Executive Summary
MEGAIN Holding Cayman Co Ltd delivered a challenging QQ2 2025, with revenue of CNY 35.38 million and a gross profit of CNY 4.97 million, translating to a gross margin of 14.0%. The quarter also produced a material operating loss, with EBITDA of CNY -9.46 million and net income of CNY -19.29 million, driven primarily by elevated operating expenses relative to revenue. Year-over-year metrics deteriorated meaningfully across key profit lines (revenue down ~15.7%, gross profit down ~63%, net income down ~517%), signaling a shift in mix, pricing pressure, or scaling costs as the company navigates a technology hardware environment with competitive cartridge chips and related services.
Despite the weak earnings trajectory, the balance sheet remains exceptionally liquid, underpinned by a very strong current position (current ratio 8.58, quick 7.66, cash ratio 5.49) and minimal leverage (debt ratio 0.0616, debt/equity 0.0696). Cash per share stands at roughly CNY 0.39, and the price-to-book ratio sits at 0.713, suggesting substantial upside potential if profitability and cash generation recover. The company’s operating cash flow per share is negative (approximately -0.0106) and free cash flow per share is also negative (-0.0113), indicating near-term cash burn from operations despite a comfortable liquidity buffer. Turnover metrics reveal stretched working capital dynamics (days sales outstanding ~118 days, days inventory ~94 days, days payables ~38 days) contributing to a cash conversion cycle of about 174 days, which warrants close attention to collections and inventory management going forward.
Looking ahead, MEGAIN faces a mixed risk-reward setup. The company operates in a highly fragmented, price-competitive segment of cartridge chips and related components, with peer metrics showing wide dispersion in gross margins and valuation multiples. Absent a clear operational turnaround or strategic pivot to higher-margin offerings (e.g., design services, integrated circuit components, or licensing arrangements), the QQ2 2025 results suggest a cautious stance on near-term profitability. An investment thesis would hinge on management delivering structural cost containment, improved product mix, and stronger top-line growth or higher-margin revenue streams, while maintaining the favorable liquidity position to weather a protracted earnings trough.
Key Performance Indicators
QoQ: 0.00% | YoY:-1 173.46%
QoQ: 0.00% | YoY:-516.71%
QoQ: 0.00% | YoY:-517.98%
Key Insights
Revenue: CNY 35,383,000 (YoY -15.68%, QoQ 0.00%)
Gross Profit: CNY 4,969,000 (Gross margin 14.04%; YoY -63.10%, QoQ 0.00%)
Operating Expenses: CNY 16,003,500 (R&D 5,100,500; G&A 7,122,000; Selling & Marketing 3,473,000; SG&A total 11,903,000)
EBITDA: CNY -9,460,000 (EBITDA Margin -26.74%)
Operating Income: CNY -11,034,500 (Operating margin -31.19%)
Total Other Income/Expenses: CNY -7,319,000
Income Before Tax: CNY -18,353,500 (Pretax margin -51.87%)
Tax Expense: CNY 934,000
Net ...
Financial Highlights
Revenue: CNY 35,383,000 (YoY -15.68%, QoQ 0.00%)
Gross Profit: CNY 4,969,000 (Gross margin 14.04%; YoY -63.10%, QoQ 0.00%)
Operating Expenses: CNY 16,003,500 (R&D 5,100,500; G&A 7,122,000; Selling & Marketing 3,473,000; SG&A total 11,903,000)
EBITDA: CNY -9,460,000 (EBITDA Margin -26.74%)
Operating Income: CNY -11,034,500 (Operating margin -31.19%)
Total Other Income/Expenses: CNY -7,319,000
Income Before Tax: CNY -18,353,500 (Pretax margin -51.87%)
Tax Expense: CNY 934,000
Net Income: CNY -19,287,500 (Net margin -54.51%; EPS -0.0372; Diluted EPS -0.0372)
Weighted Avg Shares: 518.76 million
Liquidity & Leverage: Current ratio 8.58; Quick ratio 7.66; Cash ratio 5.49; Debt ratio 0.0616; Debt/Equity 0.0696; Price-to-Book 0.713; Price-to-Sales 6.69; Enterprise Value Multiple -7.41; Price/Earnings (negative) -3.07
Efficiency & Working Capital: DSO 118.2 days; DIO 94.3 days; DPO 38.31 days; Cash Conversion Cycle 174.19 days; Asset Turnover 0.0945; Receivables Turnover 0.761; Inventory Turnover 0.954; Operating Cash Flow per Share -0.0106; Free Cash Flow per Share -0.0113
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
35.38M |
-15.68% |
0.00% |
| Gross Profit |
4.97M |
-63.10% |
0.00% |
| Operating Income |
-11.03M |
-1 173.46% |
0.00% |
| Net Income |
-19.29M |
-516.71% |
0.00% |
| EPS |
-0.04 |
-517.98% |
0.00% |
Key Financial Ratios
operatingProfitMargin
-31.2%
operatingCashFlowPerShare
$-0.01
freeCashFlowPerShare
$-0.01
Management Commentary
No earnings call transcript was provided in the dataset; as a result, no management quotes or thematic quotes could be extracted to accompany the results.
Forward Guidance
No formal forward guidance was disclosed in the QQ2 2025 release. In the absence of explicit targets, the near-term trajectory will likely depend on: (i) cost-control and efficiency initiatives to reduce the operating expense base relative to revenue, (ii) improvements in gross margin through product mix optimization or price discipline, and (iii) working capital management to reduce the cash conversion cycle. Given the company’s current liquidity strength, the primary focus for investors should be whether MEGAIN can transition to more profitable revenue streams or achieve meaningful margin expansion. Monitoring management commentary on strategic initiatives (e.g., higher-margin services, design/licensing opportunities, diversification of product offerings) will be critical to gauge achievability of a more favorable trajectory over the next few quarters.