Best Food Holding Company (1488.HK) Q1 2025 Earnings Report

Best Food Holding Company Limited reported QQ1 2025 revenue of 97.73 million CNY, down 22.98% year over year and 18.69% quarter over quarter, as disclosed in the quarterly results. Gross profit was 19.68 million CNY with a gross margin of 20.14%, reflecting ongoing pricing, mix, and cost headwinds within the restaurant portfolio. Operating income stood at 11.70 million CNY, yielding an operating margin of 11.97%; however, the company posted a bottom-line loss driven by a substantial negative item in total other income/expenses of 29.49 million CNY, resulting in a net loss of 16.43 million CNY and a negative earnings per share of 0.0104 CNY. YoY, net income declined from prior quarters but improved on a per-share basis, with earnings per share of -0.0104 CNY, reflecting an ongoing deleveraging and profitability challenge in a highly levered capital structure.

Cash flow dynamics show a positive operating cash flow of 8.31 million CNY and a free cash flow of 6.32 million CNY after a capex outflow of 1.99 million CNY. The balance sheet remains heavily leveraged and structurally challenged: total assets of 772.97 million CNY versus total liabilities of 1,023.16 million CNY, and equity of -276.48 million CNY. The company carries a total debt burden of 776.35 million CNY with a net debt of 752.01 million CNY. The current ratio is a stressed 0.18x, signaling near-term liquidity risk despite positive operating cash flow, underscoring the need for balance sheet deleveraging and capital structure optimization.

Looking forward, there is no explicit forecast from management in the QQ1 release. The near-term investment thesis hinges on stabilizing and growing same-store sales, further enhancing store-level profitability, and accelerating deleveraging. Investors should monitor management’s actions on cost control, working capital optimization, potential franchising accelerants, and any strategic asset monetization plans as key catalysts for improved liquidity and earnings power over the ensuing quarters.