Yongjia Group (03322)'s profit warning expects the mid-term post-tax loss to narrow to about HK$9 million year-on-year

According to the Zhitong Finance App, Yongjia Group (03322) issued an announcement. According to currently available information and the Group's unaudited consolidated management accounts for the six months ended June 30, 2026 (current period), the Group expects to have a loss of approximately HK$9 million after tax during the current period, while the six months ended June 30, 2025 (same period last year) will achieve a loss of HK$56 million after tax.

The estimated decrease in losses after tax during this period is mainly due to the following reasons: (i) The fashion brand and franchise business achieved operating profit of approximately HK$35 million during the period (same period last year: operating profit of HK$14 million), an increase of HK$21 million. A significant increase in the benefits derived from revenue growth, effective cost management and expansion of the franchise model;

(ii) The sportswear production business achieved operating profit of approximately HK$5 million during the period (same period last year: operating loss of HK$18 million). The successful conversion of loss into profit was mainly due to the Group's successful resolution of raw material problems at production facilities located in Southeast Asia, which drastically reduced related production and transportation costs compared to the same period last year;

(iii) The financing costs for the period were reduced by approximately HK$2 million compared to the same period last year, mainly due to the Group's further strengthening of fund management and saving interest expenses on bank loans; and

(iv) The above positive effects were partially offset by operating losses of approximately HK$37 million (same period last year: operating loss of HK$17 million) from the advanced functional outdoor clothing production business during the period. The first half of the year is a traditional low season for the premium functional outdoor apparel production business, which usually results in losses. The increase in operating losses was mainly due to a decrease in revenue of approximately HK$70 million or 28% to HK$180 million (same period last year: HK$250 million). The decrease in revenue was mainly due to reduced orders from a major customer and delays in delivery to several customers due to falling demand.

Revenue from the sportswear manufacturing business increased by about HK$59 million to HK$1,251 billion (same period last year: HK$1,192 billion), an increase of 5%. During this period, the Group successfully solved the raw material problems faced earlier by production facilities located in Southeast Asia, drastically reducing related production and transportation costs. Coupled with the Group's continued strict cost control measures, these favorable factors mitigated the adverse effects of the US tariffs on this business.

Revenue from the premium functional outdoor clothing production business decreased by about HK$70 million to HK$180 million (same period last year: HK$250 million), or 28%. The decrease was mainly due to a drop in demand, which led to fewer orders placed by one major customer and delays in delivery to several customers. As a result, operating losses further increased to approximately HK$37 million during the period (same period last year: operating loss of HK$18 million). The delayed shipment was later delivered and resolved.