Karin Technology Holdings Limited: Profit Guidance for Half Year Ended 31 December 2025

Karin Technology Holdings Limited has issued a profit guidance update for the half year ended 31 December 2025 (1HFY2026). This update is based on a preliminary review of the Group’s unaudited management accounts and highlights a significant accounting reclassification related to one of its principal assets, the Karin Building.

Key Event: Asset Reclassification and Its Impact

The Group has decided to reclassify the Karin Building—a 13-storey industrial building in Hong Kong—back to ‘property, plant and equipment’ from its previous classification as an asset held for sale. This action is due to ongoing market conditions affecting the sale price and timeline for disposal. As a result, depreciation, which was previously suspended, will now be recognized retroactively for the period during which the building was held for sale. This “catch-up” depreciation is a non-cash accounting adjustment and will also resume going forward.

The company explicitly states that these are non-cash items and do not affect the Group’s cash position, liquidity, or core business operations.

Exceptional Expense and Financial Impact

Due to the substantial catch-up depreciation, the Group expects to report a net loss for 1HFY2026, a reversal from the net profit recorded in the corresponding period last year. Management emphasizes that excluding this one-off, non-cash depreciation adjustment, the Group would have posted a net profit for the period.

Performance Table

Asset Revaluation and Accounting Adjustments

• Asset reclassification: Karin Building reclassified from ‘asset held for sale’ to ‘property, plant and equipment’ due to uncertain market conditions for a sale.
• Catch-up depreciation: A significant, non-cash accounting charge will be recognized, impacting the current period’s profit and loss.
• No impact on cash flow: These adjustments do not affect actual cash, liquidity, or core business operations.

Forward Guidance and Expected Events

The company will release its unaudited financial statements for 1HFY2026 on 13 February 2026. This guidance is preliminary and subject to auditor review and further adjustments.

Chairman’s Statement

No Chairman’s Statement was provided in the announcement.

Investor Advisory

The Board cautions shareholders and potential investors to exercise care when dealing in the Company’s shares due to the expected net loss for the period, which is driven by non-cash, one-off accounting charges rather than operational weakness.

Conclusion & Recommendations

Overall Financial Performance and Outlook: The overall financial performance for 1HFY2026 appears weak due to the reported net loss. However, the weakness is entirely attributable to a one-off, non-cash accounting adjustment (catch-up depreciation). The underlying business remains profitable, and there are no signs of stress on cash flow, liquidity, or core operations.

• If you are currently holding the stock: Investors should consider maintaining their position. The reported loss is a technical adjustment, not a deterioration in business fundamentals. Unless there are further negative surprises in the full results, there is no operational reason to exit based on this guidance.
• If you are not currently holding the stock: Potential investors may consider monitoring the stock for price weakness related to the headline net loss, which could present a value opportunity. However, wait for the full 1HFY2026 unaudited results to confirm ongoing operating strength before entering.

Disclaimer: This analysis is based strictly on the company’s profit guidance announcement. It does not constitute financial advice. Investors should consider their own circumstances and seek professional advice before making investment decisions.

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