EPS of $0.03 increased by 325.8% from previous year
Gross margin of 100.0%
Net income of 398.89M
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Bank of Gansu Co Ltd (2139.HK) QQ2 2025 Results: Sustained Topline Momentum and Expanding Profitability in a Regional Chinese Bank
Executive Summary
Bank of Gansu delivered a standout QQ2 2025 performance with a substantial year-over-year expansion in revenue and net income, underpinned by a very high gross margin and solid operating leverage. Revenue reached 1.3996 billion CNY, up 94.73% YoY, driving operating income of 389.707 million CNY and a net income of 398.886 million CNY, implying an exceptionally strong quarterly profitability profile for a regional lender. The company maintains a favorable operating margin (~27.85%) and pretax margin (~24.23%), resulting in a net margin of 28.50% for the quarter, with earnings per share of 0.0264 CNY. Despite the robust profitability, liquidity metrics indicate material funding and balance-sheet discipline considerations, as reflected in current and quick ratios near 0.19 and cash ratio of 0.0988, suggesting a tight liquidity position relative to short-term obligations. The balance sheet also shows a modest debt footprint (debt ratio ~7.5%), but a very high equity multiplier (~12.6x) and a reported return on assets of 0.0933% and return on equity of 1.17%, signaling that profitability is heavily influenced by the bank’s equity base and non-operating elements may be at play in the reported figures. The stock trades at depressed valuation multiples (P/B ~0.107x, P/E ~2.28x) with no dividend yield reported, implying a potentially attractive entry point for value-oriented investors if operational efficiency, asset quality, and liquidity can be maintained. Overall, the QQ2 results demonstrate strong earnings expansion and margin resilience, but investors should monitor liquidity, funding stability, and capital efficiency moving into H2 2025.
Revenue and profitability metrics (CNY):
- Revenue: 1,399,366,000; YoY: +94.73%; QoQ: 0.00%
- Gross Profit: 1,399,366,000; YoY: +94.73%; QoQ: 0.00%
- Gross Profit Margin: 1.0000 (100.0%); QoQ: 0.00%
- Operating Income: 389,707,000; YoY: +304.11%; QoQ: 0.00%
- Operating Margin: 27.85%
- Total Other Income/Expenses (Net): -50,616,000
- Income Before Tax: 339,091,000; Pretax Margin: 24.23%
- Income Tax Expense: 59,795,000
- Net Income: 398,886,000; Net Margin: 28.50%; QoQ: 0.00%
- EPS: 0.0264; Diluted EPS: 0.0264; YoY EPS Growth: +325.81%; QoQ: 0.00%
- Weighted Average Shs Out: 15,070,500,226; Diluted: 15,069,791,000
Key ratios and balance sheet indicators (period-end):
- Current Ratio: 0.189; Quick Ratio: 0.189; Cash Ratio: 0.0988
- Debt Ratio: 0.0753; Debt to Equity: 0.945; Long-Term Debt to Capitalization: 0.486
- Asset Turnover: 0.00327; Fixed Asset Turnover: 0.467; Receivables Turnover: 0.0450
- ROA: 0.0933%; ROE: 1.17%; Return on Capital Employed: 0.461%
- Cash per Share: 2.25; Price-to-Book: 0.107; Price-to-Sales: 2.60; Price-to-Earnings: 2.28
- Operating Cash Flow per Share: -0.694; Free Cash Flow per Share: -0.696
- Dividend Payout Ratio: 0; Dividend Yield: 0%
- Operating Cash Flow to Sales Ratio: -7.48%; Free Cash Flow to Operating Cash Flow Ratio: 1.002
- Capital Expenditure Coverage Ratio (capex vs. cash flow): -473.62
- Price/Earnings to Growth: 0.0202; Price/Sales: 2.60; Price/Book: 0.107
Notes: Some metrics (e.g., gross profit margin and net margins) appear unusually high or 100% in this dataset; interpretation assumes reported values. Asset turnover and ROA/ROE indicate modest efficiency and returns given the bank’s regional profile.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
1.40B
94.73%
0.00%
Gross Profit
1.40B
94.73%
0.00%
Operating Income
389.71M
304.11%
0.00%
Net Income
398.89M
324.71%
0.00%
EPS
0.03
325.81%
0.00%
Key Financial Ratios
currentRatio
0.19
grossProfitMargin
100%
operatingProfitMargin
27.8%
netProfitMargin
28.5%
returnOnAssets
0.09%
returnOnEquity
1.17%
debtEquityRatio
0.95
operatingCashFlowPerShare
$-0.69
freeCashFlowPerShare
$-0.7
priceToBookRatio
0.11
priceEarningsRatio
2.28
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings call transcript was provided in the dataset; as a result, management quotes and thematic highlights could not be extracted. If a transcript is supplied, expected themes would include strategy execution (digital transformation, rural SME lending), cost control and operating leverage, asset quality and provisioning, and market conditions in regional China.
