E-Commodities Holdings Issues Profit Warning for FY2025: Revenue and Profit Decline Expected

Key Highlights from the Report

• Significant Decline in Revenue and Profit:
  E-Commodities Holdings Limited has issued a profit warning, expecting consolidated revenue for the year ended 31 December 2025 to fall to between HK\$24.5 billion and HK\$26 billion, representing a notable decrease compared to 2024.
• Profit Attributable to Shareholders Drops Sharply:
  Profit attributable to equity shareholders is anticipated to decrease to a range of HK\$310 million to HK\$330 million, also down from 2024. While this signals a year-on-year decline, the company saw a steady improvement in the second half of 2025 compared to the first half.
• Market and Industry Headwinds:
  The underperformance is primarily due to drastic fluctuations in the coking coal market, a significant downturn in coal prices, and restructuring within the industrial chain that compressed margins for both intermediary trading and logistics segments.

Detailed Operating Environment Analysis

1. Supply Chain Trading Segment

• Global and Domestic Pressures:
  Global economic uncertainties, driven by escalating geopolitical tensions and trade frictions, led to major adjustments in the steel and coking coal industries. In China, both crude steel production and consumption fell, and demand shifted from construction to manufacturing. Although steel exports increased in volume, the average export price dropped (“more export, less price”).
• Coking Coal Imports:
  China’s coking coal imports decreased by about 3% year-on-year (excluding Mongolia, seaborne imports fell by 10%). This was influenced by price inversions between domestic and international markets.
• Price Volatility:
  Average price of tier-one premium coking coal in 2025 dropped to USD183/tonne (down 27% year-on-year), and futures contracts fell up to 39%, marking the lowest levels since 2017. Downstream steel mills asserted greater pricing power, squeezing upstream margins and causing profit compression for trading intermediaries, resulting in thin margins.
• Trading Challenges:
  Downstream customers maintained low inventories and fast turnover, showing weak buying interest. Consequently, the company faced intensified risks and operational pressures, necessitating stronger risk controls and capital management.
• Strategic Response:
  E-Commodities adopted a cautious procurement strategy, strictly controlled risks, and closely monitored market conditions. Despite these efforts, revenue from this segment declined approximately 38% year-on-year due to lower unit prices and trading volume. The company responded with a dual-engine strategy, optimizing its product mix and investing in coal blending technology to enhance service capability and maintain a differentiated edge. It also expanded its international presence and used futures to hedge price risks and support partners in managing spot and futures positions.

2. Integrated Supply Chain Services Segment

• Port Competition Intensifies:
  The competitive landscape at China-Mongolia ports shifted dramatically in 2025 due to increased clearance capacity at Gants Mod Port and infrastructure upgrades at Ceke and Mandula Ports. This boosted transport capacity and drove fiercer competition, leading to lower service fees for cross-border transport, pressuring both revenue and profitability.
• Coal Price Weakness:
  Average annual price of Mongolian #5 raw coal at Gants Mod Port fell to RMB909/tonne in 2025 (down 29% year-on-year), reducing customers’ buying interest and freight demand, which further weakened pricing power for related services.
• Freight Rate Decline:
  The average short-haul freight rate at Gants Mod Port was RMB67/tonne (down 26% year-on-year).
• Business Resilience:
  Despite the challenging environment, the company’s business volume remained stable, demonstrating resilience and the anti-cyclical strength of its integrated supply chain service model. Nevertheless, revenue from this segment slid by about 14% year-on-year due to overall market price declines.
• Forward-Looking Strategy:
  The company plans to optimize its presence across multiple ports to reduce reliance on any single location, seeking to maintain its competitive edge at Gants Mod Port while exploring incremental growth at Ceke and Mandula Ports. This strategy aims to enhance risk resistance and stabilize long-term profitability.

What Shareholders Need to Know (Potentially Price-Sensitive Information)

• Profit Warning:
  The profit warning signals a significant decrease in both revenue and profit for FY2025, which is material information that may impact the company’s share price.
• Market and Competitive Risks:
  The company is exposed to ongoing global economic and market volatility, aggressive competition at key ports, and depressed coal prices, all of which could further affect future financial performance.
• Ongoing Adaptations:
  The company’s efforts to diversify and optimize its port and service network signal a proactive approach to risk management and long-term stability, but the immediate outlook remains challenging.
• Final Results Pending:
  The information is based on unaudited management accounts; final audited results will be published later, which could reveal additional details or adjustments.

Board Statement and Caution for Investors

The Board emphasizes that these results are based on preliminary, unaudited figures and advises shareholders and investors to exercise caution when dealing in the company’s shares. Further details will be released upon publication of the audited annual results.

Disclaimer: This article is a summary and analysis based on E-Commodities Holdings Limited’s official profit warning announcement. It is intended for informational purposes only and does not constitute investment advice. Investors should refer to the company’s official filings and consult professional advisors before making investment decisions.

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