HG Semiconductor Limited (6908.HK) Q1 2024 Earnings Report

HG Semiconductor Limited delivered a weak QQ1 2024 performance with a material year-on-year revenue decline and continued operating losses, underscoring an ongoing profitability challenge despite a solid liquidity position. Revenue for the quarter was 17.13 million CNY, down 25.39% year-over-year and 19.78% quarter-over-quarter. Gross profit was 1.36 million CNY, yielding a gross margin of 7.94%, but operating losses persisted at 36.61 million CNY and EBITDA was negative 27.56 million CNY, translating to an EBITDA margin of approximately -160.9% of revenue. Net income registered at -27.12 million CNY, with a net margin of -1.58% and an EPS of -0.0361 CNY. These results reflect outsized selling, general, and administrative costs (SG&A) that overshadow the modest gross profit and the absence of meaningful top-line growth in the period.

On the balance sheet, HG Semiconductor exhibits a strong liquidity profile, reporting cash and cash equivalents of 21.69 million CNY and short-term investments of 34.60 million CNY, for total cash and short-term investments of 56.29 million CNY. The current ratio stood at 9.79 and the quick ratio at 8.07, signaling ample short-term liquidity despite the operating weakness. The company carries minimal leverage (total debt of 10.0 million CNY and net debt of about -11.69 million CNY, i.e., net cash) which provides a cushion to weather near-term cash pressures. However, the QQ1 results do not support a near-term turnaround in profitability without meaningful improvements in gross margins and operating efficiency.

Management commentary is not available in the provided transcript, limiting qualitative insight into forward guidance or strategic pivots for QQ2 2024. Given the current financials, investors should focus on margin restoration, SG&A rationalization, product mix optimization, and any steps toward monetizing non-core assets or refining the subcontracting business to stabilize cash flows. The market-facing takeaway remains cautious: a stronger LVDS (LED module) demand recovery or cost-control initiatives will be critical to shift HG Semiconductor from a negative profitability trajectory toward sustainable cash generation.