ETHK Labs Inc. Issues Significant Profit Warning for FY2025

ETHK Labs Inc. (Stock Code: 1931), a Cayman Islands-incorporated company listed on the Hong Kong Stock Exchange, has released a profit warning that could have a substantial impact on its share price. The announcement, made in accordance with Hong Kong Listing Rules and disclosure requirements, highlights a sharp decline in the company’s expected net profit for the year ended 31 December 2025.

Key Highlights from the Announcement

• Profit Plunge Expected: The company anticipates a consolidated profit attributable to its owners for FY2025 of not more than RMB 42.2 million. This represents a dramatic decrease compared to the RMB 260.4 million recorded for FY2024.
• Major Factors Behind the Decline:
  • Gross Profit Margin Reduction: The group’s gross profit is expected to drop by around RMB 184.8 million, mainly due to a more competitive operating environment in the in vitro diagnostics (IVD) industry.
  • Increased Administrative Expenses: Administrative costs rose by approximately RMB 68.0 million, driven primarily by higher legal and professional fees. These relate to the group’s proposed dual listing in the United States and include payments to legal advisers, auditors, financial advisers, and other professional service providers for listing documents and regulatory filings.
  • Higher Finance Costs: Finance costs increased by about RMB 24.5 million due to higher borrowings used to fund business expansion and working capital needs, resulting in additional interest expenses.

Important Information for Shareholders

• Unaudited Figures: The financial data disclosed is based on management’s preliminary assessment of unaudited consolidated accounts for FY2025. These figures have not yet been reviewed or audited by the company’s auditors or audit committee and may be subject to adjustments.
• Timing of Final Results: The audited annual results are expected to be published by the end of March 2026.
• Directors and Governance: The board currently consists of three executive directors, two non-executive directors, and three independent non-executive directors.

Potential Price-Sensitive Information

• The anticipated steep decline in profit is highly material and likely to be price sensitive, potentially leading to significant share price movement upon market open.
• The increased costs associated with the proposed dual listing in the United States signal strategic ambitions but also highlight near-term financial strain.
• Shareholders are strongly advised to exercise caution when dealing in the company’s securities due to the uncertainty and possible volatility surrounding these developments.

Looking Ahead

ETHK Labs Inc. attributes its challenged performance chiefly to industry competition, increased professional fees for US dual listing efforts, and higher finance costs from expanded borrowings. While these strategic moves may position the company for future growth and international exposure, the short-term financial impact is significant and may influence shareholder sentiment and share price dynamics.

Disclaimer

This article is based on preliminary unaudited financial information and forward-looking statements provided by ETHK Labs Inc. Actual results may differ due to further review and audit processes. Investors should conduct their own due diligence and consult with financial advisers before making investment decisions. The information provided does not constitute investment advice or a recommendation to buy or sell securities.

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