Huili Resources (Group) Limited Issues Significant Profit Warning for FY2025

Key Highlights and Investor Takeaways

Huili Resources (Group) Limited (Stock Code: 1303) has issued an important profit warning for the year ended 31 December 2025. This announcement contains several material and potentially price-sensitive updates that all shareholders and potential investors should be aware of.

Summary of Profit Warning

• The Board expects the Group’s net profit attributable to equity owners from continuing operations for FY2025 to be in the range of RMB10 million to RMB20 million.
• This represents a dramatic decline compared to the net profit of approximately RMB160 million recorded for the year ended 31 December 2024.
• The information is based on preliminary, unaudited management accounts and may be subject to adjustments once the financials are audited and reviewed.

Key Factors Behind the Profit Decline

The Board cited several reasons for the sharp drop in profit:

1. Gross Profit Decline: Gross profit fell significantly from approximately RMB223 million in 2024 to around RMB132 million in 2025. This was mainly due to a decrease in coal prices during 2025, despite efforts to optimize the customer mix and maintain overall gross profit margin.
2. Absence of One-off Gains:
   • No gain on bargain purchase of CC Bong Logistics Limited was recorded in 2025, compared to a one-off gain of about RMB20 million in 2024.
   • No gain on disposal of Hami Jinhua Mineral Resource Exploiture Ltd, which contributed approximately RMB18 million in 2024.
3. Foreign Exchange Loss: The Group incurred a foreign exchange loss of around RMB15 million in 2025, a reversal from a foreign exchange gain of about RMB1 million in the previous year.
4. Increased Credit Losses: Expected credit losses on financial assets rose to approximately RMB35 million, compared to RMB20 million in 2024.

Implications for Shareholders and Investors

• The expected net profit for FY2025 is only about 6-12% of the previous year’s profit, a significant reduction that is likely to be highly price sensitive and may impact the Company’s share price.
• The deterioration in gross profit, the absence of previous one-off gains, and increased credit losses are all negative signals for operational performance.
• The announcement specifically cautions shareholders and potential investors to exercise caution when dealing in the Company’s shares, given the possibility of further changes when the audited results are published.
• The Company will publish the full annual results for FY2025 by the end of March 2026. Further updates will be provided if there are significant changes to the expected results.

Board Statement

The Board, led by Chairman Cui Yazhou, emphasizes that the disclosed figures are preliminary, unaudited, and subject to change. The executive team comprises Mr. Cui Yazhou (Chairman), Ms. Wang Qian, Mr. Ye Xin, and Mr. Zhou Jianzhong, with Mr. Cao Ye as non-executive Director and three independent non-executive Directors.

Conclusion

This profit warning highlights several key operational and financial setbacks for Huili Resources (Group) Limited in 2025. The significant reduction in profit, driven by lower commodity prices, absence of non-recurring gains, foreign exchange losses, and rising credit loss provisions, is likely to be viewed negatively by the market and may have a substantial impact on share valuation in the near term.

Disclaimer: This article is based on information provided by Huili Resources (Group) Limited’s preliminary and unaudited financial disclosures. Actual results may differ when the audited annual report is released. Investors are advised to conduct their own research and consult professional advisors before making any investment decisions. The publisher of this article assumes no responsibility or liability for any losses arising from reliance on the information contained herein.

View HUILI RES Historical chart here