Hong Kong-listed Feiyu issues profit warnings as more Chinese tech start-ups run into trouble

A Chinese tech start-up listed in Hong Kong released a profit warning on Monday, joining a wave of once-promising mainland internet and tech start-ups that have faced difficulties in their operations recently.

Feiyu Technology International Company, a Chinese mobile and web games developer, informed its shareholders and potential investors on its website that it may record a net loss of approximately 75 million to 85 million yuan for the six months ended June 30, 2016 under the International Financial Reporting Standards as compared to a net profit of 92 million yuan for the corresponding period in 2015.

Following the announcement, Feiyu’s share price dropped from HK$1.63 in early trading on Monday to HK$1.4 on Tuesday afternoon.

Feiyu went public in Hong Kong in December 2014, one year after it was set up in Xiamen in Fujian province, on the back of its success in developing several popular mobile games, including Carrot Fantasy.

In its statement, Feiyu explained that the expected net loss was due to the delay in launching key new games and a decrease in revenue of the group’s existing games as they reached mature stages of their product life cycles, as well as a significant increase in administrative expenses and research and development costs.

Last year, Feiyu saw annual revenue of 322 million yuan with net profit of 200 million yuan, according to mainland media.