Executive Summary
Tak Lee Machinery Holdings Limited reported QQ4 2024 revenue of HKD146.752 million, up 4.5% year over year, driven by steady demand for heavy equipment sales and leasing activities in Hong Kong. The company delivered positive EBITDA of HKD20.289 million and a modest operating income of HKD2.296 million, but net income declined to a loss of HKD1.424 million in the quarter, primarily due to tax and minor non-operating adjustments. Cash flow remains robust, with net cash provided by operating activities of HKD52.662 million and free cash flow of HKD49.478 million, culminating in a strong liquidity position (cash balance of HKD73.765 million and net cash position of HKD68.001 million). The balance sheet shows manageable leverage and ample liquidity, underpinned by a high current ratio (12.64x) and a solid equity base (total stockholders’ equity of HKD443.727 million).
Looking at the four-quarter run rate, revenue grew modestly YoY (4.53%), while gross profit rose ~7.0% YoY, and EBITDA remained positive. However, the net income for QQ4 2024 was negative, reflecting a tax expense that outweighed pre-tax income in the period and a low earnings base. The business remains cash-generative with strong operating cash conversion and a conservative balance sheet with persistent net cash. The market remains cyclical for agricultural machinery and the sustainability of earnings will hinge on maintenance/parts revenue, utilization of leased assets, and the company’s ability to optimize tax and non-operating costs. Investors should monitor demand cycles in Hong Kong and potential expansion opportunities, as well as any changes in regulatory or tax environments that could impact profitability.
Key Performance Indicators
QoQ: 150.66% | YoY:93.92%
QoQ: -100.00% | YoY:-186.04%
QoQ: -100.00% | YoY:-182.35%
Key Insights
Revenue: HKD146,752,000 (QoQ: 100.00%; YoY: 4.53%); Gross Profit: HKD24,929,000 (YoY: 7.04%; QoQ: 96.14%); EBITDA: HKD20,289,000 (EBITDARatio: 13.83%); Operating Income: HKD2,296,000 (Operating Margin: 1.56%); Net Income: -HKD1,424,000 (Net Margin: -0.97%); EPS: -HKD0.0014 (Diluted: -HKD0.0014)
Liquidity and cash flow: Net cash provided by operating activities HKD52,662,000; Free cash flow HKD49,478,000; Cash at end of period HKD73,765,000; Net debt position: -HKD68,001,000 (net cash)
Balanc...
Financial Highlights
Revenue: HKD146,752,000 (QoQ: 100.00%; YoY: 4.53%); Gross Profit: HKD24,929,000 (YoY: 7.04%; QoQ: 96.14%); EBITDA: HKD20,289,000 (EBITDARatio: 13.83%); Operating Income: HKD2,296,000 (Operating Margin: 1.56%); Net Income: -HKD1,424,000 (Net Margin: -0.97%); EPS: -HKD0.0014 (Diluted: -HKD0.0014)
Liquidity and cash flow: Net cash provided by operating activities HKD52,662,000; Free cash flow HKD49,478,000; Cash at end of period HKD73,765,000; Net debt position: -HKD68,001,000 (net cash)
Balance sheet health: Total assets HKD491.701 million; Total liabilities HKD47.974 million; Total stockholders’ equity HKD443.727 million; Current ratio 12.64x; Quick ratio 7.09x; Cash ratio 3.04x; Inventory HKD134.513 million; Receivables HKD83.261 million; Debt total HKD5.764 million; Low leverage and abundant liquidity support ongoing operations and potential capex or selective acquisitions.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
146.75M |
4.53% |
100.00% |
| Gross Profit |
24.93M |
7.04% |
96.14% |
| Operating Income |
2.30M |
93.92% |
150.66% |
| Net Income |
-1.42M |
-186.04% |
-100.00% |
| EPS |
0.00 |
-182.35% |
-100.00% |
Key Financial Ratios
operatingProfitMargin
1.56%
operatingCashFlowPerShare
$0.05
freeCashFlowPerShare
$0.05
Management Commentary
Note: Earnings transcript data is not provided in the supplied document. As a result, this section uses the QQ4 2024 financials alongside management commentary typically found in quarterly releases. Key themes to watch in management communications (when available) would include: 1) Revenue drivers (sales versus leasing mix) and utilization of heavy equipment fleets; 2) Maintenance and spare parts as a stable, high-margin revenue stream; 3) Tax strategy and any non-cash items impacting reported net income; 4) Capex plans and working capital management; 5) Market conditions in Hong Kong and regional opportunity assessments.
Forward Guidance
The company did not publish formal forward-looking targets within the QQ4 2024 materials. Given the cyclicality of the agricultural machinery sector and Tak Lee’s cash-generative profile, the near-term outlook hinges on: (i) continued demand for heavy equipment sales and fleet utilization in Hong Kong; (ii) growth in service, maintenance, and spare parts revenue to stabilize gross margins; (iii) tax efficiency and potential non-operating items affecting reported results; (iv) macro factors such as interest rates and procurement cycles influencing capex in construction and agriculture. Management should provide visibility on annual revenue trajectory, margin discipline, and any expansion plans (new markets, extended warranties, or leasing depth). Investors should monitor cash conversion, working capital needs, and any changes to tax provisions that could materially impact net income.