Key Highlights

• Significant increase in expected loss for FY2025: The company anticipates a loss attributable to owners of no more than RMB 635.0 million for the year ended 31 December 2025, compared to a loss of approximately RMB 291.1 million in FY2024.
• Profit warning driven by multiple one-off and non-recurring items: The Board attributes the larger loss to several key factors affecting the Group’s financial position.

Details of Loss Factors

1. One-off Loss on Store Adjustment:
   • The Group will incur a one-off loss of approximately RMB 176.9 million from writing off property, plant, and equipment. This is due to store adjustment initiatives aimed at improving sales efficiency and profitability through network optimisation.
2. Impairment Losses:
   • A non-recurring impairment loss of approximately RMB 155.5 million on property, plant, and equipment is expected.
   • Additionally, an impairment loss of approximately RMB 32.7 million will be recorded on right-of-use assets, relating to underperforming cash-generating units after a prudent impairment assessment.
3. Credit Loss from Default:
   • An expected credit loss of approximately RMB 57.2 million is anticipated due to advances to and interest receivable from Henan Hexie Automobile Aftersales Services Co., Ltd., which defaulted on its debts.
4. Non-cash Fair Value Loss:
   • A non-cash fair value loss of approximately RMB 42.1 million will be recognized on convertible notes issued by a subsidiary, resulting from remeasurement of the financial liability as per relevant accounting standards.

Positive Revenue Growth

• Revenue from sale of automobiles and others increased by over 30% in FY2025: The growth is attributed to the strategic expansion of the international sales network, which broadened market reach and boosted sales volume.

Shareholder Information and Price Sensitivity

• Significant Loss May Impact Share Price: The substantial increase in loss from FY2024 to FY2025 is likely to be price sensitive and may affect the value of the company’s shares.
• Unaudited and Preliminary Figures: The profit warning is based on unaudited consolidated management accounts. The figures may be subject to adjustments once the auditors finalize the accounts and the audit committee reviews them.
• The official annual results announcement for FY2025 is expected to be published on 31 March 2026.
• Board advises caution: Shareholders and potential investors are strongly advised to exercise caution when dealing in the securities of the Company.

Corporate Governance

• Announcement issued by CEO and Executive Director Liu Fenglei.
• Executive Directors: Feng Changge, Feng Shaolun, Liu Fenglei, Ma Lintao, and Cheng Junqiang.
• Independent Non-Executive Directors: Wang Nengguang, Lau Kwok Fan, and Sung Ka Woon.

Conclusion

China Harmony Auto Holding Limited’s profit warning for FY2025 highlights material losses driven by one-off and non-recurring items, despite strong revenue growth. The significant increase in expected loss, especially compared to FY2024, is a noteworthy event for shareholders and investors, and is likely to be price sensitive. Investors should monitor upcoming disclosures and exercise caution regarding the company’s securities.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. All figures are based on preliminary unaudited financial data and may be subject to change. Investors should consult official releases and their own advisors before making any investment decisions.

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