Precious Dragon Technology Holdings Limited (Precious Dragon, 01861) reported an unaudited net loss attributable to shareholders of HK$14.41 million for the six months ended 30 June 2026, reversing from a HK$52.71 million profit in the prior-year period.
Revenue edged up 2.64% year on year to HK$333.34 million, supported by a 65.7% surge in overseas sales to HK$68.00 million, which offset a 6.46% decline in mainland China turnover to HK$265.37 million.
Profitability was pressured by a 19.41% rise in cost of sales to HK$215.62 million, lifting the cost-to-sales ratio to 64.7% (1H25: 55.6%) and compressing gross margin to 35.3% (1H25: 44.4%). Gross profit fell 18.36% to HK$117.72 million.
Key expense movements: • Other income and gains slid 76.52% to HK$6.20 million, reflecting the absence of a HK$14.30 million vessel disposal gain booked in 1H25 and lower foreign-exchange gains. • Selling and distribution costs dropped 48.30% to HK$36.07 million, mainly due to reduced e-commerce advertising and promotion spending. • Administrative expenses rose 38.00% to HK$31.19 million, driven by property acquisition fees, higher professional costs and staff expenses. • Other expenses expanded to HK$44.18 million (1H25: HK$1.24 million), including a HK$31.59 million impairment on the group’s under-utilised Thailand production plant and HK$9.96 million in net exchange losses.
Finance costs remained stable at HK$0.74 million. Income tax expense increased to HK$13.88 million (1H25: HK$11.75 million).
Balance-sheet highlights as of 30 June 2026: • Net assets: HK$379.37 million (31 Dec 2025: HK$377.39 million). • Cash and cash equivalents (incl. pledged deposits): HK$139.68 million, down from HK$173.23 million at end-2025. • Interest-bearing borrowings: HK$66.39 million (current and non-current), up from HK$16.44 million. • Gearing ratio: 3.1% (31 Dec 2025: not applicable due to negligible debt). • Current ratio: 1.7x (31 Dec 2025: 2.2x).
Capital commitments totalled HK$20.50 million, primarily for plant and machinery. Unutilised banking facilities stood at HK$377.20 million.
The board declared no interim dividend (1H25: HK3.24 cents per share), citing the interim loss and working-capital considerations.
Operational notes: Precious Dragon’s revenue mix shifted as e-commerce sales of its own-brand automotive beauty and maintenance products declined about 60%, while a new global customer in the PRC and recovering overseas demand supported overall top-line growth.
Looking ahead, management intends to continue brand promotion, cost control, product innovation with environmentally friendly formulas, and expansion into new markets amid persistent global economic uncertainties.