KWUNGS AROMA (01925) has issued a profit warning, projecting a net loss attributable to shareholders of approximately RMB 20 million for the six months ending June 30, 2026, marking a sharp reversal from the net profit of roughly RMB 23 million recorded in the same period of the prior year.

The company's board attributes this financial deterioration primarily to a net exchange loss of about RMB 27.4 million incurred during the reporting period, stemming from the depreciation of the US dollar against the Renminbi. With a substantial portion of the group's financial assets—mainly trade receivables and bank balances—denominated in US dollars from overseas sales, the weaker greenback reduced the value of these holdings.

Additionally, the softer US dollar lowered the Renminbi-equivalent unit selling prices of the group's products. However, since most suppliers are domestic Chinese enterprises and settlements are conducted in Renminbi, production costs remained stable, which in turn compressed the gross profit margin.

Furthermore, the group experienced a decline in the fair value of its fund investments, resulting in a fair value loss of approximately RMB 3.7 million for the first half of 2026, compared with a fair value gain of around RMB 3.4 million in the corresponding period of 2025.

The group also saw a reduction in government grants, receiving about RMB 2.9 million during the current six-month period versus roughly RMB 6.7 million in the prior-year period, further contributing to the decrease in profitability.