Directel Holdings Limited (DIRECTEL, 08337) reported unaudited interim results for the six months ended 30 June 2026, showing a marked slowdown in top-line growth and a wider net loss.
Revenue and Profitability • Group revenue fell 20.9% year on year to HK$18.36 million (H1 2025: HK$23.20 million), driven by softer sales in the distribution segment and lower telecommunications turnover. • Gross profit shrank 76.8% to HK$0.17 million, compressing the gross margin to 0.9% from 3.1% a year earlier. • Loss attributable to equity shareholders widened 64.9% to HK$6.91 million (H1 2025: HK$4.19 million). Basic and diluted loss per share increased to HK2.82 cents from HK1.70 cents. • The Board did not declare an interim dividend.
Segment Performance • Telecommunications services revenue declined 31.2% to HK$3.11 million, reflecting intense pricing pressure in Hong Kong and subdued roaming demand. The segment swung to a HK$0.06 million loss (H1 2025: HK$0.48 million profit). • Distribution business revenue dropped 23.0% to HK$15.25 million, as the suspension of Singapore e-voucher sales outweighed growth in Hong Kong mobile phone and electronics trading. Segment profit was broadly flat at HK$0.23 million (H1 2025: HK$0.24 million).
Cost Structure and Expenses • Cost of sales decreased 19.1% to HK$18.19 million, but expense reductions lagged the revenue contraction. • Administrative and other operating expenses rose 29.1% to HK$7.23 million, driven by higher repair and maintenance outlays and a HK$1.70 million impairment on trade receivables. • Other income fell to HK$0.04 million (H1 2025: HK$0.19 million); other net gains declined to HK$0.11 million (H1 2025: HK$0.49 million), reflecting lower foreign-exchange gains. • Finance costs edged up to HK$0.02 million, attributable to lease-related interest.
Balance Sheet and Liquidity • Cash and cash equivalents stood at HK$14.17 million (31 December 2025: HK$17.89 million). • Net current assets totalled HK$17.43 million, with a current ratio of 3.5 (31 December 2025: 4.7). • Total equity declined to HK$18.86 million from HK$26.01 million at year-end 2025, reflecting accumulated losses and fair-value movements in investments. • The Group held no interest-bearing bank borrowings; gearing ratio remains not applicable. • Capital commitments amounted to HK$5.30 million for machinery and equipment upgrades, while HK$0.24 million of bank deposits were pledged against a HK$0.20 million performance bond.
Operational Highlights • Hong Kong telecommunications revenue slipped amid competitive pricing and changing traveller behaviour despite recovering tourism. • In Mainland China, telecommunications revenue surged to HK$0.82 million (H1 2025: HK$0.02 million) following new distributor agreements. • Singapore distribution revenue declined to zero after the cessation of e-voucher sales from Q3 2025 due to intense market competition and margin pressure.
Management Outlook DIRECTEL plans to launch an upgraded roaming package featuring AI translation and eSIM capabilities, continue cost-containment initiatives, and pursue new distribution channels in Southeast Asia and other markets. The company remains cautious given global macroeconomic uncertainties but expects ongoing tourism recovery and product innovation to support medium- to long-term growth.