Honghua Group Limited (Honghua Group, 00196) reported a net loss attributable to shareholders of RMB 28.92 million for the six months ended 30 June 2026, reversing a RMB 37.10 million profit a year earlier. The downturn follows shipping disruptions in the Strait of Hormuz, volatile RMB/US-dollar movements and a sharp pull-back in China’s fracturing market.

Financial performance • Revenue slipped 3.5 % year on year to RMB 2.51 billion. • Gross profit fell 21.9 % to RMB 264.58 million, driving gross margin down 2.5 ppts to 10.5 %. • Operating profit contracted 89.5 % to RMB 8.57 million. • Net finance costs widened 21.5 % to RMB 49.79 million. • Loss before tax totalled RMB 44.15 million; a RMB 4.05 million tax credit reduced the period loss to RMB 40.10 million. • Basic and diluted EPS moved to a negative RMB 0.32 cents (2025: +0.41 cents). • The board declared no interim dividend.

Segment highlights • Land drilling rigs: Revenue surged 44.3 % to RMB 1.16 billion (46.1 % of group total), supported by stronger deliveries—nine sets of rigs sold, all to overseas clients. • Offshore segment: Sales eased 6.5 % to RMB 576.61 million. Within this, offshore engineering equipment manufacturing rose 75.0 % to RMB 460.62 million, offset by a 72.7 % drop in offshore wind power revenue to RMB 96.69 million. • Parts & components: Revenue fell 23.2 % to RMB 441.39 million following a planned reduction in lower-margin lines. • Fracturing: Revenue declined 53.2 % to RMB 203.04 million amid a domestic market downturn; the unit remained loss-making. • Drilling engineering services: Revenue slid 24.5 % to RMB 131.79 million as Middle-East operations were curtailed.

Geographic mix • Overseas markets contributed 67.7 % of revenue (RMB 1.70 billion, +30.2 % YoY), led by the Middle East at RMB 1.31 billion (+27.4 %). • China revenue dropped 37.5 % to RMB 810.35 million, reflecting weakness in domestic fracturing and component sales.

Order intake and backlog New orders reached RMB 4.28 billion (–6.5 %), with offshore businesses accounting for 58.8 % (RMB 2.52 billion, +27.6 %). Bookings include specialised offshore vessels, 50 large wind-power jackets and additional overseas rig contracts.

Cash flow and balance-sheet metrics • Operating cash outflow: RMB 194 million (2025 inflow of RMB 94 million), hit by delayed Middle-East payments. • Cash and cash equivalents: RMB 885.52 million (31 Dec 2025: RMB 999.97 million). • Borrowings: RMB 4.86 billion, up 3.7 % since year-end; gearing ratio edged to 72.1 % (+1 ppt). • Net finance expenses consumed 2.24 % of revenue (2025: 2.03 %). • Capital expenditure rose to RMB 75.77 million, mainly for infrastructure and technical upgrades.

Strategic and operational notes Management cited five corrective actions: contract-level risk controls, tighter on-site safety protocols, a region-wide operating model, diversification into Africa/Southeast Asia/Central Asia, and enhanced FX hedging. The offshore segment—spanning oil & gas, wind power and engineering vessels—remains positioned as Honghua’s “second growth curve” with continued investment in deep-sea drilling technologies and marine equipment.

No interim dividend is proposed. The board is seeking to fill the vacant chairman and nomination committee chair roles following recent leadership changes. No post-period material events or share buy-backs were reported.