Zhongguancun ScienceTech (1601.HK) Q2 2025 Earnings Report

Zhongguancun ScienceTech Leasing reported QQ2 2025 revenue of 126.32 million CNY, flat versus the prior quarter but down 63.65% year over year. The company posted an operating loss of 188.63 million CNY, reflecting a heavy operating expense load (314.95 million CNY) against mid-single digit revenue, resulting in an operating margin of -1.49%. A substantial non-operating gain of 384.26 million CNY (total other income/expenses net) significantly boosted pre-tax income to 195.63 million CNY, yielding a net income of 147.14 million CNY and EPS of 0.091 CNY. The YoY net income uplift of 91.19% is largely attributable to the non-operating item rather than a material improvement in core operations, as evidenced by a negative operating margin and constrained top-line growth.

On the balance sheet and cash flow, leverage remains modest by some metrics (debt ratio 0.246; debt/equity 1.007) with ROA of 1.14% and ROE of 4.69%. However, liquidity signals are weak or not captured in the reported current ratios (current ratio, quick ratio, and cash ratio are all shown as 0), implying potential working capital and liquidity constraints in a stressed scenario. Cash flow from operations per share stands at 0.129 CNY, and free cash flow per share is 0.00933 CNY, suggesting limited recurring cash generation despite a positive per-share cash profile driven by the one-off item.

Compared with listed peers in the dataset, Zhongguancun’s quarterly profitability appears muted (net margin 1.17%) versus peers that show higher net margins in the 5–14% range. The reliance on a large non-operating gain to achieve reported earnings creates a sustainability concern for investors seeking a run-rate, cash-generative business. The company’s business model—finance leasing linked to science and technology innovation—retains long-term growth potential if core operating performance improves and liquidity is stabilized. The investment angle remains nuanced: a potential upside if recurring earnings improve and non-operating income normalizes, but downside risk if the one-off income recurs only sporadically or if liquidity deteriorates.