C&D Newin Paper & Pulp Corporation Limited Issues Profit Warning for FY2025

Key Points from the Announcement

• The Board of Directors of C&D Newin Paper & Pulp Corporation Limited has issued a profit warning, stating that the Group expects to record a net loss attributable to owners for the year ended 31 December 2025 (FY2025) in the range of HK\$71.5 million to HK\$76.5 million.
• This contrasts sharply with a net profit of approximately HK\$24.6 million for the previous year (FY2024), indicating a significant reversal in financial performance.
• The major factors contributing to this expected loss are:
  • Absence of a significant one-off gain: FY2024 benefited from a one-off gain of about HK\$128.2 million resulting from the release of undeclared claims under a debt restructuring. This gain will not recur in FY2025.
  • Challenging market conditions: The Group faced a complicated and volatile trading environment, slow consumer market recovery, pricing pressure in the packaging paper market, and raw material price fluctuations. These factors narrowed the price spread between finished products and raw materials, negatively impacting profitability.
• The Board also notes that if the one-off gain in FY2024 is excluded, the Group’s adjusted net loss for FY2024 would have been approximately HK\$103.6 million. The expected net loss for FY2025 thus represents a narrowing of losses by about 26.2% to 31.0% compared to this adjusted figure.

Important Information for Shareholders

• Potential Price Sensitivity: The announcement reveals a substantial turnaround from profit to loss, primarily due to the absence of a one-off gain and ongoing operational challenges. This information is likely to be price sensitive and may negatively affect the share value.
• Unaudited Figures: The financial data presented are based on preliminary unaudited management accounts and are subject to further review, confirmation, and possible adjustment. Audited results will be released at the end of March 2026.
• Market Environment: Investors should note the ongoing volatility in the trading environment, slow consumer recovery, and pressure on margins in the packaging paper segment, which may continue to affect future performance.
• Debt Restructuring Impact: The significant gain from debt restructuring in FY2024 will not recur, highlighting the importance of recurring operational profitability and the need for caution regarding future earnings.
• Board Composition: The announcement also notes the current board structure, which includes executive, non-executive, and independent directors, ensuring oversight and governance.
• Caution Advised: Shareholders and potential investors are explicitly advised to exercise caution in dealing with the Company’s securities in light of this profit warning.

Detailed Analysis

The profit warning issued by C&D Newin Paper & Pulp Corporation Limited is a significant development for investors. The Group’s expected net loss for FY2025, ranging from HK\$71.5 million to HK\$76.5 million, marks a substantial deterioration from the prior year’s net profit. The main reason for this dramatic shift is the non-recurrence of a one-off gain related to debt restructuring, which contributed HK\$128.2 million to FY2024’s results. Excluding this gain, the underlying operational losses have actually narrowed, suggesting some improvement in core operations, but the Company remains in a loss-making position.

The underlying business continues to face tough market conditions, including slow recovery in consumer demand, pricing pressures in the packaging paper market, and raw material cost fluctuations. These challenges have reduced the price spread between finished products and raw materials, compressing margins and affecting profitability.

Investors should be aware that these figures are based on unaudited management accounts and may be subject to adjustment. The audited financial results will be announced at the end of March 2026. The Board’s warning to exercise caution underscores the potential impact this news could have on the Company’s share price.

Disclaimer

The information in this article is based on unaudited preliminary management accounts and statements by C&D Newin Paper & Pulp Corporation Limited. Investors are advised to exercise caution and consult with financial advisors before making investment decisions. The Company’s audited results may differ from estimates provided, and further details will be available upon formal release of the FY2025 financial statements.

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