 32 million to RMB 33 million for the six months ending June 30, 2025 (the management is still determining the final amount).
This situation is mainly attributed to the group’s sale of a 55% stake in Kangxin Hospital:
Due to the sale (which will be completed in February 2025), the group expects to realize a gain of approximately RMB 19.5 million from the sale in mid-2025.
Kangxin Hospital has continued to incur losses over the past few years. After the sale, the financial performance of Kangxin Hospital has been removed from the group’s consolidated financial statements. The group has accounted for its remaining 45% stake in Kangxin Hospital using the equity method, and expects to recognize its share of the losses from Kangxin Hospital of approximately RMB 18.4 million in mid-2025. The remaining 55% loss from Kangxin Hospital will not be consolidated into the group’s financial performance in mid-2025. Therefore, compared to the comprehensive losses from Kangxin Hospital prior to the sale, this divestment has had a net positive impact on the group’s financial performance
