The board of CHINA HK POWER (ASX: 00931) has issued a profit warning announcement.

It is expected that the group will record an attributable loss to the company's owners in the range of approximately HKD 130 million to HKD 160 million for the financial year ending 31 March 2026 (FY2026).

This compares to an attributable loss of about HKD 106 million for the financial year ended 31 March 2025 (FY2025).

Looking back at FY2026, despite an increase in the group's overall sales figures and improvements in various expense items, the attributable loss to owners is still expected to be higher than the previous year.

The primary reason cited is the challenging and uncertain slow economic recovery domestically, which has compressed the gross profit margin for the group's midstream natural gas trading business due to intense competition and market pressures.

Additionally, one of the group's natural gas refueling stations, part of its terminal projects, suspended operations to accommodate government-led road modification works.

This station contributed approximately HKD 40 million in gross profit during FY2025, but generated no gross profit in FY2026 due to the suspension, leading to a corresponding reduction in gross profit for the current year of about HKD 40 million.

The natural gas refueling station is expected to resume operations in 2028 following the completion of the relevant road modification project by the government, at which point it is anticipated to once again contribute to the group's growth momentum.