ENM HOLDINGS issues a profit warning, expecting a shareholder profit of approximately HKD 21 million for the first three quarters, a significant turnaround from a loss to a profit year-on-year

According to the announcement from ENM HOLDINGS (00128), the group expects to achieve a profit attributable to shareholders of approximately HKD 21 million for the nine months ending September 30, 2025, a significant turnaround from a loss of HKD 7.9 million for the year ending December 31, 2024. The improvement in financial performance is mainly attributed to the following factors: the fashion retail business achieved a slight profit of approximately HKD 2.1 million, primarily due to the sale of a large amount of impaired old inventory and a reduction in operating expenses; compared to a loss of HKD 3.9 million for the year ending December 31, 2024; the resort and club business ceased operations in mid-June 2024, incurring a loss of HKD 6.1 million during the nine months ending September 30, 2024; and the net gains from the group's investment portfolio, both realized and unrealized, increased, mainly due to the rise in fair value of investments from private equity funds, benefiting from the recovery of the stock market where some of the funds' investments are located.

The group has been engaged in the retail business of luxury fashion and accessories through its subsidiary Shiyun Limited (Shiyun) for many years (collectively referred to as the "fashion retail business"). The operational challenges faced by Shiyun have become increasingly severe, exacerbated during the COVID-19 pandemic, and continue to exist in the current economic environment in Hong Kong, where consumer spending on luxury fashion is weak. Therefore, the board has closely monitored the performance and feasibility of the fashion retail business over the past 12 months. As stated in the announcement on June 6, 2024, after considering various factors including business plans, performance, and lease renewal terms, Shiyun decided not to renew the lease for its flagship store in Central. Despite the board and management implementing several cost-saving and profitability-enhancing strategies to help reduce operating losses, the fashion retail business has not demonstrated a healthy and sustainable profit outlook. In light of the challenges in the business and market environment, as well as the current market rental levels, the board has resolved not to renew the lease for Shiyun's last store located in Ap Lei Chau's New Horizon Plaza, which will expire on November 30, 2025; and to terminate the fashion retail business on or around November 30, 2025.

Given that the fashion retail business has not shown the ability to continuously generate profits for the group, the board believes that it is no longer commercially reasonable to continue operating the fashion retail business in order to safeguard and enhance shareholder value