EDA Group Holdings (02505) has issued a profit warning, announcing that it expects to swing to a net loss of approximately RMB 42.2 million for the six months ending June 30, 2026, compared with a net profit of around RMB 19.3 million in the same period of 2025.

The company also anticipates reporting an adjusted net loss (a non-HKFRS measure, defined as net loss plus share-based payment expenses related to the share award scheme) of roughly RMB 41.1 million for the reporting period, versus an adjusted net profit of about RMB 22.2 million a year earlier.

The expected loss is primarily attributed to the following factors: (1) Strategic investment in overseas warehouses: With six new overseas warehouses leased during the first half of 2025 and the first half of 2026, these facilities typically require a ramp-up period before achieving profitability. However, related costs and expenses have risen significantly, mainly due to the commencement of amortization of right-of-use assets and the recognition of interest expenses on lease liabilities. The board believes this strategic investment will support the group's long-term sustainable development; (2) Further decline in gross profit, mainly due to the increased proportion of semi-managed model, which generally carries lower gross margins; and during the reporting period, the group aggressively expanded its European business, where higher labor and compliance costs typically result in lower gross margins; (3) Rising overseas logistics and labor costs, leading to a substantial increase in the group's overall costs during the reporting period; (4) Due to the continued depreciation of the US dollar against the Renminbi, the group incurred exchange losses of approximately RMB 19 million during the reporting period (compared with exchange gains of RMB 240,000 in the same period of 2025).