EDA GROUP HLDGS (02505) announced that it expects to record a net loss of approximately RMB 12 million for the fiscal year ending December 31, 2025. This contrasts with a net profit of about RMB 47.1 million achieved in the 2024 fiscal year. Furthermore, the group forecasts an adjusted net loss of approximately RMB 8.5 million for the reporting period. This compares to an adjusted net profit of about RMB 113.9 million in 2024, a non-Hong Kong Financial Reporting Standards measure which adds back listing expenses and share-based compensation costs related to the share incentive scheme.

The primary reasons cited for this downturn are as follows: (1) Strategic Investment in Overseas Warehouses: Following the leasing of new overseas warehouses in the second half of 2024 and in 2025, these facilities require a ramp-up period before becoming profitable. However, related costs have increased significantly, mainly due to the commencement of amortization for the right-of-use assets and interest expenses recognized on lease liabilities. The board of directors believes this strategic investment will benefit the group's long-term sustainable development. (2) Market Uncertainty and Competition: Adjustments to tariff policies during the reporting period increased market uncertainty and intensified industry competition, leading to a continuous decline in the average unit price of orders. (3) Rising Operational Costs: Increases in overseas logistics costs and labor costs during the reporting period resulted in a substantial rise in the group's overall expenses. (4) Increased Provision for Expected Credit Losses: The provision for expected credit losses on accounts receivable increased, primarily due to an extension in the aging of receivables. The amount increased by approximately RMB 7.7 million compared to the same period in 2024.