"Profit Warning" Shanghai Fudan expects last year's net profit to drop by up to 66.82% year-on-year

SHANGHAI FUDAN (01385.HK) issued a profit warning, expecting to record operating revenue of approximately RMB 3.93 billion to RMB 4.03 billion for the year ending last December, an annual increase of about 9.46% to 12.25%; expected net profit is approximately RMB 190 million to RMB 283 million, an annual decrease of about 66.82% to 50.58%; expected net profit excluding non-recurring gains and losses is approximately RMB 125 million to RMB 185 million, an annual decrease of about 73.07% to 60.14%.

The board believes that the increase in revenue and decrease in net profit during the period are mainly affected by the main business, expenses, and costs. Last year, the semiconductor industry showed a significant structural differentiation in prosperity, with significant differences in downstream application demand. The company's operating revenue achieved growth, and the gross profit margin remained stable, with gross profit increasing by RMB 200 million to RMB 260 million compared to the same period last year; the company has implemented a strategic inventory stocking strategy in recent years, and under the increasingly tense international trade situation, the company's inventory effectively improved supply chain security and resilience, supporting good market performance of related products. On the other hand, the downstream demand for some stocked products has undergone structural changes, and the sales of some inventories did not meet expectations. The company conducted impairment testing and measurement of inventories according to prudent principles, with inventory impairment losses increasing by approximately RMB 250 million compared to the previous year; the company continues to strengthen the construction of a diversified supply system and increase the development of new processes and new products; at the same time, affected by changes in the international trade environment, the supply chain and customer demand have changed, making it difficult for some capitalized R&D projects to achieve expected economic benefits in the future, leading to the write-off of some development expenditures. As a result of the aforementioned matters, R&D expenses increased by approximately RMB 180 million compared to the previous year; the reduction in the value-added tax deduction for integrated circuit design enterprises recognized by the company and the decrease in government subsidies for R&D projects led to a decrease in other income of approximately RMB 90 million