ECO-TEK HLDGS issued a profit warning, expecting an annual loss attributable to shareholders of approximately HKD 2.5 million to HKD 3.5 million, a year-on-year turnaround from profit to loss
ECO-TEK HLDGS issued a profit warning, expecting to record a loss attributable to shareholders of approximately HKD 2.5 million to HKD 3.5 million for the year ending October 31, 2024, compared to a profit of HKD 5.6 million in the same period last year. The loss is mainly due to a decrease in gross profit of approximately HKD 6 million, affected by the decline in water selling prices from the water treatment plant business and the depreciation of the Renminbi. Changes in customer structure have led to a reduction in the proportion of high-priced customers. The group is taking measures to accelerate the collection of accounts receivable and is considering making provisions for expected credit losses of approximately HKD 2 million to HKD 3 million
According to the announcement from ECO-TEK HLDGS (08169), the group expects to incur a loss attributable to the owners of the company of approximately HKD 2.5 million to HKD 3.5 million for the year ending October 31, 2024 (the current year), compared to a profit attributable to the owners of the company of approximately HKD 5.6 million for the year ending October 31, 2023 (the previous year).
The expected net loss for the current year is primarily due to a decrease in the group's gross profit of approximately HKD 6 million, mainly caused by a reduction in revenue and gross profit margin. The decrease is attributed to the decline in the weighted average selling price of water from the water supply business and the depreciation of the revenue currency, the Renminbi. Changes in the customer structure, with an increased proportion of rural residents (who pay lower water prices) and a decreased proportion of industrial and commercial customers (who pay higher water prices), have led to a decline in the weighted average selling price of water; and in response to challenges related to delayed payments from certain customers in the water supply business, the group has actively taken measures to accelerate the collection of outstanding accounts receivable, a process that is still ongoing. To ensure prudent financial management, the group is considering a provision for expected credit losses on accounts receivable of approximately HKD 2 million to HKD 3 million
