Gelonghui International Holdings (08521.HK) announcement on May 5thBased on a preliminary assessment of the latest unaudited consolidated management accounts of the Group for the three months ended 31 March 2022 and information currently available, the Group is expected to record a loss of approximately HK $4.5 million, compared with a profit of approximately HK $900000 for the three months ended 31 March 2021.
The board believes that the change in financial performance is mainly due to a sharp decline in earnings in the first quarter of 2022 by more than 50 per cent compared with the first quarter of 2021, resulting in a significant decline in gross margin of more than 80 per cent in the first quarter of 2022 compared with the first quarter of 2021.
The significant decline in earnings can be mainly attributed to a decrease in sales orders from a number of major customers in the first quarter of 2022. The outbreak of the highly contagious COVID-19 Omicron variant virus since late February 2022 has caused significant economic uncertainty in mainland China. The business operations of some of the company's major customers in East and North China were adversely affected by the implementation of various proactive prevention and control measures, resulting in a significant decline in purchase orders received from these customers in the first quarter of 2022.