EPS of $0.01 decreased by 59.9% from previous year
Gross margin of 37.7%
Net income of 11.24M
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XXF Group Holdings Ltd (2473.HK) QQ1 2025 Results – Revenue Growth in China Auto Credit Services with Leverage and Cash-Flow Constraints
Executive Summary
XXF Group Holdings Ltd reported QQ1 2025 results that show meaningful topline growth, underpinned by activity in the Chinese auto credit services market. Revenue reached 306.53 million CNY, up 21.45% year over year, though sequential performance declined by 7.30% quarter over quarter. Gross profit was 115.44 million CNY with a robust gross margin of 37.66%, and EBITDA stood at 93.07 million CNY (EBITDA margin ~30.36%), reflecting disciplined cost control in a light-to-moderate risk environment. Operating income was 57.41 million CNY (margin ~18.73%), while net income was 11.24 million CNY (net margin 3.67%), with earnings per share of 0.0073 CNY and diluted EPS of 0.0069 CNY.
The quarter carries notable leverage and cash-flow characteristics. Operating cash flow per share was negative at -0.0094 CNY and free cash flow per share was -0.0508 CNY, while cash per share stood at 0.203 CNY. The company posted a working capital cycle of roughly 301 days, including a receivables turnover implying extended collection periods (DSO ~229 days). Balance-sheet metrics show a high degree of gearing (debt ratio ~72%, debt-to-equity ~2.9) and an overall capitalization structure where long-term debt to capitalization is 0.597 and total debt to capitalization is 0.744.
Management commentary is not available in the provided transcripts, limiting the ability to quote direct management views. Nevertheless, near-term risks center on the sustainability of receivables collection, deleveraging trajectories, and near-term cash flow generation, which will be critical to monitor given the elevated leverage and lack of dividend payout. Investors should focus on credit quality metrics, cost control effectiveness, and any indicated guidance on capital allocation or deleveraging plans for the balance of 2025.
Key Performance Indicators
Revenue
306.53M
QoQ: -7.30% | YoY:21.45%
Gross Profit
115.44M
37.66% margin
QoQ: 0.78% | YoY:10.22%
Operating Income
57.41M
QoQ: 9.88% | YoY:6.52%
Net Income
11.24M
QoQ: 10.85% | YoY:14.12%
EPS
0.01
QoQ: 10.61% | YoY:-59.88%
Revenue Trend
Margin Analysis
Key Insights
Current ratio: 1.31; Quick ratio: 1.19; Cash ratio: 0.26.
Debt ratio: 0.72; Debt/Equity: 2.90; Long-term debt to capitalization: 0.597; Total debt to capitalization: 0.744.
Revenue: 306,532,500 CNY; YoY +21.45%; QoQ -7.30%.
Gross Profit: 115,437,000 CNY; YoY +10.22%; QoQ +0.78%; Gross Margin: 37.66%.
EBITDA: 93,067,500 CNY; EBITDA Margin: 30.36%.
Operating Income: 57,409,000 CNY; Operating Margin: 18.73%.
Total Other Income/Expenses Net: -43,449,000 CNY.
Income Before Tax: 13,960,000 CNY; Pretax Margin: 4.55%.
Income Tax Expense: 2,675,000 CNY.
Net Income: 11,243,000 CNY; Net Margin: 3.67%.
EPS: 0.0073 CNY; Diluted EPS: 0.0069 CNY; YoY EPS change: -59.88%; QoQ EPS change: +10.61%.
Balance Sheet & Cash Flow:
- Current ratio: 1.31; Quick ratio: 1.19; Cash ratio: 0.26.
- Debt ratio: 0.72; Debt/Equity: 2.90; Long-term debt to capitalization: 0.597; Total debt to capitalization: 0.744.
- Receivables Turnover: 0.393; Payables Turnover: 6.70; Inventory Turnover: 1.248; Asset Turnover: 0.0899.
- Operating Cash Flow per Share: -0.0094; Free Cash Flow per Share: -0.0508; Cash per Share: 0.203.
