According to a report from Economic Information Daily on the 25th, DIWANG IND H (01950) issued a profit warning, expecting to record a consolidated loss of approximately HKD 1.8 million for the year ending December 31, 2025, compared to a profit attributable to the company's owners of approximately HKD 30 million for 2024, marking a shift from profit to loss.

The company stated that the decline in profit is mainly influenced by two major factors. First, the impairment losses under the Expected Credit Loss (ECL) model (net of reversals) have significantly increased, rising from approximately HKD 7 million in 2024 to about HKD 30.8 million in 2025, an increase of approximately HKD 23.8 million, primarily due to intensified competition in the synthetic leather chemicals industry and a deteriorating overall operating environment, leading to an increase in overdue accounts receivable from customers. Secondly, selling and distribution expenses have also significantly increased by approximately HKD 35.8 million, with advertising expenses rising by about HKD 27.8 million and depreciation expenses increasing by approximately HKD 5.3 million, further compressing profit margins.

The company continued to state that although the group's revenue recorded growth during the period, leading to an increase in gross profit of approximately HKD 27.9 million, it was still insufficient to offset the negative impacts brought by the aforementioned costs and impairments.

The company expects to announce its annual results by the end of March. (eh)