CRCC HighTech Equipment (1786.HK) Q3 2024 Earnings Report

CRCC HighTech Equipment Corporation Limited delivered a profit-positive QQ3 2024 despite a material step-down in quarterly revenue. Revenue for the quarter ended 2024-09-30 came in at 698.58 million CNY, down 6.65% year-over-year and 18.88% quarter-over-quarter, reflecting a softer top line in a seasonally uneven rail infrastructure cycle. Notwithstanding the demand headwinds, the company posted a gross profit of 135.37 million CNY with a gross margin of 19.38%, and an operating profit of 38.57 million CNY (operating margin 5.52%), supported by disciplined cost controls and a favorable product mix that helped offset ongoing revenue weakness. Net income stood at 33.43 million CNY, yielding a net margin of 4.79% and earnings per share (EPS) of 0.022 CNY. EBITDA was 59.27 million CNY, with an EBITDA margin of 8.48%, underscoring a cash-generative core despite muted top-line growth. The company generated robust operating cash flow of 264.75 million CNY in the quarter, contributing to a free cash flow of 257.69 million CNY. A substantial working capital change (+208.34 million CNY) and a sizable accounts receivable balance (~2.16 billion CNY) framed the cash dynamics, while inventories remained elevated (~2.88 billion CNY), indicating a working-capital-intensive business cycle inherent to heavy equipment manufacturing. The balance sheet shows a strong liquidity position with cash and cash equivalents of ~1.75 billion CNY and a net cash position of approximately -1.73 billion CNY when netting out total debt (~16.1 million CNY). The company maintains a solid equity base (total stockholders’ equity ~6.04 billion CNY) and a conservative balance sheet with very modest leverage (debt-to-equity and debt-to-capitalization metrics near zero). From an investment standpoint, CRCC HighTech remains well-positioned on a cash-generative spine, with potential upside tied to rail capex cycles, international expansion, and aftermarket/service growth. However, the revenue trajectory and continued inventory build warrant close monitoring of backlog conversion, pricing power, and margin resilience. The stock trades at relatively modest valuations by traditional metrics (P/E ~7.4x, P/B ~0.16x) despite a 2.3% dividend yield, suggesting upside if the company can stabilize volumes and sustain cash-generation momentum over the coming quarters.