- Price Metrics (end of QQ1 2025): P/E ~231x; P/B 12.27x; P/S 33.90x; Dividend Yield: 0%.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
306.53M
21.45%
-7.30%
Gross Profit
115.44M
10.22%
0.78%
Operating Income
57.41M
6.52%
9.88%
Net Income
11.24M
14.12%
10.85%
EPS
0.01
-59.88%
10.61%
Key Financial Ratios
currentRatio
1.31
grossProfitMargin
37.7%
operatingProfitMargin
18.7%
netProfitMargin
3.67%
returnOnAssets
0.33%
returnOnEquity
1.33%
debtEquityRatio
2.9
operatingCashFlowPerShare
$-0.01
freeCashFlowPerShare
$-0.05
priceToBookRatio
12.27
priceEarningsRatio
231.03
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Note: No earnings call transcripts were provided in the data set. As a consequence, management quotes or transcript-driven themes cannot be cited directly. The following themes are common in this sector and relevant to XXF’s QQ1 2025 context: (1) credit quality and risk controls amid a slowing macro; (2) operating efficiency gains to offset high funding costs; (3) capital allocation and deleveraging plans; (4) potential cross-sell opportunities through IT and insurance agency services. Investors should seek management commentary on credit risk metrics (delinquency rates, write-offs), funding costs, and any forward-looking guidance once transcripts are available.
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Forward Guidance
No explicit forward guidance was disclosed in the provided data. Given the leverage and negative cash flow indicators, investors should watch for management's commentary on deleveraging timelines, targeted reduction in receivables days, and plans to improve cash conversion. Key catalysts would include: (a) better collections efficiency to reduce DSO and CCC; (b) disciplined capital expenditure and working capital management; (c) any potential divestitures or asset-light initiatives; (d) stabilization or improvement in the Chinese auto financing market and lease penetration. In the absence of formal guidance, a conservative stance is warranted until there is visible deleveraging and sustained FCF generation.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
2473.HK Focus
37.66%
18.70%
1.33%
231.03%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
QQ1 2025 presents a mixed set of signals. The top line shows meaningful YoY growth, supported by a favorable margin structure, but profitability is thin after interest and non-operating items, and cash flow remains negative. The company’s heavy leverage and extended working capital cycle create funding and liquidity headwinds that could be material if market conditions deteriorate. The stock trades at high multiples (P/E ~231x, P/S ~33.9x) with no dividend, which places a premium on sustained earnings quality and cash flow improvement. Your investment thesis should hinge on: (1) a credible deleveraging plan and clear path to recurring free cash flow acceleration; (2) stabilization or improvement in AR collections and working capital efficiency; (3) any near-term guidance on cost containment and capital allocation. Until deleveraging and cash flow normalization are evident, the investment stance should be cautious, with a watchlist focus on leverage trends, cash flow trajectory, and management commentary on strategic pivots.
Key Investment Factors
Growth Potential
Potential growth from scale in auto credit services and auto leasing in PRC, with opportunities to monetize IT and insurance agency services across a broader dealer network. Expansion potential depends on the pace of new origination, risk-adjusted pricing, and the ability to convert receivables into cash efficiently.
Profitability Risk
Material risk from high leverage (debt ratio ~0.72; debt/equity ~2.90), sizeable working capital burden (DSO ~229 days; CCC ~288 days), and negative cash flow per share. Dependency on the Chinese auto market and credit cycles exposes the business to cyclical demand, interest-rate changes, and regulatory shifts. No dividend provides limited income optionality for investors.
Financial Position
Balanced by a current ratio above 1.0, but with high leverage and negative operating/free cash flow per share. Cash per share is modest (0.203 CNY), limiting flexibility to fund working capital needs and growth from internal cash flow. Valuation remains rich (P/E ~231x, P/S ~33.9x), implying investor scrutiny on earnings quality and capital discipline.
SWOT Analysis
Strengths
Revenue growth in QQ1 2025 (YoY +21.45%), indicating top-line momentum.
Gross margin around 37.7% demonstrates relatively resilient product mix in credit services and leasing.
Positive EBITDA and operating income, with EBITDA margin ~30.36% and operating margin ~18.73%.
Diversified service offerings (auto finance lease, operating lease, IT and insurance agency services) potentially enabling cross-sell dynamics.
Weaknesses
High leverage: debt ratio ~0.72 and debt/equity ~2.90, with limited cushion on interest coverage.
Negative operating cash flow per share (-0.0094) and negative free cash flow per share (-0.0508), signaling cash-generation fragility.
Extended receivables cycle (DSO ~229 days) and long cash conversion cycle (~288 days) imply working capital strain.
No dividend payout and weak free-cash-flow generation may deter income-focused investors.
Opportunities
Market recovery in PRC auto financing could lift origination volumes and credit performance.
Cross-selling opportunities via IT and insurance agency services to dealer networks could lift ROE with higher-margin franchises.
Operational improvements and deleveraging could enhance cash flow metrics and balance sheet resilience.
Threats
Credit risk from macroeconomic cycles and auto market volatility in China.
Regulatory changes affecting automotive financing, insurance agency operations, or IT service providers.
Competitive pressures in the financial services and auto-credit space; valuation may reflect cyclical risk.