According to Zhitong Finance App, Hutai Textile (01382) issued an announcement. The Group expects the profit attributable to corporate equity holders for the six months ending September 30, 2026 (reporting period) to be between HK$1 million and HK$10 million, while the profit attributable to corporate equity holders for the six months ended September 30, 2025 (same period last year) is approximately HK$79.3 million. The decline during the reporting period was due to a number of factors, mainly due to:
Gross profit margin declined. The ongoing war between the US and Iran in the Middle East has intensified inflationary pressure, leading to a sharp rise in electricity and raw material prices, especially yarn and chemicals, which in turn is driving up the Group's production costs. At the same time, there was a time lag in negotiations and adjustments with customers to fully offset the increase in production costs, leading to a decline in the Group's overall gross margin from April to August 2026. In addition, during price negotiations, some customers delayed or slowed down their orders, which led to a decline in order demand and sales revenue from April to August 2026; and
Foreign exchange losses have increased. Compared with the exchange loss of approximately HK$8.9 million in the same period last year, an exchange loss of about HK$25.6 million was recorded during the reporting period. This loss was mainly due to the appreciation of the RMB. Over 90% of the exchange losses were related to the revaluation of internal current accounts between the Group's subsidiaries in China and Hong Kong, but this revaluation did not affect the Group's cash flow.
Despite this situation, management remains confident about the Group's future. The company achieved a positive EBITDA (profit before interest, tax, depreciation and amortization) of approximately HK$160 million to HK$169 million during the reporting period, while the amount after deducting exchange losses from EBITDA was approximately HK$186 million to HK$195 million. At the same time, with the completion of price adjustments with customers, the sales price has been adjusted to the maximum practical extent, and the Group's gross margin and order volume for September 2026 have improved.
Based on the current schedule, the Group expects to complete the expansion of production capacity at the Vietnamese factory by the end of 2027. After that, the Group expects to be able to more effectively meet the demand for orders from US customers starting in 2028. Following the completion of Vietnam's expansion, the Group expects its capital expenditure to be drastically reduced, thereby freeing up remaining cash flow to repay bank loans and thereby reduce interest expenses. Furthermore, in order to reduce operating costs and improve the operating efficiency of the Nansha plant in China, management has begun considering and initiating an assessment aimed at further improving its asset structure. This move may involve the sale of some underutilized land and plant properties in due course. Meanwhile, with the successful promotion of the home textile business in the Chinese domestic market, compared with the first half of the fiscal year ending March 31, 2026, the sales volume of the business has doubled in the first half of the fiscal year ending March 31, 2027. The company hopes to expand the scale of the home textile business to target a global customer base.