TSUN YIP HLDGS (08356) has issued a positive profit alert for the financial year ending March 31, 2026.

The group expects to report a profit attributable to company owners of approximately HK$7.6 million.

This represents a significant improvement from the previous year, which saw a loss attributable to owners of about HK$11.3 million.

Key Drivers for the Turnaround

The anticipated shift from loss to profit is attributed to the combined net effect of several key factors.

Firstly, revenue increased as several existing projects entered their peak construction phases.

Secondly, gross profit and the gross profit margin improved.

This improvement was driven by higher margins from certain civil engineering projects at their construction peak and a reduction in subcontractor costs following successful negotiations and settlement for a completed project.

This positive impact was partially offset by increased construction costs from some projects entering their maintenance or final completion stages.

Thirdly, there was a substantial decrease in the expected credit loss provision for the 2026 financial year.

This contrasts with the 2025 period, which included a provision of roughly HK$13.2 million related to increased credit risk from a client in provisional liquidation.

Fourthly, administrative expenses for 2026 were lower.

This reduction was primarily due to decreased legal and professional fees related to special transactions, such as extending and issuing convertible bonds, share consolidation, and a company name change.

It was also due to a lower provision for long-service payments following the abolition of the Mandatory Provident Fund offsetting mechanism.

Finally, the positive effects of the above factors were partially counterbalanced by the absence of any recognized fair value gains in the 2026 financial year.

In contrast, the 2025 results included a non-recurring fair value gain of approximately HK$17.3 million arising from the revision of terms for an accepted note.