Goldstream Investment Limited Issues Profit Warning for FY2025

Key Points and Detailed Analysis

• Profit Warning Announcement: Goldstream Investment Limited (“the Company”) has announced that it expects to record a significant loss attributable to equity holders for the financial year ended 31 December 2025, ranging between HK\$4 million and HK\$9 million. This is a sharp reversal from the profit of approximately HK\$67 million reported for the previous year (2024).
• Primary Driver of Loss: The loss is mainly due to a one-off, non-cash share-based compensation expense of HK\$82 million to HK\$90 million. This expense resulted from the grant of share options to directors and senior management during the year. Such a large share-based compensation is unusual and could be viewed as dilutive or negative by shareholders, as it reflects a substantial reward to senior staff and impacts bottom line profitability.
• Adjusted Profit (Non-IFRS Measure): Excluding the effects of share-based compensation (2025 and 2024) and a one-off loan interest income from a fellow subsidiary (fully settled in November 2024, amounting to approximately HK\$32 million), the Company expects to report an adjusted profit of HK\$78 million to HK\$88 million for 2025, compared to an adjusted profit of HK\$36 million for 2024. This adjusted profit is a non-IFRS measure and is not directly comparable with statutory profit figures.
• Operational Highlights:
  • Investment Management Service Income: Increased to HK\$42 million to HK\$47 million in 2025 (2024: HK\$25.5 million). This suggests robust growth in core business operations.
  • Net Fair Value Gains – Direct Investment (SDI Segment): Rose to HK\$52 million to HK\$56 million (2024: HK\$28.4 million), indicating improved investment performance.
  • Net Fair Value Gains – Strategic Investment (SDI Segment): Decreased to HK\$22 million to HK\$24 million (2024: HK\$42.2 million), reflecting lower returns from strategic investments.
  • Share of Profit of Associates: Increased sharply to HK\$20 million to HK\$25 million (2024: loss of HK\$0.8 million), marking a turnaround in associate investments.
  • Operating Expenses: Increased to HK\$64 million to HK\$72 million (2024: HK\$63.2 million), possibly due to expansion or increased business activity.
• Non-IFRS Measures: The adjusted profit calculation excludes non-recurring items and their related tax impacts. Investors should note that these non-IFRS measures are not standardized and may not be comparable with similar metrics from other companies.
• Unaudited Figures: All figures are based on preliminary unaudited management accounts and may be subject to change upon finalization and audit review.
• Timeline: The audited annual results announcement will be released by the end of March 2026.
• Board Composition: The Board currently consists of two executive directors (Mr. Zhao John Huan – Chairman, Mr. Gao Ziqi – CEO), one non-executive director (Mr. Tam Terry Sze Ying), and three independent non-executive directors (Mr. Jin Qingjun, Mr. Shu Wa Tung Laurence, Ms. Ge Xin).

Implications for Shareholders and Investors

• The announcement of a significant loss due to a large one-off share-based compensation expense is material and likely price sensitive. The magnitude of the expense (up to HK\$90 million) will impact the statutory profit and may affect investor sentiment, especially as it relates to management reward and potential dilution.
• The underlying business, as reflected in the adjusted profit and growth of core income streams, appears robust. However, investors should be cautious about relying solely on non-IFRS measures.
• The figures are preliminary and unaudited, and the final results may differ. Investors are advised to await the official audited results in March 2026.
• Caution is advised when dealing in the Company’s securities until more clarity is provided.

Conclusion

Goldstream Investment Limited has issued a profit warning for FY2025, primarily driven by a substantial one-off share-based compensation expense. While the Company’s adjusted profit shows strong underlying business performance, the statutory loss and the nature of the compensation expense are significant and could impact share price. Investors should monitor developments closely and await further disclosures.

Disclaimer

The information in this article is based on unaudited preliminary accounts and is subject to change upon audit and further review. This article is for information purposes only and does not constitute investment advice. Investors should exercise caution and consult official company announcements and professional advisors before making investment decisions.

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