SHENGUAN HLDGS (00829) announced that the group expects to record a loss attributable to owners of the parent company of approximately RMB 35 million to RMB 43 million for the six months ended June 30, 2025, compared to a profit attributable to owners of the parent company of approximately RMB 8.2 million for the six months ended June 30, 2024.

The board of directors believes that the following are the main factors adversely affecting the performance for the period:

1. The overall business environment remains challenging, resulting in a decline in the group's sales revenue. Additionally, the increase in inventory write-offs and provisions is mainly due to the group's large-scale product trials and equipment modifications undertaken in past years for developing new products and expanding production capacity. The finished goods inventory related to these new product trials still awaits market absorption. The daily operating business recorded an after-tax loss of approximately RMB 17 million to RMB 25 million.

2. Investment properties recorded a total after-tax valuation loss of approximately RMB 3 million.

3. The remaining after-tax losses are mainly due to adjustments in the overall financial planning between the group's companies in the People's Republic of China and Hong Kong. One Hong Kong company within the group has and plans to repay part of the interest-bearing loans to another Chinese company within the group. The repayment funds of the Hong Kong subsidiary come from dividends that have been and are planned to be paid by one of its Chinese subsidiaries, resulting in expenses and provisions for Chinese dividend withholding tax.