Walnut Capital Limited Issues Significant Profit Warning for FY2025

Key Highlights

• Walnut Capital Limited expects to record a substantial net loss of not less than HK\$170 million for the year ended 31 December 2025, compared to a modest net profit of approximately HK\$0.4 million in 2024.
• The sharp turnaround from profit to loss is primarily attributed to:
  • Impairment loss on cryptocurrencies: Estimated at HK\$142.9 million.
  • Loss on disposal of cryptocurrencies: Estimated at HK\$7.4 million.
  • Change in fair value of financial assets at FVTPL: From a net gain of HK\$17.4 million in 2024 to a net loss of not less than HK\$2 million in 2025.
• The profit warning is based on unaudited management accounts; the final results may differ upon audit review.
• The official annual results announcement for FY2025 is expected to be released before end of March 2026.

Details and Analysis

Walnut Capital Limited, a company incorporated in the Cayman Islands and continued in Bermuda, has issued a profit warning to shareholders and potential investors. This announcement adheres to regulatory requirements under Rule 13.09 of the Hong Kong Listing Rules and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance.

The Board of Directors has advised that the Group expects to report a net loss of at least HK\$170 million for FY2025. This represents a dramatic reversal from the previous year’s net profit of HK\$0.4 million. The primary drivers of this downturn are:

• Cryptocurrency impairment: The Group will recognize an impairment loss of approximately HK\$142.9 million on its cryptocurrency holdings. This indicates significant devaluation or write-off of crypto assets, likely due to adverse market conditions or volatility.
• Loss on disposal: An additional loss on disposal of cryptocurrencies amounting to HK\$7.4 million will be recorded, suggesting realized losses from selling digital assets, possibly at depressed prices.
• Financial assets at FVTPL: The Group’s financial assets at fair value through profit or loss (FVTPL) will shift from a net gain of HK\$17.4 million in FY2024 to a net loss of at least HK\$2 million in FY2025, reflecting further deterioration in the market value of investable assets.

Implications for Shareholders

This announcement is highly price sensitive. The expected loss is substantial and represents a major negative swing in the Company’s financial performance. Given the magnitude of the loss, especially from cryptocurrency-related activities, investors should anticipate potential volatility and downward pressure on share prices.

Shareholders and potential investors are strongly advised to exercise caution when dealing in the Company’s securities. The financial results are still preliminary and unaudited, and further adjustments may occur once the audit committee and external auditors review the accounts.

The official audited results and further guidance will be provided in the Company’s annual results announcement for FY2025, scheduled for release before the end of March 2026.

Corporate Governance

As of the date of the announcement, the Board comprises two executive directors (Mr. Mung Kin Keung, Co-chairman, and Mr. Mung Bun Man, Alan), one non-executive director (Mr. Mung Hon Ting, Jackie, Co-chairman), and three independent non-executive directors (Mr. Fung Wai Ching, Mr. Chung Wang Hei, and Ms. Cheng Hiu Ching).

Disclaimer: This article is based on preliminary unaudited information released by Walnut Capital Limited. Investors should not rely solely on this summary for investment decisions and are advised to await the audited annual results and consult professional financial advisers. The information herein may be subject to change and does not constitute financial advice or a recommendation to buy or sell securities.

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