Valuetronics Holdings drop by around a fifth after warning that it will be making an impairment which will lead to a "significant" decrease in its FY2026 earnings over the preceding year ended March 2025.
Specifically, the impairment is related to the company's investments in GPUs and related ancillary hardware assets under equipment leasing arrangements to an associate company, Trio AI, in which it holds 26.6%.
According to Valuetronics, Trio AI was a joint venture set up to provide GPU and AI-related value-added cloud services in Hong Kong.
Valuetronics had acquired GPUs and related ancillary hardware and then lease to Trio AI.
However, Trio AI has yet to gain "sufficient commercial traction" despite a new venture partner and additional capital committed.
"In addition, certain rental amounts owing from Trio AI to the Group under the equipment leasing arrangements have remained outstanding beyond their contractual due date," says Valuetronics, which expects to report on or before May 28.
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As at 9.43 am, Valuetronics Holdings shares changed hands at 96.5 cents, down 18.22%.
