Master Copper (00664) issued a profit warning. Net profit for the medium term is expected to decrease from 1 million yuan to 1.5 million yuan year-on-year

Zhitong Finance App News, Master Tong (00664) announced that the Group expects to obtain net profit in the six months ending June 30, 2026: net profit of about RMB 1 million to RMB 1.5 million, while net profit for the same period in 2025 is RMB 30.2 million; adjusted net profit (not measured by IFRS) is approximately RMB 15 million to RMB 20 million, while adjusted net profit for the same period in 2025 is RMB 42.9 million; and adjusted EBITDA (measured in non-IFRS) is approximately RMB 30.2 million 35 million yuan to 40 million yuan, while the adjusted EBITDA for the same period in 2025 was RMB 56.2 million.

The Board believes that the decrease in net profit during the reporting period was mainly due to the combined effects of the following factors:

1. The rapid expansion of offline direct stores has led to a significant increase in costs: In order to promote the multi-channel sales network construction strategy, the Group accelerated the expansion of offline direct stores during the reporting period. As of June 30, 2026, the total number of direct-run stores of the Group reached 65, a net increase of 55 compared to the 10 stores as of June 30, 2025, an increase of 5.5 times. Sales and marketing expenses related to this, such as sales staff salaries, amortization and rent for store decoration, and administrative expenses such as related management personnel costs have all increased dramatically. These investments are upfront costs of business expansion. As new stores gradually enter a mature operation period, these upfront fixed costs (including store renovation costs) will gradually be amortized, and their scale effect and contribution to revenue will gradually become apparent.

2. Production capacity expansion and production line upgrades bring phased costs: In order to meet future business growth needs, the Group continued to promote the construction and commissioning of the second production center during the reporting period. The project was officially put into operation in the second quarter of 2026, increasing total production capacity by more than 50%. In the process of capacity expansion, production equipment upgrades and iterations caused some old equipment scrapping losses and workshop renovation costs. At the same time, depreciation and manufacturing costs at the beginning of the commissioning of the new production line increased, which had a phased impact on net profit during the period.

3. R&D investment continues to increase: In order to enrich the product matrix, expand product lines made of copper, silver, gold, etc., and meet the product development needs of newly introduced IP (such as “The Legend of Mortal Immortals”, “Taiping Year” and “Haunted Tiangong” series), the Group continues to expand its R&D team and increase investment in related licensing fees. These investments... aim to lay the foundation for medium- to long-term product innovation and market expansion.