According to the announcement from HUASHENG INTL (01323), the group expects that the unaudited net loss attributable to the owners of the company for the year ending March 31, 2026, will increase by no less than approximately 45% compared to the net loss of approximately HKD 92.4 million for the year ending March 31, 2025.

The increase in the net loss attributable to the owners of the company for this year is mainly due to the sluggish residential real estate market in Hainan Province and the general slowdown of commercial construction projects caused by delays in fund allocation. The contraction in demand for ready-mixed concrete products has led to intense price competition among local production lines vying for limited infrastructure and public works contracts. To maintain market share, the company's concrete business has lowered its average selling price and reduced profit margins to keep prices at a level acceptable to customers. As a result, the company's revenue decreased by approximately HKD 91 million or 24% compared to the previous year. At the same time, the company's gross profit margin has been severely squeezed due to persistently high raw material costs. Consequently, the company's gross profit decreased by approximately HKD 54 million compared to the previous year.

In this challenging operating environment characterized by intensified competition, shrinking demand, and persistently high raw material costs, the company has revised down its future expected profitability for the concrete business. Accordingly, the company has recognized a non-cash impairment loss on goodwill of approximately HKD 32 million for this year