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On March 10, Zhengshang Industrial issued a profit warning announcement, and it is expected that the comprehensive net profit for the whole year of 2020 will fall by 35%-45% year-on-year. In 2019, the comprehensive net profit of Zhengshang Industrial was 1.152 billion yuan. This means that the comprehensive net profit of Zhengshang Industry in 2020 will be 634 million to 749 million.

Source: Zhengshang Industrial Announcement
Source: Zhengshang Industrial Announcement

Regarding the decline in net profit in 2020, Zhengshang Industrial stated that it was mainly due to the impact of the new crown pneumonia epidemic, which has blocked the development progress of some property projects and delayed the delivery of residential properties. In addition, due to the impact of real estate control policies (including housing purchase restrictions and price restrictions), the revenue of some property delivery in 2020 will decrease and gross profit will be pressured. The selling price of property projects is lower than expected. Provision for impairment.

Public information shows that Zhengshang Industrial was established in 1965 and listed on the Hong Kong Stock Exchange in 1972. It is a real estate company under Zhengshang Group, a leading real estate company in Henan. It is mainly engaged in property development, property investment and management, and hotel business.

It is worth noting that in recent years, Zhengshang Industrial’s profitability has been mediocre, and only achieved a substantial increase in 2019.

According to financial report data, in 2017 and 2018, Zhengshang Industrial’s revenue was 1.1 billion yuan and 601 million yuan, and net profits were 132 million yuan and 30 million yuan respectively. By 2019, revenue increased by 1378% year-on-year to 88.87. 100 million yuan, net profit increased by 3742% to 1.152 billion yuan.

However, in just one year, the performance of Zhengshang Industry has fallen again, and its profitability is worrying.

In addition, Zhengshang Industry stated in the announcement that in the face of the economic environment challenge under the impact of the new crown pneumonia epidemic, fierce competition and the continuous development of national control measures, the board of directors is still optimistic about the company’s long-term development.