Chervon Holdings Limited (2285.HK) Q1 2024 Earnings Report

Chervon Holdings Limited reported a strong start to FY2024 QQ1 (quarter ending 2024-03-31) with solid top-line growth and improving profitability. Revenue of USD 407.8 million rose 10.4% year over year and 28.2% quarter over quarter, supported by a favorable product mix and ongoing demand in key markets. The company delivered a gross margin of 32.9% and an operating margin of 10.7%, translating into EBIT of USD 43.7 million and net income of USD 30.8 million (EPS USD 0.060). Year-over-year profitability improvements were broad: gross profit rose 13.2%, operating income by 29.3%, net income by 25.3%, and EPS by 24.1%. Free cash flow generation remained healthy at USD 48.5 million, and net cash stood at negative USD 58.1 million (i.e., a modest net cash position), underscoring a solid liquidity profile amid modest capital outlays (capex USD 11.0 million; acquisitions net USD -3.45 million). Cash flow from operations was USD 59.6 million, supporting ongoing deleveraging and shareholder-friendly activity (minimal share repurchases of USD 0.89 million in the period). Balance sheet remains lean with total assets of USD 1.94 billion and total liabilities of USD 0.96 billion, yielding a debt-to-asset ratio of ~0.17 and a debt-to-equity ratio of ~0.34. Liquidity metrics are healthy (current ratio 1.79, quick ratio 1.09), though working capital remains relatively capital-intensive (days sales outstanding ~100, days inventory outstanding ~188). The QQ1 performance positions Chervon well for near-term growth, while the absence of formal quarterly guidance requires close monitoring of macro demand signals, channel mix, and inventory management.