Legend Strategy (1355.HK) Q3 2024 Earnings Report

Legend Strategy International Holdings Group Company Limited reported QQ3 2024 revenue of HKD 10.79 million, marking a YoY decline of 41.9% but a QoQ uptick of 12.96%. Gross profit reached HKD 6.13 million with a robust gross margin of 56.8%, yet the company remained loss-making at the operating level, posting an operating loss of HKD 17.74 million and a net loss of HKD 12.17 million. EBITDA was modest at HKD 0.673 million, with an EBITDA margin of 6.2%, underscoring limited operating leverage in near-term profits. The quarter featured a substantial drag from other expenses (HKD 17.02 million) and overall operating expenses of HKD 23.87 million, contributing to a negative EBIT and net income despite some margin resilience in gross profit.

From a cash flow perspective, operating cash flow (OCF) was positive at HKD 3.27 million and free cash flow after minimal capital expenditure was HKD 3.19 million, suggesting some cash generation potential that could support near-term liquidity initiatives. However, the balance sheet reveals material solvency and leverage concerns: total liabilities of HKD 180.4 million vs assets of HKD 75.1 million, and negative equity of HKD 42.4 million. Net debt stood at HKD 151.1 million, with a weak liquidity position (current ratio 0.243, quick ratio 0.237).

Management commentary is not provided in the supplied transcript data, limiting direct quotes to anchor qualitative interpretation. Given the weak profitability, high leverage, and limited liquidity, the outlook hinges on debt remediation, potential asset monetization, and any upcoming guidance on operational efficiency or strategic pivots in the PRC travel lodging market.