PHOENITRON HOLD (08066) issues a profit warning, expecting a net loss attributable to shareholders of approximately HKD 10.9 million for the first half of the year, compared to a profit in the same period last year.

PHOENITRON HOLD (08066) announced that the group anticipates a net loss attributable to the company's owners of approximately HKD 10.9 million in the first half of 2026, compared to a net profit of about HKD 40.4 million attributable to the companys owners in the same period of 2025. The Board of Directors believes that this expected loss is primarily influenced by the following consolidated factors: (1) The group has upgraded the Dongchuang Digital Entertainment (a private membership e-commerce platform operated by Shanxi Dongchuang Digital Entertainment Technology Group Co., Ltd.) to version 2.0, focusing on transforming it into a global digital gaming platform operated by the group's wholly-owned subsidiary, Nova Digital Labs Limited. The original Dongchuang App (Chinese version) performed strongly in the first half of 2025. Subsequently, according to the disclosed strategic transformation and resource reallocation, operations of the original private domain platform have been gradually reduced and transitioned. Since the original platform primarily relied on commission from third-party game operation membership fees, related cooperation contracts have been terminated upon expiration. The new partners are international companies, therefore the Dongchuang App must be upgraded to the international version 2.0. Compared to the original Chinese version, version 2.0 requires more resources and a longer development and launch time at the technical level, including multilingual adaptation, cross-jurisdiction compliance, product localization, overseas market expansion, partnership establishment, and redevelopment of related systems. At the operational level, the new platform initially also requires significant traffic resource investment. As a result, the commercial launch of Dongchuang App 2.0 is delayed compared to initial expectations, adversely affecting the revenue and profit performance of this business segment during the reporting period. Consequently, the related segment incurred a loss of approximately HKD 7.6 million in the first half of 2026, compared to a segment profit (after tax) of approximately HKD 37.7 million in the same period of 2025. (2) Revenue from the SIM card business segment increased by approximately 11.5% year-on-year, resulting in an increase of approximately HKD 550,000 in segment profit; (3) The segment profit generated from providing artificial intelligence voice technology data services decreased by 3.94 million HKD year-on-year, partly due to the higher direct costs for customized projects undertaken during the reporting period, as well as partly attributed to the acquisition of several intangible assets (proprietary technologies) starting in the second half of 2025, leading to increased amortization costs; and (4) Corporate expenses increased year-on-year.