Kinetic Development Group Issues Profit Warning: Net Profit Expected to Drop 50-60% in FY2025

Kinetic Development Group Limited (Stock Code: 1277) has issued a profit warning, alerting shareholders and potential investors to a significant decline in the Group’s net profit for the year ended 31 December 2025. This announcement was made in accordance with Hong Kong Stock Exchange regulations and the Inside Information Provisions under the Securities and Futures Ordinance.

Key Highlights from the Profit Warning

• Substantial Decrease in Net Profit: The Group expects its net profit after tax for FY2025 to decrease by 50% to 60% compared to FY2024. This dramatic fall is based on a preliminary review of unaudited consolidated management accounts.
• Core Business Impacted by Market Conditions: One key contributor to the lower profit is the market volatility and overall decline in coal prices in 2025. Profit from Kinetic Development’s principal coal business is anticipated to decline by around 40% to 45% year-on-year.
  • The company has responded by enhancing cost controls, operational efficiency, and maintaining safe production standards. Management believes that any future improvement in coal prices could positively affect the Group’s performance.
• Large Non-Cash Impairment Provisions: The Group will recognize non-cash impairment provisions in the range of RMB250 million to RMB290 million in FY2025, as a precautionary measure given ongoing market volatility. Importantly, these write-downs will not impact the company’s core business operations or cash flow.
• Losses from Non-Core Businesses: The Group’s non-core business segments, still in their early expansion stages, have suffered operational losses of RMB80 million to RMB90 million. While this has negatively affected current year performance, management expects these businesses to mature and contribute to the Group’s long-term diversification strategy.
• Company’s Financial Position: Despite the profit decline, management asserts that the Group maintains a sound capital position and solid operations. The company continues to expand its core coal business both domestically and internationally, aiming to strengthen its foundation for future development.

Important Shareholder Considerations & Price Sensitive Issues

• The projected 50%-60% drop in net profit is a significant development and may have a direct, negative impact on the company’s share price due to the magnitude of the decline.
• The recognition of substantial non-cash impairment provisions signals management’s cautious approach, but also reflects deterioration in the value of some assets. While these are non-cash in nature, they can affect investor sentiment.
• The losses in non-core businesses highlight risks associated with the company’s diversification efforts, though management is optimistic about long-term prospects.
• The company’s annual results for FY2025 will be announced on 24 March 2026. Until then, investors should be cautious as the figures in this announcement are preliminary and unaudited.

Corporate Governance and Board Composition

As of the announcement date (19 March 2026), the Board comprises seven directors: three executive directors (Mr. Ju Wenzhong, Mr. Li Bo, Mr. Ji Kunpeng), one non-executive director (Ms. Zhang Lin), and three independent non-executive directors (Ms. Liu Peilian, Mr. Chen Liangnuan, Ms. Xue Hui).

Next Steps

• Shareholders and investors are strongly advised to exercise caution when dealing in the company’s securities, given the anticipated net profit decline and market uncertainties.
• Investors should look out for the full audited results, which are scheduled for release on 24 March 2026.

Disclaimer: This article is based on a preliminary profit warning announcement by Kinetic Development Group Limited. The financial information discussed has not been audited or reviewed by the company’s auditors or audit committee. Investors should exercise caution and consider seeking professional advice before making investment decisions.

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