Vodatel Networks Holdings Limited reported a HK$7.98 million net loss for the six months ended 30 June 2026, reversing a HK$4.45 million profit in the prior-year period. The swing reflects weaker revenue, lower gross margin and higher staff costs despite a modest uptick in new contract wins.

Revenue and Profitability

• Revenue slipped 8.17% year on year to HK$244.11 million, as prolonged equipment lead times deferred project execution and revenue recognition. • Gross margin contracted to 16.69% from 19.02%, pressured by sharp increases in DRAM prices that inflated hardware costs. • Operating loss reached HK$9.13 million versus a HK$3.33 million operating profit a year earlier. • Finance income of HK$1.44 million partially offset finance costs of HK$0.42 million.

Contract Intake and Segment Mix

• New contracts totalled HK$338.00 million, up 2.5% from the first half of 2025, boosting the order book but not yet translating into revenue because of supply-chain delays. • Revenue contribution shifted markedly: Macao and Hong Kong generated HK$189.92 million (77.8% of total), while Mainland China delivered HK$54.19 million (22.2%), down from 45.4% a year earlier. • Adjusted EBITDA showed a combined loss of HK$8.26 million, with both regions in negative territory.

Cost Dynamics

• Selling, marketing and administrative expenses rose 4.62% to HK$50.13 million, driven mainly by an 8% rise in staff costs linked to AI-related hiring and succession-planning initiatives. • Inventory nearly doubled to HK$49.13 million as goods arrived late in June for July deliveries. • Trade receivables fell 11.1% to HK$155.58 million, while trade payables declined 14.7% to HK$97.15 million.

Balance Sheet and Cash Flow

• Total equity dropped to HK$183.81 million after the period loss and an HK$18.19 million fair-value write-down of the group’s 17.86% stake in Timor Telecom (TTSA) to HK$13.25 million. • Net cash and yield-enhanced financial instruments stood at HK$99.40 million. • Interest-bearing borrowings of HK$26.30 million produced a gearing ratio of 14.31%. • Operating activities consumed HK$29.46 million in cash, compared with an HK$4.31 million inflow a year earlier. • No interim dividend was declared.

Strategic and Market Developments

• In Macao, the company deepened its presence in surveillance and AI-driven analytics for gaming operators and the public sector, leveraging long-standing client relationships. • Hong Kong operations suffered from intensified competition and a continued slump in SD-WAN demand; management has begun reviewing the local setup. • Mainland China performance was dampened by supply delays, prompting ongoing efforts to improve demand forecasting and supplier coordination.

Outlook

Management expects external headwinds—volatile component pricing, elevated logistics costs and extended delivery cycles—to persist through 2H 2026. Focus remains on cost discipline, cash preservation and capitalising on opportunities in Macao’s public- and private-sector IT spending.