Zhongyuan Bank Co Ltd (1216.HK) Q2 2025 Earnings Report

Zhongyuan Bank reported a Q2 2025 set of results that show robust topline growth alongside meaningful earnings expansion. Revenue for the quarter stood at 5.4916 billion CNY, up 53.1% year over year, with gross profit matching revenue per the reported gross margin of 100.0%. Operating income reached 1.5491 billion CNY, a year-over-year increase of 137.2%, resulting in an operating margin of 28.21%. Net income totaled 2.0336 billion CNY, up 191.3% YoY, delivering an EPS of 0.0516 CNY (diluted 0.0516 CNY), aided by a favorable net income margin of 37.03%. Despite strong earnings, the balance sheet and cash flow profile reveal structural intensification and liquidity considerations: total assets of 1.408 trillion CNY versus total liabilities of 1.308 trillion CNY, and a negative operating cash flow of 19.52 billion CNY for the period, driven by significant working capital outflows and non-cash adjustments reflected in other working capital items. Free cash flow was negative by roughly 19.80 billion CNY. The bank also holds substantial long-term investments (about 672.26 billion CNY), contributing to a large asset base but weighing on cash generation. The liquidity metrics are tight by conventional standards (current ratio and quick ratio near 0.17x) despite a substantial cash balance (cash and cash equivalents of 153.42 billion CNY). Valuation portrays a stock that trades at a very low multiple to book (P/B ~0.14x) and earnings (P/E ~1.68x), suggesting material upside if liquidity and asset quality stabilize. Investors should monitor deposit trends, asset quality, capital adequacy, and the realization of potential gains from the investment portfolio as catalysts for a derisked, more sustainable growth path.