CRCC HighTech Equipment (1786.HK) Q4 2024 Earnings Report

CRCC HighTech Equipment reported QQ4 2024 revenue of 698.58 million CNY, down 6.65% year over year (YoY) and flat quarter over quarter (QoQ). The quarter delivered a solid gross profit of 135.37 million CNY, yielding a gross margin of 19.38%, with EBITDA of 59.27 million CNY and operating income of 38.57 million CNY (operating margin 5.52%). Net income was 33.43 million CNY, or 2.2 cents per share (basic and diluted), representing a YoY decline of 33.4% and a QoQ flat profile in EPS. Management’s commentary is not included in the provided transcript data, so the synthesis here relies on reported figures and implied dynamics. Despite a softer top line, gross profit expanded meaningfully versus the prior year (YoY gross profit up ~129.7%), indicating an improved product mix, pricing discipline, or favorable cost absorption. The firm generated strong operating cash flow of 264.75 million CNY and reported free cash flow of 257.69 million CNY, underscoring robust cash generation even as working capital remained elevated. The balance sheet shows a pronounced net cash position (net debt of -1.73 billion CNY), with cash and equivalents of ~1.75 billion CNY and total equity of ~6.04 billion CNY, while total liabilities stand at ~3.08 billion CNY. The company also exhibits a modest leverage profile (total debt to capitalization ~0.27%), suggesting ample financial flexibility to navigate a capital-intensive rail maintenance market. From a relative valuation standpoint, the stock trades at a cautious discount to many industrial peers (P/E around 8.0x, P/B ~0.18x, P/S ~1.53x) with a dividend yield of ~2.14%. Given the cash-generative profile, minimal debt, and a large cash position, CRCC HighTech presents a defensible earnings base even as revenue growth remains constrained in the short term. The key risk remains cyclicality in rail infrastructure spending and potential inventory intensity, which warrants monitoring of order intake and working capital dynamics going into 2025.