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Forward Guidance
No explicit forward guidance was disclosed in the provided data. Investors should focus on monitoring (i) trajectory of loan growth and net interest income given a constrained liquidity profile, (ii) asset quality indicators and credit provisioning in the regional lending book, and (iii) cost-to-income dynamics and efficiency improvements. In the absence of explicit guidance, the bank’s ability to sustain profitability hinges on balance-sheet management, funding stability, and continued efficiency gains as it leverages its rural and regional market footprint.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
2139.HK Focus
1.00%
27.80%
1.17%
2.28%
2016.HK
1.00%
23.60%
0.86%
13.76%
2066.HK
1.00%
42.20%
0.62%
5.08%
1216.HK
1.00%
28.20%
2.10%
1.68%
1916.HK
1.00%
30.30%
1.17%
2.12%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
The QQ2 2025 results deliver a positive near-term earnings trajectory, with material YoY improvements in revenue and net income, and resilient margins for a regional bank. Valuation metrics (P/B and P/E) imply an attractive entry point from a value-investing perspective. However, the investment case remains contingent on stabilizing liquidity and improving capital efficiency. The bank should be evaluated on its ability to sustain loan growth while controlling credit risk, convert profitability into stronger cash flow generation, and secure stable funding to support growth without compromising capital adequacy. Pending clearer guidance and stabilization in asset quality and liquidity, the stance should be cautious to moderately constructive, with emphasis on monitoring liquidity, asset quality, and efficiency improvements over the next several quarters.
Key Investment Factors
Growth Potential
Significant YoY growth in revenue and net income indicates strong top-line momentum. Very low P/B and P/E multiples suggest potential upside if profitability and liquidity improve further. Growth potential may stem from expanded rural and SME lending, increased fee-based income, and operational leverage from digitization.
Profitability Risk
Liquidity constraints implied by sub-0.2 current/quick/cash ratios risk funding stability. Low ROA and ROE reflect limited earnings efficiency relative to asset and equity base. Potential asset-quality deterioration in a cyclical Chinese economy and regulatory changes could pressure margins and provisioning.
Financial Position
Conservative leverage with a low debt ratio (~7.5%) and a high equity multiplier (~12.6x) suggests a capital-rich but asset-light profile. Cash per share of 2.25 and a price-to-book of 0.107x indicate strong valuation underpins but capital efficiency is a concern given negative cash flow metrics per share.
SWOT Analysis
Strengths
Strong quarterly profitability with high net margin (28.5%) and operating margin (27.85%).
Very significant YoY revenue growth (+94.7%) and net income uplift (+324.7%).
Low debt burden and conservative capital structure (debt ratio ~7.5%; debt to equity ~0.95).
Cash per share of 2.25 provides some liquidity cushion.
Weaknesses
Liquidity indicators show strain (current/quick/cash ratios around 0.19 and cash ratio 0.0988).
Operating cash flow per share negative (-0.694) and free cash flow per share negative (-0.696), signaling cash generation concerns.
Very low asset turnover and ROA/ROE metrics (ROA ~0.093% and ROE ~1.17%) imply limited efficiency and returns on capital.
Opportunities
Valuation could reflect an underappreciated recovery path in a regional Chinese bank; compelling entry multiples (P/B ~0.107x, P/E ~2.28x).
Expansion opportunities in rural and SME segments through digital channels and product diversification.
Potential fee-based income expansion through corporate and retail services in the bank’s domestic network.
Threats
Macroeconomic headwinds in China affecting loan growth and asset quality.
Regulatory changes and heightened supervision for regional banks could impact provisioning and capital requirements.
Funding market volatility and competition from larger banks and fintech entrants may pressure margins.
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