EPS of $0.09 increased by 57.7% from previous year
Gross margin of 100.0%
Net income of 147.14M
"N/A" - N/A
Zhongguancun ScienceTech Leasing Co Ltd (1601.HK) QQ2 2025 Results Analysis – Mixed Operating performance with a sizable non-operating income contribution
Executive Summary
Zhongguancun ScienceTech Leasing reported QQ2 2025 revenue of 126.32 million CNY, flat versus the prior quarter but down 63.65% year over year. The company posted an operating loss of 188.63 million CNY, reflecting a heavy operating expense load (314.95 million CNY) against mid-single digit revenue, resulting in an operating margin of -1.49%. A substantial non-operating gain of 384.26 million CNY (total other income/expenses net) significantly boosted pre-tax income to 195.63 million CNY, yielding a net income of 147.14 million CNY and EPS of 0.091 CNY. The YoY net income uplift of 91.19% is largely attributable to the non-operating item rather than a material improvement in core operations, as evidenced by a negative operating margin and constrained top-line growth.
On the balance sheet and cash flow, leverage remains modest by some metrics (debt ratio 0.246; debt/equity 1.007) with ROA of 1.14% and ROE of 4.69%. However, liquidity signals are weak or not captured in the reported current ratios (current ratio, quick ratio, and cash ratio are all shown as 0), implying potential working capital and liquidity constraints in a stressed scenario. Cash flow from operations per share stands at 0.129 CNY, and free cash flow per share is 0.00933 CNY, suggesting limited recurring cash generation despite a positive per-share cash profile driven by the one-off item.
Compared with listed peers in the dataset, Zhongguancun’s quarterly profitability appears muted (net margin 1.17%) versus peers that show higher net margins in the 5–14% range. The reliance on a large non-operating gain to achieve reported earnings creates a sustainability concern for investors seeking a run-rate, cash-generative business. The company’s business model—finance leasing linked to science and technology innovation—retains long-term growth potential if core operating performance improves and liquidity is stabilized. The investment angle remains nuanced: a potential upside if recurring earnings improve and non-operating income normalizes, but downside risk if the one-off income recurs only sporadically or if liquidity deteriorates.
Income Before Tax: 195,631,868 CNY; Pre-tax Margin: 1.55%
Financial Highlights
Revenue and profitability
- Revenue: 126,324,212 CNY (Q2 2025); YoY change: -63.65%; QoQ change: 0.00%
- Gross Profit: 126,324,212 CNY; Gross Margin: 100.0%
- Operating Income: -188,628,136 CNY; Operating Margin: -1.49%
- Total Other Income/Expenses Net: 384,260,000 CNY
- Income Before Tax: 195,631,868 CNY; Pre-tax Margin: 1.55%
- Income Tax Expense: 48,496,512 CNY
- Net Income: 147,135,356 CNY; Net Margin: 1.16%; EPS: 0.091 CNY
Efficiency and leverage
- ROA: 1.14%; ROE: 4.69%; Asset Turnover: 0.00983; Debt Ratio: 0.246; Debt/Equity: 1.007
- Long-Term Debt to Capitalization: 0.502; Total Debt to Capitalization: 0.502
Cash flow and per-share metrics
- Operating Cash Flow per Share: 0.129 CNY; Free Cash Flow per Share: 0.00933 CNY
- Cash per Share: 0.746 CNY; P/B: 0.432; P/S: 10.73; P/E: 2.30
Liquidity indicators
- Current Ratio / Quick Ratio / Cash Ratio: all reported as 0, signaling potential liquidity testing or data limitations in the quarter
Caveat on the data
- A substantial portion of net income is driven by Non-Operating items (Other Income/Expenses Net), which distorts true operating performance. The current ratio metrics being 0 suggest liquidity risks or incomplete balance sheet detail in the provided dataset.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
126.32M
-63.65%
0.00%
Gross Profit
126.32M
-63.65%
0.00%
Operating Income
-188.63M
-165.96%
0.00%
Net Income
147.14M
91.19%
0.00%
EPS
0.09
57.71%
0.00%
Key Financial Ratios
grossProfitMargin
100%
operatingProfitMargin
-149.3%
netProfitMargin
116.5%
returnOnAssets
1.14%
returnOnEquity
4.69%
debtEquityRatio
1.01
operatingCashFlowPerShare
$0.13
freeCashFlowPerShare
$0.01
priceToBookRatio
0.43
priceEarningsRatio
2.3
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings call transcript was provided in the data. As a result, management commentary, thematic disclosures, and forward-looking guidance typically captured in transcripts are not recoverable from the supplied material. The analysis below integrates only quantitative disclosures and publicly sourced peer benchmarks.
