REDCO GROUP (01622) issued a profit warning, expecting a mid-term net loss of approximately 1.05 billion to 1.15 billion yuan.

REDCO GROUP (01622) announced that it expects to incur a net loss of approximately RMB 1.05 billion to RMB 1.15 billion for the six months ending June 30, 2026, compared to a net loss of approximately RMB 709 million for the six months ending June 30, 2025. The attributable loss to the owners of the company for the same period is expected to be around RMB 1.35 billion to RMB 1.45 billion, whereas for the six months ending June 30, 2025, it was approximately RMB 590 million. The announcement stated that the anticipated increase in losses during this period is primarily due to a significant rise in financing costs. Due to the ongoing severe environment in the Chinese real estate market, which has led to a slowdown and suspension of certain property development projects, the amount of borrowing costs eligible for capitalization during this period has significantly decreased. Consequently, a larger proportion of borrowing costs has been recognized as expenses. As a result, the net financing costs for the Group during this period are expected to increase by approximately RMB 530 million compared to the same period in 2025. This adverse effect is only partially offset by improvements in gross profit and reductions in selling and administrative expenses.