Executive Summary
Royale Home Holdings Limited reported a challenging QQ1 2025, with revenue of HK$93.27 million, down 32.0% year over year and 35.7% quarter over quarter. The company posted a gross profit of HK$4.95 million and a gross margin of 5.30%, but remained in deep operating loss with EBITDA of HK$-45.32 million and operating income of HK$-57.03 million, culminating in a net loss of HK$143.93 million and an EPS of HK$-0.058. The negative earnings were amplified by substantial non-operating charges (total other income/expenses net of HK$-94.25 million), contributing to a total income before tax of HK$-151.29 million and an income tax expense of HK$9.24 million, leaving net income at HK$-143.93 million. The quarter underscores structural cost pressures: selling, general and administrative expenses totaled HK$61.98 million, representing a significant fixed cost base relative to the modest revenue base.
From a balance sheet perspective, Royale Home exhibits pronounced leverage and liquidity stress. Total liabilities stand at HK$4.02 billion against total assets of HK$5.26 billion, with equity of HK$1.07 billion. The company carries short-term debt of HK$2.784 billion and long-term debt of HK$642 million, leading to a net debt position of HK$3.38 billion and a debt-to-asset ratio of roughly 65%. Liquidity metrics are notably weak: total current assets HK$2.18 billion versus total current liabilities HK$3.23 billion, yielding a current ratio near 0.68 and an extremely tight quick ratio (cash plus receivables) well below 0.10. These dynamics imply heightened refinancing risk and a material need for deleveraging and working-capital optimization.
The investment thesis in the near term remains cautious. Substantial fixed costs, ongoing gross-margin compression, and a negative operating trajectory overshadow any potential tailwinds from the China-focused furnishings market or asset-light monetization options. Management commentary (if provided) would need to focus on cost containment, deleveraging, and leveraging non-core assets (e.g., long-term investments) to restore balance-sheet health. Absent a clear plan to stabilize revenue, improve margins, and reduce leverage, Royale Home’s equity story remains highly sensitive to macro demand, currency, and financing conditions.
Key Performance Indicators
QoQ: -35.66% | YoY:-32.02%
QoQ: -47.44% | YoY:-48.52%
QoQ: -44.86% | YoY:-79.91%
QoQ: -44.89% | YoY:-79.88%
Key Insights
Revenue: HK$93.27m (YoY -32.0%, QoQ -35.66%)
Gross Profit: HK$4.95m; Gross Margin: 5.30%
Operating Income: HK$-57.03m; Operating Margin: -61.15%
EBITDA: HK$-45.32m; EBITDA Margin: -45.59%
Net Income: HK$-143.93m; Net Margin: -154.32%
Earnings per Share (EPS): HK$-0.0581; Diluted EPS: HK$-0.0581
Weighted Avg Shares: 2,477,877,000 (approx.)
Total Assets: HK$5,259.88m
Total Liabilities: HK$4,019.80m
Total Stockholders’ Equity: HK$1,073.97m
Cash & Equivalents: HK$50.11m
Short-term Debt: HK$2,7...
Financial Highlights
Revenue: HK$93.27m (YoY -32.0%, QoQ -35.66%)
Gross Profit: HK$4.95m; Gross Margin: 5.30%
Operating Income: HK$-57.03m; Operating Margin: -61.15%
EBITDA: HK$-45.32m; EBITDA Margin: -45.59%
Net Income: HK$-143.93m; Net Margin: -154.32%
Earnings per Share (EPS): HK$-0.0581; Diluted EPS: HK$-0.0581
Weighted Avg Shares: 2,477,877,000 (approx.)
Total Assets: HK$5,259.88m
Total Liabilities: HK$4,019.80m
Total Stockholders’ Equity: HK$1,073.97m
Cash & Equivalents: HK$50.11m
Short-term Debt: HK$2,784.05m
Long-term Debt: HK$642.34m
Net Debt: HK$3,376.28m
Current Ratio: ~0.68x
Quick Ratio: ~0.09x
Debt to Assets: ~0.65x
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
93.27M |
-32.02% |
-35.66% |
| Gross Profit |
4.95M |
-48.52% |
-47.44% |
| Operating Income |
-57.03M |
7.76% |
23.15% |
| Net Income |
-143.93M |
-79.91% |
-44.86% |
| EPS |
-0.06 |
-79.88% |
-44.89% |
Management Commentary
Transcript not provided in the prompt. No management call quotes or thematic notes are available to extract at this time. Once the earnings call transcript is supplied, I will extract management themes by category (strategy, operations, market conditions) and include context and significance for investors.
Forward Guidance
No explicit guidance was published in the provided QQ1 2025 materials. Given the dramatic year-over-year and quarter-over-quarter declines in revenue and the material leverage burden, any forward-looking assessment hinges on: (1) management-driven cost containment and SG&A rationalization; (2) stabilization or rebound in product demand and pricing power in key China markets; (3) monetization or strategic reallocation of non-core assets (e.g., long-term investments) to ease liquidity; (4) potential debt refinancing or extended maturities. Investors should monitor any updated guidance on revenue trajectory, gross margin targets, capex plans, and deleveraging timetable. Key indicators to watch include cash burn rate (operating cash flow), changes in working capital, and progress on asset disposition or refinancings.