GLOBAL NEW MAT (06616) issues a profit warning, expecting a mid-term loss of approximately 50 million to 100 million yuan, experiencing a year-on-year shift from profit to loss.

GLOBAL NEW MAT (06616) announced that the Group expects to record revenue of approximately RMB 2.5 billion to 2.7 billion for the six months ended June 30, 2026 (the review period), representing an increase of about 180% to 200% compared to approximately RMB 912 million for the same period in 2025. During the review period, the Group anticipates a loss of approximately RMB 50 million to 100 million, whereas a profit of approximately RMB 100 million was recorded for the same period in 2025. The expected EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) for the review period is approximately RMB 450 million to 500 million, an increase of about 30% to 45% compared to approximately RMB 344 million for the same period in 2025; the adjusted EBITDA is expected to be around RMB 500 million to 600 million, an increase of about 16% to 39% compared to approximately RMB 431 million for the same period in 2025. The loss recorded by the Group during the review period is mainly attributed to the completion of the acquisition of Merck Group's (Merck) global surface solutions business in July 2025 (the acquisition matter), which resulted in the following non-cash and one-off items related to the acquisition: (i) fair value adjustments and amortization of intangible assets resulting from the acquisition, approximately RMB 130 million to 140 million; (ii) one-off transaction costs and professional fees related to the acquisition and closing, approximately RMB 20 million to 30 million; and (iii) business integration costs totaling RMB 60 million to 70 million, including transitional service agreement (TSA) fees paid to Merck for the German operations and other costs and expenses incurred by the Group in relation to the acquisition. During the review period, the Group recognized a non-cash fair value gain of approximately RMB 100 million to 110 million for the derivative instruments related to the outstanding convertible bonds (same period in 2025: recognized a fair value loss of approximately RMB 1 million) and incurred financing costs of approximately RMB 70 million to 80 million (same period in 2025: financing costs of approximately RMB 27 million). The combined net impact of these two items on the Group's profit before tax for the review period is a net profit of approximately RMB 20 million to 40 million (same period in 2025: net loss of approximately RMB 28 million). The aforementioned fair value gains are of a non-cash nature and fluctuate with the Companys stock price and other market parameters and may turn into fair value losses in subsequent periods, which do not reflect the core operating performance of the Group. Most of the items mentioned above are of a non-cash nature (such as fair value adjustments, amortization of intangible assets) or one-off costs related to the acquisition, which have not significantly adversely affected the Group's cash flow from operations and daily operations. The expected losses during the review period are a temporary accounting performance during the acquisition integration phase. As the business integration progresses, synergies are realized, and subsequent debt structure is optimized, there is room for recovery in medium to long-term profit levels.