Edensoft Holdings Limited (1147.HK) Q3 2024 Earnings Report

Edensoft Holdings Limited reported QQ3 2024 revenue of CNY 314.49 million, marking a substantial 84.9% year-over-year increase but a material 38.0% sequential decline from QQ2 2024. The gross profit was CNY 25.23 million, yielding a gross margin of 8.02%, while EBITDA stood at CNY 1.62 million and operating income at CNY 1.51 million, translating to an operating margin of 0.48%. Net income was a modest CNY 0.132 million (net margin ~0.04%) and diluted EPS of CNY 0.0001. The quarter featured a notable working capital build (change in working capital +CNY 30.59 million; accounts receivable +CNY 28.34 million; other working capital effect -CNY 2.64 million) and a sizeable non-cash charge (other non-cash items of -CNY 74.10 million), culminating in negative cash flow from operating activities of -CNY 43.33 million and negative free cash flow of -CNY 43.34 million. On the balance sheet, Edensoft carried total assets of ~CNY 437.65 million with cash and cash equivalents of ~CNY 84.24 million. The company held total liabilities of ~CNY 236.85 million and total stockholders’ equity of ~CNY 200.79 million, resulting in a net debt position of -CNY 42.95 million and a cash-rich balance sheet profile by some metrics. Key liquidity ratios show a current ratio of 1.77, quick ratio of 1.26, and cash ratio of 0.36, indicating adequate near-term liquidity despite cash flow headwinds. Management commentary is not contained in the provided transcript. Investors should weigh the revenue strength against margin compression, cash flow depletion, and modest profitability in QQ3 2024 while monitoring the trajectory of cloud services and IT infrastructure adoption. For benchmarking, Edensoft trades with modest margins relative to peers and carries a relatively high enterprise value multiple, underscoring a valuation sensitive to margin expansion and cash flow improvement.