Hong Kong ZCloud profit plunges 79.6% amid rising costs

Hong Kong ZCloud Technology Construction Limited, a construction contractor in Hong Kong, reported a substantial 79.6% decrease in profit attributable to owners, falling to HK$3.4 million for HY2025 from HK$16.7 million in HY2024. Revenue also declined by 8.9% to HK$565.3 million from HK$620.6 million in the prior period. This downturn was primarily attributed to additional costs for building construction services and increased material expenses, which led to a 42.5% decrease in gross profit to HK$18.0 million and a gross profit margin contraction to 3.2% from 5.0%.

During the period, the company secured new RMAA services contracts worth HK$288.8 million and building construction projects valued at HK$276.5 million. Administrative expenses saw a decrease of 22.6% to HK$12.0 million, mainly due to reduced staff costs. Finance costs increased from HK$7,000 to HK$31,000, reflecting renewed lease contracts. The company's basic earnings per share dropped to HK0.12 cent from HK0.56 cent (restated).

Despite the challenges, Hong Kong ZCloud maintained a strong financial position with current assets of HK$394.0 million and bank balances and cash of HK$195.0 million. The current ratio improved to 4.2 times from 3.3 times. The board has not recommended an interim dividend for HY2025.