Yuzhou Group Issues Profit Warning: Turnaround Driven by One-Off Gains; Core Operations Still in Loss

Key Highlights from the Profit Warning Announcement

• Expected Profit for 2025: Yuzhou Group Holdings Company Limited anticipates reporting a profit for the year ended 31 December 2025, in the range of approximately RMB19.8 billion to RMB21.8 billion.
• Reason for Turnaround: This turnaround from a previous year’s loss is primarily attributed to a one-off, non-cash gain from offshore debt restructuring (estimated at RMB32.6 billion), and a further one-off remeasurement gain on financial guarantee contracts (about RMB2 billion).
• Non-Recurring Gains: The gains are clearly described as one-off, non-cash, and non-recurring. These do not reflect the sustainability or the underlying operating performance of the Group.
• Underlying Business Still Loss-Making: Excluding the impact of these exceptional gains, the Group would still be reporting a significant loss for the year – estimated at RMB14.8 billion to RMB12.8 billion at the Group level, and RMB11.2 billion to RMB9.2 billion attributable to the owners of the Company. This is only a modest improvement from the 2024 loss of RMB14.8 billion (total) and RMB12.0 billion (attributable to owners).

Details for Investors and Shareholders

• Key Drivers of Losses (Excluding One-Offs): The Group attributes the ongoing losses to several adverse factors:
  • Unfavorable macroeconomic environment and continued downturn in the real estate industry, resulting in decreased gross profit from project deliveries.
  • Market conditions led to impairment indicators on several real estate projects, prompting increased provisions for impairment of inventories and other assets, and fair value losses on investment properties.
  • Significant finance costs could not be capitalized, further pressuring the bottom line.
• Change in Attributable Loss: The reduction in loss attributable to owners (when excluding the one-offs) is due to an increase in the portion of loss allocated to non-controlling interests.
• Results Not Yet Finalized: The reported figures are based on preliminary, unaudited management accounts and have not yet been reviewed or endorsed by external auditors or the company’s audit committee. Final results may differ.
• Pillar Two Tax Exposure: The company’s exposure to Pillar Two income tax for the reporting period is still being evaluated and has not been finalized or reviewed.
• Publication of Full Results: Yuzhou Group expects to publish its final annual results by the end of March 2026.
• Board Statement: Investors and shareholders are urged to exercise caution when dealing in the shares of the Company, given the non-recurring nature of the reported turnaround and the underlying losses in core business operations.

Potential Share Price Impact and Price-Sensitive Information

• Price-Sensitive News: The anticipated profit for 2025 is primarily due to one-off, accounting gains and not due to operational turnaround. The underlying business remains loss-making. This information is highly price-sensitive as it signals that the apparent recovery in the headline profit is not sustained by ongoing operations, and future profitability remains uncertain.
• Caution for Investors: The market may react to the headline profit but should be wary of the underlying operational losses and the non-recurring nature of the reported gains.
• Uncertainty Remains: Final results, including any tax implications and auditor reviews, may alter the figures reported here.

Summary Table of Key Financial Estimates

Board and Management

The Board consists of Ms. Kwok Ying Lan (Chairman), Mr. Lin Conghui (Executive Director), Mr. Lam Lung On (J.P.) and Mr. Lam Wai Hon (Non-Executive Directors), and independent non-executive directors Mr. Lam Kwong Siu, Mr. Wee Henny Soon Chiang, and Mr. Yu Shangyou.

Disclaimer: This article is based on preliminary, unaudited figures as disclosed by Yuzhou Group Holdings Company Limited. The final annual results, subject to audit and review, may differ materially from the estimates provided. Investors should exercise caution and refer to the official audited results announcement expected by the end of March 2026 before making any investment decisions. This article does not constitute investment advice.

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