SouthGobi Resources Issues Profit Warning for FY2025: Significant Net Loss Expected

Key Highlights from the Announcement

• SouthGobi Resources Ltd. (Hong Kong Stock Code: 1878, TSX Venture Exchange Stock Symbol: SGQ) has issued a profit warning for the financial year ending December 31, 2025 (FY2025).
• The company expects to record a net loss attributable to equity holders between approximately US\$151.9 million and US\$185.6 million for FY2025.
• This marks a significant reversal from the net profit of approximately US\$92.5 million reported for the corresponding period in 2024.
• The announcement is made in accordance with Rule 13.09(2)(a) of the Listing Rules of the Hong Kong Stock Exchange and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance.

Factors Driving the Expected Net Loss

1. Decrease in Average Realised Selling Price:
   • The company experienced a fall in the average selling price of its products in FY2025 compared to the previous year. This price drop has directly impacted the company’s revenue and profitability.
2. Change in Product Mix:
   • SouthGobi sold a higher proportion of processed coal, which carries higher production costs, further squeezing profit margins.
3. Impairment Losses:
   • The company recognized significant impairment losses, including:
   • US\$77.3 million on coal stockpiles
   • US\$42.0 million on cash generating units
   • These impairment losses have materially impacted the company’s bottom line.

Implications for Shareholders and Investors

• Material Price Sensitive Information: The announcement of a substantial net loss, in sharp contrast to the previous year’s profit, is likely to be regarded as highly price sensitive and could negatively impact the share price.
• Ongoing Audit Process: The financial results for FY2025 are still being prepared and finalized. All numbers are based on preliminary unaudited management accounts and may be subject to adjustments.
• Result Announcement Date: The final, audited financial results for FY2025 will be published on Friday, March 27, 2026.
• Caution Advised: Shareholders and potential investors are strongly advised to exercise caution when dealing in the shares of SouthGobi Resources until the final results are released and further clarity is provided.
• Board Composition: As of the date of the announcement, the board consists of executive directors Mr. Ruibin Xu, Ms. Chonglin Zhu, and Mr. Chen Shen; independent non-executive directors Mr. Yingbin Ian He, Ms. Jin Lan Quan, and Mr. Fan Keung Vic Choi; and non-executive directors Mr. Zhu Gao and Mr. Zaixiang Wen.

Conclusion

The profit warning from SouthGobi Resources signals a major shift in the company’s financial performance, with a substantial net loss expected for FY2025. The combination of falling coal prices, an unfavorable product mix, and large impairment charges is likely to have a significant negative impact on shareholder value. Investors should stay alert to further developments and review the audited results once released.

Disclaimer: This article is prepared for informational purposes only and does not constitute investment advice. Investors should exercise caution and consult their financial advisors before making any investment decisions. The final audited results may differ from the figures disclosed above.

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