N/A
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N/A
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Forward Guidance
No formal management guidance was disclosed in the provided data. Given the quarter’s heavy reliance on a one-off non-operating gain to report a positive net income, investors should monitor: 1) sustainability of operating revenue growth and core profitability (improvement in operating margin, stable or growing leasing volumes), 2) recurring sources of other income and any potential impairments or one-off gains, and 3) liquidity dynamics, including the ability to meet short-term obligations given zero reported current liquidity ratios. In the context of the broader Chinese financial services and finance-leasing landscape, key external factors to watch include policy shifts affecting technology financing demand, credit risk in tech-sector lending, and macro demand for capital equipment leasing. Targets to watch would be any guidance on annualized operating cash flow generation, impairment provisions, and cost discipline that could convert the reported net income into sustainable free cash flow.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
1601.HK Focus
1.00%
-1.49%
4.69%
2.30%
1740.HK
11.30%
-64.30%
-9.02%
-2.49%
1747.HK
29.70%
9.61%
17.40%
6.85%
1692.HK
24.70%
9.01%
4.55%
13.73%
1713.HK
12.60%
6.98%
4.01%
4.55%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Neutral with cautious watchfulness. The QQ2 2025 results are dominated by a large non-operating gain that masks subpar operating performance. Until the company can demonstrate sustainable operating revenue growth and expanding operating margins, the earnings quality remains questionable. Investors should require clarity on recurring cash generation, impairment provisions, and working-capital stability. A potential upside exists if management can convert the one-off boost into sustainable profitability, supported by stronger leasing volumes in the tech sector and disciplined cost management. Key monitoring factors: core revenue trajectory, operating expense discipline, ongoing liquidity posture, and any disclosures around future non-operating income sources.
Key Investment Factors
Growth Potential
Long-term growth hinges on expanding finance leasing to science/tech SMEs and synergy with the parent Zhongguancun Development Group. Potential upside if core operating revenue stabilizes and margins improve beyond the current negative operating profitability.
Profitability Risk
High reliance on a large non-operating item to post a positive net income; negative operating earnings raise questions about core profitability; weak liquidity indicators (current/quick/cash ratios = 0) imply funding and working-capital risk; elevated SG&A and other expenses relative to revenue warrant scrutiny.
Financial Position
Moderate leverage (debt ratio ~0.25; debt/equity ~1.01) with modest returns (ROA ~1.1%, ROE ~4.7%). Cash generation is tepid (OCF per share 0.129; FCF per share 0.0093) and valuation multiples suggest investors are pricing in earnings potential from non-operating items rather than stable cash flow.
SWOT Analysis
Strengths
Strategic alignment with tech innovation in China via Zhongguancun Development Group
Positive net income in QQ2 2025 helped by non-operating income, providing a near-term earnings signal
Moderate leverage with room to maneuver debt if core profitability improves
Weaknesses
Negative operating margin (-1.49%) and flat QoQ revenue amid a steep YoY decline (-63.65%)
Large other income/expenses item obscuring true operating performance
Zero liquidity indicators (current/quick/cash ratios shown as 0) implying potential working-capital constraints
Opportunities
Growing demand for finance leasing to science/tech firms; potential cross-sell opportunities with the parent group
Policy tailwinds for China’s tech ecosystem could drive leasing volumes
Opportunity to convert non-cash earnings into recurring cash flow through improved operations
Threats
Market cyclicality in tech investment and equipment financing; credit risk in tech-heavy portfolio
Competition from better-margin peers in financial services/leasing
Regulatory changes affecting leasing and subsidy regimes that could alter non-operating income sources
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