Dexin Services Group (2215.HK) Q2 2024 Earnings Report

Dexin Services Group Limited reported QQ2 2024 revenue of 236.6 million CNY, marking a 3.32% year-over-year increase, while quarterly sequencing was flat. The gross margin declined to 21.45% from prior-year levels, and operating margin stood at 9.89% with an EBIT of 23.39 million CNY. Net income totaled 21.08 million CNY, a 33% decline versus the prior-year quarter, with earnings per share of 0.0227 CNY. The earnings backdrop reflects a volume-driven top-line but margin compression driven by a sharper rise in operating costs and SG&A, consistent with a more competitive pricing environment and ongoing pricing/contract mix pressures in the domestic property services market. From a balance sheet perspective, Dexin entered the period with a robust asset base (total assets 1.512 billion CNY) and a healthy liquidity complexion, including cash and short-term investments totaling approximately 471.6 million CNY and a net cash position (net debt negative) of about 173 million CNY. The company generated negative cash flow from operations (-6.39 million CNY) and delivered a negative free cash flow (-7.03 million CNY), with financing activities also contributing to cash outflows (-19.32 million CNY). Despite near-term free-cash-flow constraints, Dexin maintains strong liquidity indicators (current ratio ~2.01, quick ratio ~1.99). Looking ahead, the China property-services cycle remains pressured by slower property sales and a cautious developer environment. Dexin’s strategic levers include expanding value-added services (smart community solutions, property-related services) and cost-control initiatives aimed at stabilizing margins and strengthening working-capital efficiency. The company’s tangible net cash position and modest leverage provide a buffer as it seeks to improve profitability through service mix optimization and operational efficiency. Investors should monitor receivables days outstanding, working capital dynamics, and the progression of higher-margin service lines that could partially offset near-term margin headwinds.