Megain Holding (Cayman) Co, the Hong Kong-listed supplier of compatible printer cartridge chips, reported a sharp first-half loss as plunging prices in its core printing segment outweighed rising volumes.
The company posted revenue of RMB70.8 million ($9.7 million/ €8.9 million) for the six months to June, up 7.7% year-on-year. Yet it swung to a net loss of RMB38.6 million ($5.3 million/ €4.9 million), compared with a small profit a year earlier.
Sales of compatible cartridge chips fell 53% to RMB27 million ($3.7 million/ €3.4 million) despite unit volumes rising 7.5%. The average selling price collapsed 57% to RMB3.5 ($0.48/ €0.44) per chip, squeezed by intense competition and weaker demand.
Gross profit from chips shrank to RMB6.9 million ($0.9 million/ €0.9 million), dragging group margins to 14% from 32%. Megain added just 107 new chip models, down from 393 last year, reflecting a slowdown in printer launches.
The group sought relief in trading consumables and nascent internet-of-things chips, but both offered thinner margins.
