Herbs Generation Group Holdings (2593) H1 2025 earnings summary

Executive summary

• 1H2025 revenue edged down 0.4% YoY to HK$117.292m, while results swung to a HK$7.535m net loss from HK$7.483m net profit.

• Profit pressure reflected promotional sales and higher advertising, promotion and staff costs; retail growth partly offset weaker wholesale and consignment sales.

Financial highlights

• Gross profit fell 5.5% to HK$82.643m; gross margin narrowed 3.7 percentage points to 70.5% from 74.2%.

• Cost of sales rose 14.0% to HK$34.649m; selling and distribution costs increased 35.3% to HK$66.5m and administrative expenses rose 43.8% to HK$26.8m.

• Operating loss was HK$8.5m versus operating profit of HK$11.2m in 1H2024; basic and diluted loss per share was HK5.65 cents versus earnings of HK7.48 cents.

• Other income rose to HK$2.062m from HK$1.310m, mainly due to higher bank interest income from unused IPO proceeds.

Outlook and guidance

• Plans include developing additional products and brands in 2H2025, aiming to mitigate 1H losses.

• Capital expenditure is expected to rise with business growth, primarily for property, plant and equipment, funded by operating cash flow and listing proceeds.