ELEPHANT HLDGS (08635) has issued a positive profit alert, forecasting a net profit not exceeding approximately HK$5.8 million for the 2026 fiscal year. This represents a significant turnaround from the net loss of about HK$19.5 million recorded for the fiscal year ended March 31, 2025 (FY2025).
Key Drivers Behind the Turnaround
The board of directors attributes the shift from loss to profit primarily to a substantial revenue increase of approximately HK$157 million. This surge in revenue is largely driven by the artificial intelligence-powered solutions segment. Additionally, a reduction in property, plant, and equipment impairment losses of about HK$1.8 million contributed positively.
Factors Partially Offsetting Gains
These positive factors were partially offset by several items: (i) a decrease in other net income of around HK$1.4 million, mainly due to lower interest income from term deposits; (ii) an increase in subcontracting costs for the AI-driven solutions segment of roughly HK$127 million; (iii) a rise in the cost of sold inventories for physical gold and cryptocurrency sales of about HK$2.1 million; (iv) an increase in impairment losses on trade receivables and contract assets for the AI-driven solutions segment of approximately HK$1.9 million; and (v) an income tax expense of about HK$0.8 million (compared to an income tax credit of around HK$0.3 million in FY2025), primarily driven by increased taxable profits from the AI-driven solutions segment.
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