China Weaving Materials Holdings Limited provided consolidated earnings guidance for the five months ended 31 May 2023. The board of directors of China Weaving Materials Holdings Limited informed the shareholder Group's unaudited consolidated management accounts for the five months ended 31 May 2023, the Group recorded a consolidated revenue and consolidated net loss of approximately RMB 358 million and RMB 9 million, respectively. As such, it is expected that the Group may record a substantial decrease in its consolidated net profit for the six months ending 30 June 2023 as compared to that for the six months ended 30 June 2022. The consolidated revenue and consolidated net profit of the Company for the six months ended 30 June 2022 was approximately RMB 697 million and RMB 34 million, respectively. The expected decrease in the consolidated net profit or the expected consolidated net loss of the Group for the Period is mainly attributable to the decrease in gross profit resulting from decrease in revenue and decrease in gross profit margin of the Group's yarn products. The decrease in revenue was mainly due to the decrease in sales volume and lower average selling prices of the Group's yarn products as compared with that for the six months ended 30 June 2022. The decrease in sales volume was mainly due to poor market conditions. The costs of raw materials were lower in the Period as compared with that for the six months ended 30 June 2022. The average selling prices of the Group's yarn products were dragged down accordingly. However, due to poor market demand, the prices of yarn products faced increased pressure and fell at a faster rate than that of the raw materials, which further contributed to the deterioration of the Group's gross profit margin. As a result of stagnant global economy, the demand for textile and apparel products in the first five months of 2023 has been weak in general and the
market conditions for the textile industry in the PRC have been difficult.