FAST NEWS: Mingyuan Cloud’s loss widens on suffering real estate clients

The latest: Ming Yuan Cloud Group Holdings Ltd. (0909.HK) said on Tuesday it expects to report a net loss of 1.14 billion yuan ($164 million) to 1.18 billion yuan last year, representing a 231% to 243% widening of its loss from 2021.

Looking up: China’s real estate industry that is Ming Yuan’s main focus began to gradually rebound last year thanks to various government support policies. That, coupled with China’s relaxation of pandemic control and a return to more normal economic activity, are making the company confident in its long-term development.

Take Note: Ming Yuan’s results took a hit from delays or even suspension of work on projects being developed by its core real estate customers. At the same time, the company suffered negative impact from a 20% to 30% rise in R&D spending and from foreign exchange losses.

Digging Deeper: Ming Yuan Cloud provides software as a service (SaaS) and enterprise resource planning (ERP) products and services to real estate developers in China, and listed in Hong Kong in 2020. By the end of June 2021, it had partnered with 96 of the country’s top 100 real-estate developers, accounting for approximately 24.6% of the industry’s contract value. With the downturn in China’s real estate sector, the company’s ERP revenue dropped 49.8% to 212 million yuan in the first half of last year, and it recorded a net loss of 564 million yuan for the period. Calculations using first-half data show Ming Yuan’s loss in the second half of the year was close to that of the first half, showing no improvement in its business.

Market Reaction: Ming Yuan Cloud’s shares plunged on Wednesday, closing down 7.5% at HK$5.29 by the midday break. The stock now trades at the lower end of its 52-week range.

Translation by Jony Ho

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