Red Star Macalline Group Corporation (01528) issues profit warning, expects a net loss attributable to shareholders in 2025 of approximately 15.36 billion to 22.86 billion yuan.

Red Star Macalline Group Corporation (01528) announced that the group expects to incur a loss of approximately RMB 15.985 billion to RMB 23.837 billion for the fiscal year ending December 31, 2025, compared to a loss of approximately RMB 3.728 billion for the fiscal year ended December 31, 2024, indicating a continued loss. The group expects a net loss attributable to the owners of the parent company of approximately RMB 15.36 billion to RMB 22.86 billion for the fiscal year 2025, compared to a net loss attributable to the owners of the parent company of approximately RMB 3.492 billion for the fiscal year 2024, also indicating a continued loss. The expected loss for the fiscal year 2025 is mainly due to fair value changes in investment properties and impairment losses on related assets. Due to the downturn in the real estate industry and the continued impact of the decline in demand in the home furnishing and building materials industry, the demand in the home retail market has weakened. The company has been continuously stabilizing and retaining business by reducing rents and management fees, actively adjusting its strategies and product categories, attracting high-quality formats and brands with favorable commercial terms, offering rent and management fee discounts in the initial expansion stage, resulting in a significant impact on lease and management income, with rental levels significantly decreasing compared to previous years. As market expectations for future rents have changed, the estimated short-term recovery of rental prices will need to be adjusted, leading to a significant decrease in the value of investment properties. The valuation of investment properties in 2025 (including rights of use assets measured at fair value) is expected to decrease by approximately RMB 13.1 billion to RMB 22 billion. In addition, based on the latest recoverable amounts of various assets historically, the company has made a preliminary calculation of the recoverable amounts of various assets as of the end of 2025, resulting in the provision of impairment losses of approximately RMB 4.5 billion to RMB 5.7 billion. The decrease in fair value of investment properties and the provision of various impairment losses are aimed at accurately reflecting the impact of various non-operating items caused by changes in the current market environment on the company's financial information. The changes in fair value of investment properties do not affect the company's ability to generate cash flow from the properties it holds, do not affect the overall stability of the company's operations, and do not change the improved rental rates and net operating cash flow of the company. The company will adjust proactively in accordance with the country's "Fifteen Five" plan and the new market environment, upgrading its strategic positioning to "a new operator of home lifestyle commercial operations and a home industry ecological service provider," focusing on upgrading its core home business while expanding its home industry ecological services, creating a second growth curve, and achieving dual growth in scale and value.