LVGEM (China) Real Estate Issues Significant Profit Warning for FY2025

Key Points from the Announcement

• Substantial Increase in Expected Losses: LVGEM (China) Real Estate Investment Company Limited has announced a significant profit warning, forecasting a net loss of approximately RMB 9.7 billion for the financial year ended 31 December 2025. This represents a sharp deterioration compared to the RMB 5.4 billion loss reported for the previous year (2024).
• Main Reasons for Losses:
  • There has been an increase in the fair value loss on investment properties, indicating a negative revaluation of the company’s property holdings, likely reflecting ongoing weakness in the real estate market.
  • The company has also made a provision for impairment loss on properties under development and properties held for sale, again attributed to the challenging and unfavorable real estate market environment in China.
• Nature of the Announcement: The figures disclosed are based on preliminary, unaudited management assessments. These numbers have not yet been audited or reviewed by the company’s external auditor or the audit committee and may be subject to change upon completion of the audit process.
• Timing of Final Results: The company expects to publish its audited results for the year ended 31 December 2025 by the end of March 2026.

Important Information for Shareholders and Potential Investors

• Price Sensitive Disclosure: This profit warning is highly price sensitive. The magnitude of the projected loss (almost double that of the previous year) could have a significant negative impact on the company’s share price.
• Market Context: The losses are primarily driven by broader market challenges facing the real estate sector in China, including declining property values and weak sales. This suggests that LVGEM (China) is not alone in facing headwinds, but the scale of the losses may raise concerns about the company’s financial health and future prospects.
• Further Details Pending: Investors should note that the final audited results may differ from these preliminary estimates. The company has advised shareholders and potential investors to exercise caution when dealing in its shares until the final results are published.
• Board Composition: As of the announcement date, the Board consists of Ms. HUANG Jingshu (Chairman and CEO), Mr. YE Xingan, Mr. HUANG Hao Yuan, and Ms. LI Yufei as executive directors, along with three independent non-executive directors: Mr. CHAN Koon Fat, Ms. JIAO Jie, and Ms. WONG Ting Dan.

Potential Impact on Share Price

The substantial increase in projected losses, driven by fair value and impairment losses, is likely to weigh heavily on investor sentiment. Shareholders should anticipate potential downward pressure on LVGEM (China)’s stock price in the immediate term, especially given the uncertain outlook for China’s real estate sector and the lack of visibility on turnaround prospects.

Disclaimer

This article is based on a preliminary profit warning announcement by LVGEM (China) Real Estate Investment Company Limited. The financial information discussed herein is unaudited and subject to change. Investors are advised to exercise caution and await the company’s final audited results before making investment decisions. This article does not constitute investment advice.

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