Net Profit Decline of 68.9% – Yongmao Holdings Limited Financial Analysis for 1H FY2025

Business Description

Yongmao Holdings Limited and its subsidiaries are primarily engaged in the manufacturing, sales, rental, and servicing of tower cranes and related components. The company operates in two main geographical segments: the PRC and Hong Kong & Macau, with additional operations in Singapore.

Industry Position

Yongmao Holdings Limited is a key player in the tower crane industry, competing with other manufacturers and rental service providers. The company has a strong presence in Asia, specifically in the PRC, Hong Kong, and Macau, contributing significantly to its revenue streams.

Revenue Streams and Customer Base

The company’s revenue is derived from the sale of manufactured tower cranes and components, as well as rental and service income. Its customer base primarily includes construction companies and infrastructure developers across its operating regions. Yongmao Holdings leverages its manufacturing capabilities and extensive rental fleet to maintain a competitive advantage.

Financial Statement Analysis

Income Statement

For the six months ended 30 September 2024, Yongmao Holdings Limited reported a revenue decrease of 3.6% to RMB463.8 million. The net profit for the period declined sharply by 68.9%, amounting to RMB14.8 million. The earnings per share also saw a significant drop from 45.23 cents in 1H FY2024 to 12.35 cents in 1H FY2025 [[2]].

Balance Sheet

As of 30 September 2024, the company’s total assets increased to RMB2,229.9 million, with notable increases in property, plant, and equipment, and financial assets at FVOCI. Total liabilities also rose to RMB1,214.3 million, primarily due to higher non-current borrowings and lease liabilities [[3-4]].

Cash Flow Statement

The company experienced a net decrease in cash and cash equivalents amounting to RMB33.1 million in 1H FY2025. This was due to net cash used in operating activities of RMB47.0 million, net cash used in investing activities of RMB3.2 million, and net cash generated from financing activities of RMB17.2 million [[6]].

Key Findings

• Revenue Decline: The company’s revenue decreased by 3.6% compared to 1H FY2024.
• Net Profit Decline: A significant drop in net profit by 68.9% to RMB14.8 million.
• Increased Operating Expenses: Total operating expenses rose by 35.3%, leading to reduced profitability.
• Exchange Loss: The company reported an exchange loss of RMB5.8 million, contributing to higher other operating expenses.
• Higher Borrowings: Increased borrowings led to higher finance costs, impacting net profit.
• No Interim Dividend: No dividend was declared for 1H FY2025.

Special Actions to Improve Profitability

The company has undertaken the disposal of its interest in Yongmao Machinery (Cambodia) Co., Ltd, aiming to restructure its interests and potentially improve profitability [[22]].

Recommendations

For Current Investors

Given the significant decline in net profit and increased operating expenses, it may be prudent for current investors to hold off on making further investments until the company shows signs of improved profitability and better cost management.

For Potential Investors

Prospective investors should closely monitor the company’s financial performance in the upcoming quarters. The current financial instability suggests that it may be wise to wait for more favorable conditions before investing.

Disclaimer

This analysis is based on the financial report provided and reflects the company’s performance as of 30 September 2024. Investors are advised to conduct their own research and consider their financial situation before making investment decisions.