Hop Fung Group (HKEX: 02320) reported a sharp contraction in first-half 2026 revenue to HK$29.90 million, down 56.7% year on year, after a decline in customer orders and continued suspension of its upstream containerboard operations since October 2021.

The gross profit slipped to HK$2.08 million from HK$5.04 million, trimming the margin to 7.0% (1H25: 7.3%). Lower procurement of containerboard tempered cost of sales, yet operating leverage eroded profitability. EBITDA remained negative at HK$-13.00 million, an 11.6% improvement on the prior-year shortfall of HK$-14.70 million. Nevertheless, loss attributable to shareholders edged up 3.4% to HK$39.74 million, translating to a basic loss per share of HK¢4.86 (1H25: HK¢4.70).

Only the corrugated packaging division generated revenue—HK$29.90 million—while the containerboard segment recorded no sales amid the production halt. The corrugated packaging unit posted a HK$4.55 million segment loss; the idle containerboard business incurred a HK$28.63 million loss.

Tight cost controls yielded a 63.6% reduction in selling and distribution expenses to HK$1.57 million and a 23.0% drop in administrative costs to HK$12.40 million. Staff numbers were cut to 74 from 187 at end-2025. Finance costs eased 5.5% to HK$1.57 million after loan repayments.

Liquidity headwinds persisted. Net current liabilities deepened to HK$128.10 million (end-2025: HK$58.07 million), and the current ratio deteriorated to 0.20. Cash and cash equivalents stood at HK$11.57 million, while total bank borrowings rose to HK$97.16 million, lifting the gearing ratio to 14.8% and net gearing to 13.0%. Capital expenditure was minimal at HK$0.02 million.

The group’s going-concern assessment highlighted material uncertainty due to consecutive losses, a low cash position, and outstanding PRC tax disputes that could trigger significant liabilities. Management is relying on a post-period letter of intent for up to RMB300 million in bank facilities and internal cash-flow measures to support operations over the next 12 months.

No interim dividend was declared. Hop Fung plans to restore its suspended containerboard mill after converting coal-fired boilers to gas, aiming to regain vertical-integration benefits. Management expects the corrugated packaging market to remain pressured by weak demand and elevated costs but sees potential tailwinds from China’s continued shift toward eco-friendly paper packaging and e-commerce growth.