YAU LEE HOLD issued a profit warning, expecting annual performance to turn from profit to loss, approximately HKD 100 million to 130 million
YAU LEE HOLD expects its annual performance for the year ending March 31, 2025, to shift from a net profit of HKD 66 million in the same period last year to a net loss of approximately HKD 100 million to HKD 130 million. The performance change is mainly influenced by factors such as adjustments in contract prices for government public housing construction projects, a downturn in the Hong Kong property market, and a decrease in construction notifications. Some negative impacts are offset by increased profits from relocation compensation agreements
According to the Zhitong Finance APP, YAU LEE HOLD (00406) announced that it expects to incur a net loss of approximately HKD 100 million to 130 million for the year ending March 31, 2025, compared to a net profit of HKD 66 million for the same period in 2024.
The announcement stated that the performance change is mainly due to the combined effects of the following factors: (i) negative adjustments to contract prices for government public housing construction projects, leading to a decrease in contract value and adversely affecting the gross profit margin of the group's construction business; (ii) unrealized revaluation losses on the group's commercial investment properties due to a downturn in the Hong Kong property market; and (iii) a decrease in the gross profit margin of several large renovation contracts due to a reduction in construction notifications in the second half of the fiscal year, resulting in a decrease in profits from the renovation business. The negative impacts mentioned above were partially offset by an increase in profits generated from the net value of physical compensation received from property owners during the fiscal year under a relocation compensation agreement established in 2015, which stipulates the compensation terms for relocating the factory in Longhua, Shenzhen, Mainland China
