VMEP HOLDINGS (00422) has issued a profit warning, announcing that the group expects to record a net loss of approximately $1.5 million for the six months ending June 30, 2026. This compares with a net profit of approximately $40,000 for the same period in the previous year.

The expected net loss is primarily attributed to several factors. Firstly, the Vietnamese market continues to experience intense competition, coupled with structural shifts driven by the government's push for electric transportation policies, which has dampened demand for fuel-powered motorcycles. Additionally, key export market agents have been adjusting inventory levels, leading to reduced sales volume and revenue during the period.

Secondly, the decline in sales and production volume has prevented fixed manufacturing costs from decreasing proportionally with the drop in output scale. This has increased the fixed manufacturing cost per unit, causing the gross profit margin for the period to fall compared to the same period last year.