Mokingran Jewellery Group Issues Profit Warning for FY2025

Key Points, Financial Highlights, and Investor Insights

Mokingran Jewellery Group Co., Ltd. (Stock Code: 2585), a leading Chinese jewellery company, has issued a significant profit warning for the financial year ended December 31, 2025. The announcement, made on February 27, 2026, contains several crucial details that investors and shareholders should note.

Key Financial Highlights

• Revenue: Expected to range between RMB19,720 million and RMB22,770 million, representing a year-on-year increase of approximately 0% to 16% compared to RMB19,713 million in 2024.
• Overseas Revenue: Projected to be RMB307 million to RMB374 million, a remarkable increase of 119% to 167% from RMB140 million in 2024, driven by successful overseas and regional market expansion efforts.
• Net Profit: Expected to drop sharply to RMB91 million to RMB111 million, a decline of approximately 45% to 55% from RMB201 million in 2024.
• Profit Attributable to Owners: Estimated between RMB77 million and RMB94 million, down by 50% to 59% from RMB189 million in 2024.

Factors Behind the Profit Decline

• The main driver of the profit decline is a significant loss from Au(T+D) contracts and gold loans. For 2025, the total loss from these instruments is projected to be RMB898 million to RMB1,097 million, an increase of 43% to 75% compared to RMB627 million in 2024.
• These losses are attributed to the continuous rise in gold prices during 2025. While the company uses Au(T+D) contracts to hedge against price volatility, the rapid increase in gold prices led to substantial losses on these contracts and gold loans, which are recognized immediately in the financial statements under “other gains and losses, net.”
• Notably, appreciation in the value of unsold gold inventory is not immediately reflected in profits, only realized upon sale. As products are sold at prevailing market prices, these gains are expected to partially offset the losses from hedging activities over time.

Turnaround in Profitability During 2025

• The Group reported a net loss of RMB64 million for the six months ended June 30, 2025 due to these hedging losses.
• With a shift to selling products at market prices, the company achieved a turnaround, ending the year with a net profit of RMB91 million to RMB111 million.

Strategic Measures and Management Response

• The Board is closely monitoring market conditions and plans to adapt its business strategy, particularly in sales and inventory management.
• There are ongoing efforts to strengthen internal controls over Au(T+D) operations and gold loans to reduce similar risks in the future.
• The figures provided are based on unaudited management accounts and have not yet been reviewed by external auditors or the audit committee. Final audited results will be disclosed in the company’s 2025 annual report.

Important Considerations for Shareholders

• The sharp anticipated decline in net profit and profit attributable to owners is a material and price-sensitive event that could significantly impact the company’s share price.
• The large losses on hedging activities highlight a key operational risk for the company amid volatile gold markets.
• While revenue and overseas revenues are growing, profit margins are under pressure due to these derivative and gold loan losses.
• Shareholders and investors are advised to exercise caution when dealing in the company’s shares, pending the release of the full audited financial results.

Board and Management

The announcement was authorized by Chairman and Executive Director Wang Zhongshan. As of the announcement date, the Board comprises four executive directors and three independent non-executive directors.

Disclaimer: This article is a summary and interpretation of the official announcement released by Mokingran Jewellery Group Co., Ltd. The information is based on unaudited figures and forward-looking statements that may be subject to change. Investors should refer to the company’s official disclosures and seek professional advice before making investment decisions. The author and publisher accept no liability for actions taken based on this article.

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