Why is Man Wah Holdings stock plunging today?

Man Wah Holdings' shares plummeted 12.9% to HK$2.40 on Tuesday following the company's disclosure of a significant profit warning for its half-year earnings. The company forecast that its net profit attributable to equity holders for the six months ending September 30, 2026, would decline between 70% and 90% compared to the HKD 1.15 billion earned in the same period last year.

Man Wah cited a surge in the prices of essential chemical-based raw materials, linked to the ongoing Middle East conflict, and heightened industry price competition, which delayed any price adjustments on products, leading to a sharp erosion of gross margins. Furthermore, the company reported an operating loss for its U.S. furniture business, acquired in December 2025, due to rising input costs and subdued consumer demand.

The subsidiary, Southern Motion, Inc., has filed for Chapter 11 bankruptcy protection in the United States, forcing Man Wah to take impairment charges on goodwill and other intangible assets. Despite this, Man Wah emphasized that its core revenue remained stable, and the company is implementing cost controls and restructuring measures to safeguard medium-term profitability.

Formal interim results are expected on November 16. The broader Hong Kong market also showed a slight decline, with the Hang Seng Index (HK50) slipping by about 0.4%.