HUAJIN INTL Holdings (02738) has announced that the group expects to record a net loss attributable to company owners of approximately RMB 11.80 billion to RMB 12.80 billion for the fiscal year ending December 31, 2025. This compares to an audited net loss attributable to owners of approximately RMB 91.20 million for the fiscal year ended December 31, 2024.

The anticipated net loss for the 2025 fiscal year is primarily attributed to several factors. These include weak market demand and intense competition, compounded by pressures in both domestic and international markets. This has led to slowed investment in downstream industries and hindered exports. Furthermore, price competition within the industry has compressed profit margins, contributing to declines in both revenue and profit.

Additional contributing factors are volatility in the trade environment and increased tariffs, which resulted in decreased sales volumes for the group's downstream customers. The group also incurred approximately RMB 390 million in forfeited commitment fees and deposits due to failure to meet minimum purchase terms.

Unstable international trade conditions have kept raw material costs, such as for hot-rolled coil, elevated. The group was unable to adjust product selling prices accordingly, leading to higher production costs. Capacity utilization was also notably lower compared to the previous year. With fixed manufacturing overheads being allocated over a significantly reduced output volume, the unit processing costs increased.

In line with the principle of prudence, the group made provisions for impairment losses on fixed assets of approximately RMB 297.5 million. A provision for credit losses on trade and other receivables of approximately RMB 46 million was also recognized. Furthermore, a year-end inventory writedown of approximately RMB 12.7 million was recorded, further widening the net loss.

To effectively hedge against raw material price volatility and reduce capital occupation pressure, the group began optimizing its business structure in the second half of 2025, shifting towards an operation model more heavily focused on processing materials supplied by clients. However, due to an adaptation period required by the customer base, this led to phased capacity adjustments in the short term, causing a corresponding reduction in revenue and exacerbating the net loss for the current period.