Smoore International Issues 2025 Interim Profit Warning: First-Half Earnings Expected to Drop 21%–35% YoY

【2Firsts News flash】On the afternoon of July 15th, Smoore International (stock code: 06969.HK) issued a profit warning, expecting that the profit for the six months ending June 30, 2025 will decrease by approximately 21% to 35% compared to the same period last year.

Announcement indicates:

·In the first half of the year, the estimated revenue is about 60.1 billion yuan, an 18% year-on-year growth. 

·The expected profit for the period is between 443 million and 541 million yuan, a decrease of about 21% to 35% compared to the same period in 2024 (683 million yuan). 

·The anticipated pre-tax profit is around 629 million to 769 million yuan, a 5% to 23% decrease year-on-year.

The announcement stated that during the review period, the group achieved satisfactory revenue growth in both its own brand business and corporate client business, thanks to the continuous improvement of the group's competitiveness in major global markets through the introduction of innovative products. During the review period, the group achieved approximately an 18% revenue growth, which in turn led to an increase in gross profit. However, the growth in revenue and gross profit was not enough to offset the decrease in net profit caused by the increase in expenses mentioned later in this period.

The main reason for the decline in profits is:

·The group experienced a non-cash, stock-based compensation expense increase of approximately 176 million yuan compared to the same period in the previous year, due to the issuance of stock options and bonus shares under the first public offering and stock incentive plan in the fourth quarter of 2024.

·Due to the group's increased efforts in market expansion for its own branded products during this period, especially in international markets, the group's distribution and sales expenses have significantly increased compared to the same period last year.

·The group's legal service expenses showed a significant increase compared to the same period last year.

If non-cash share-based expenses are added back, the adjusted estimated surplus for the group in the current period is approximately 6.88 billion to 7.87 billion, representing a decrease of around 9% to an increase of about 4% compared to the same period last year.

The announcement stated that the final interim performance report is expected to be released in August 2025.