Exchange: HKSE | Sector: Industrials | Industry: Engineering Construction
Q2 2025
Published: Jun 30, 2025
Earnings Highlights
Revenue of $3.57B up 116.9% year-over-year
EPS of $0.05 increased by 171.5% from previous year
Gross margin of 8.3%
Net income of 24.28M
"N/A" -
CR Construction Group Holdings Limited (1582.HK) QQ2 2025 Results Analysis: Revenue Surge Amid Margin Pressure in HK/SEA Construction
Executive Summary
CR Construction Group Holdings Limited reported QQ2 2025 revenue of HKD 3.5709 billion, up 116.9% year over year, underscoring a strong top-line rebound. Despite the robust revenue quantum, profitability remains modest with gross margin of 8.27%, operating margin of 1.71%, and net margin of 0.68%, translating to net income of HKD 24.28 million and earnings per share of HKD 0.0486. The period benefited from higher volume and a favorable project mix, but cost absorption and overhead leverage left margins thin as the business scales. EBITDA stood at HKD 76.21 million, yielding an EBITDA margin of 2.13%, signaling limited operating leverage in the quarter.
Key Performance Indicators
Revenue
3.57B
QoQ: 0.00% | YoY:116.89%
Gross Profit
295.42M
8.27% margin
QoQ: 0.00% | YoY:257.71%
Operating Income
61.01M
QoQ: 0.00% | YoY:160.53%
Net Income
24.28M
QoQ: 0.00% | YoY:171.72%
EPS
0.05
QoQ: 0.00% | YoY:171.51%
Revenue Trend
Margin Analysis
Key Insights
Revenue: HKD 3,570,868,000 for QQ2 2025; YoY growth: 116.89% (peers show more volatility in margin profiles).
Gross Profit: HKD 295,417,000; Gross Margin: 8.27%; YoY gross profit up 257.71% indicating substantial scale benefits from higher activity, albeit with cost pressures.
Context versus Peers
- Compared to select industrials peers, gross margins in QQ2 2025 for CR Construction (~8.27%) are below leaders like 1553.HK (~17.1%) and 1545.HK (~31.6%) in the period, with CR’s net margin (~0.68%) also materially lower than peers with more favorable cost structures. Valuation appears inexpensive (P/E around 2.2) versus some peers, albeit with weaker cash flow generation and higher leverage.
Outlook and Implications
- The revenue rebound is a positive signal, but margin recovery and cash generation remain critical over the near term. The company faces ongoing margin pressure from project mix, fixed cost absorption, and working capital considerations. Investors should monitor project backlog execution, tender discipline, and the cadence of capex funded by operations.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
3.57B
116.89%
0.00%
Gross Profit
295.42M
257.71%
0.00%
Operating Income
61.01M
160.53%
0.00%
Net Income
24.28M
171.72%
0.00%
EPS
0.05
171.51%
0.00%
Key Financial Ratios
currentRatio
1.13
grossProfitMargin
8.27%
operatingProfitMargin
1.71%
netProfitMargin
0.68%
returnOnAssets
0.47%
returnOnEquity
3.47%
debtEquityRatio
1.4
operatingCashFlowPerShare
$-0.31
freeCashFlowPerShare
$-0.33
dividendPayoutRatio
37.1%
priceToBookRatio
0.31
priceEarningsRatio
2.21
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript availability: No earnings-call transcript data were provided in the supplied materials. As a result, management-specific quotes or thematic takeaways from a live or recorded call could not be incorporated. If a transcript becomes available, key themes to extract would include: project backlog stability, tender strategy, cost control initiatives, procurement leverage, and any guidance on 2025–2026 targets.
N/A
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N/A
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Forward Guidance
Guidance absence: The material does not present explicit management targets or forward-looking guidance. Given the current set of results, a cautious to neutral outlook is prudent. Scenarios:
- Base case: Revenue growth moderates toward single digits as project execution normalizes; margin expansion requires better cost control and mix optimization; FCF remains negative in the near term due to working capital needs.
- Upside case: Continued strength in HK and Malaysia project awards leads to higher scale with improved absorption of fixed costs and potential margin uplift to the low-to-mid teens.
- Risks: Tender price competition, commodity price volatility, and protracted receivables cycles could limit profitability and cash generation. Investors should monitor backlog progression, payment terms, and macro-driven demand in construction markets.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
1582.HK Focus
8.27%
1.71%
3.47%
2.21%
1553.HK
17.10%
7.12%
7.35%
1.60%
1545.HK
31.60%
-11.30%
-4.84%
-2.46%
1401.HK
8.48%
-0.04%
2.95%
21.97%
1587.HK
19.10%
7.70%
4.01%
3.51%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
CR Construction Group is trading at a historically low earnings multiple with a fragile cash-flow profile but a meaningful top-line rebound in QQ2 2025. The stock could offer upside if the company can improve gross margin through better project selection and cost containment, while generating positive free cash flow and reducing leverage. Given current indicators, the stance is cautiously optimistic with a focus on margin stabilization and cash flow conversion. Investors should monitor backlog execution, receivables days, capex needs, and any disclosed guidance in future quarters to reassess the risk-reward profile.
Key Investment Factors
Growth Potential
Strong revenue potential from ongoing and announced infrastructure and public works projects in Hong Kong and Malaysia; potential scale benefits as project execution accelerates and overheads spread over a larger base.
Profitability Risk
High reliance on tender-driven construction cycles; negative free cash flow and modest liquidity metrics suggest funding needs and sensitivity to working capital movements; leverage remains elevated relative to some peers.
Financial Position
Moderate liquidity with current ratio around 1.13; net debt burden reflected in debt-to-equity of ~1.40 and total debt to capitalization of 0.58. Margins are thin; earnings quality requires sustained operating leverage and cash flow improvement.
SWOT Analysis
Strengths
Established market presence in Hong Kong and Malaysia with a long operating history (founded in 1967).
Diverse service offering across building construction, repair, alterations, and maintenance, serving public and private sectors.
Solid revenue execution in QQ2 2025 with YoY growth and improved scale.
Weaknesses
Low gross and net margins, indicating limited operating leverage and cost absorption challenges.
Negative free cash flow and negative operating cash flow per share; reliance on working capital to fund operations.
Relatively high leverage (debt-to-equity ~1.40) and modest liquidity risk buffers.
Opportunities
Pipeline of public infrastructure in HK and growth opportunities in Malaysia could sustain demand.
Potential for margin improvement through better project mix, procurement efficiency, and cost control.
Capacity to leverage scale for better overhead absorption over time.
Threats
Tender competition and cyclicality in the construction sector.
Macroeconomic headwinds in HK/Malaysia impacting public/private project awards.
Working capital volatility and potential funding stress if receivables lengthen.
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