EPS of $0.01 increased by 62.8% from previous year
Gross margin of 24.8%
Net income of 7.00M
"N/A" - N/A
Tak Lee Machinery Holdings Limited (2102.HK) QQ1 2025 Results – Resilient profitability and strong liquidity amid seasonality in Hong Kong’s agricultural machinery market
Executive Summary
Tak Lee Machinery Holdings Limited reported QQ1 2025 revenue of HKD 75.73 million, delivering a gross profit of HKD 18.76 million and a net income of HKD 7.00 million. The quarter shows a robust year-over-year improvement in demand and profitability metrics, underpinned by a high gross margin of 24.76% and an operating margin of 11.20%, with EBITDA of HKD 17.14 million. However, quarterly results were seasonally depressed relative to the prior quarter, with revenue down 48.4% QoQ from HKD 146.75 million in Q4 2024, reflecting the cyclical nature of heavy equipment sales and leasing in the Hong Kong market. The company generated HKD 25.07 million of operating cash flow and free cash flow, and maintained a strong liquidity profile with a net cash position of approximately HKD 102.45 million after accounting for debt, dividends, and financing activities. Management guidance was not issued in the disclosed materials; investors should monitor fleet utilization, lease demand, and fleet renewal cycles going forward. Valuation remains conservative by traditional metrics, with a price-to-earnings ratio around 5.2x and a price-to-book of ~0.33x, complemented by a dividend yield near 5.2%.*
Revenue: HKD 75.73m (YoY +14.24%, QoQ -48.39%)
- Gross Profit: HKD 18.76m; Gross Margin: 24.76%
- EBITDA: HKD 17.14m; EBITDA Margin: 22.64%
- Operating Income: HKD 8.48m; Operating Margin: 11.20%
- Net Income: HKD 7.00m; Net Margin: 9.24%
- EPS: HKD 0.007 (diluted HKD 0.007); Weighted Avg Shares: 1.0000b
- Cash Flow: Operating Cash Flow HKD 25.07m; Free Cash Flow HKD 25.07m; Dividends Paid HKD 7.50m; Net Financing cash flow HKD -8.68m; Forex impact HKD -0.43m
- Balance Sheet: Cash & Equivalents HKD 105.86m; Total Current Assets HKD 320.31m; Total Assets HKD 493.02m; Total Liabilities HKD 50.30m; Total Equity HKD 442.73m; Net Debt = -HKD 102.45m
- Liquidity Ratios: Current 11.40x; Quick 6.50x; Cash 3.77x
- Valuation: P/E ~5.18x; P/B ~0.33x; Dividend Yield ~5.17%
- Industry peers (selected): 2116.HK P/E ~11.62x; 2108.HK and 2182.HK show varied capital structures; overall sector margin dispersion is evident across HK-listed equipment players
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
75.73M
14.24%
-48.39%
Gross Profit
18.76M
15.82%
-24.76%
Operating Income
8.48M
63.09%
269.36%
Net Income
7.00M
64.52%
591.61%
EPS
0.01
62.79%
600.00%
Key Financial Ratios
currentRatio
11.4
grossProfitMargin
24.8%
operatingProfitMargin
11.2%
netProfitMargin
9.24%
returnOnAssets
1.42%
returnOnEquity
1.58%
debtEquityRatio
0.01
operatingCashFlowPerShare
$0.03
freeCashFlowPerShare
$0.03
dividendPayoutRatio
107.1%
priceToBookRatio
0.33
priceEarningsRatio
5.18
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings-call transcript data provided in the supplied materials. As a result, direct management quotes and thematic highlights from an QQ1 2025 earnings call could not be extracted from the dataset.
N/A
— N/A
N/A
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Forward Guidance
No explicit forward guidance issued in the QQ1 2025 materials. In the context of seasonality and cyclicality in heavy equipment sales and leasing, investors should monitor: (1) utilisation of the fleet and renewal rate on leases, (2) maintenance service demand and gross margin stability, (3) working capital dynamics given the substantial cash balance and dividend payout, and (4) potential expansion opportunities into new markets or adjacent services. Management commentary, where available outside the dataset, should be weighed for any targeted fleet renewal plans or capex intentions.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
2102.HK Focus
24.77%
11.20%
1.58%
5.18%
2116.HK
27.50%
12.60%
1.53%
11.62%
2182.HK
0.00%
0.00%
0.00%
0.00%
2108.HK
0.00%
0.00%
0.00%
0.00%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
From a quantitative perspective, Tak Lee shows a resilient QQ1 2025 performance with improving profitability margins and strong cash generation, supported by a net cash position and modest leverage. The valuation appears conservative (P/E ~5.2x, P/B ~0.33x) with a dividend yield around 5.2%, which may appeal to value-oriented investors seeking downside protection through balance-sheet strength. However, the quarter’s revenue is notably seasonal, and the QoQ decline underscores the cyclicality inherent in Hong Kong’s agricultural machinery market. Investors should weigh the durability of gross and operating margins against cyclical headwinds and monitor the following near-term catalysts: fleet utilization, maintenance services growth, and any announced expansion plans that could broaden the addressable market beyond Hong Kong. Given the lack of explicit forward guidance in the provided materials, the investment thesis hinges on the company’s ability to sustain cash generation and to stabilize quarterly demand through diversification or improved asset utilization. Overall, Tak Lee remains a compelling value stock within Industrials/Agri machinery in HK, with meaningful upside if fleet utilization rebounds and the company continues to generate steady free cash flow while preserving its net cash position.
Key Investment Factors
Growth Potential
Leasing and maintenance services provide recurring revenue streams; potential margin expansion through higher fleet utilization and selective price/mix adjustments; potential geographic or product-line expansion to broaden addressable market.
Profitability Risk
Cyclicality in agricultural machinery demand; concentration in Hong Kong market; modest scale relative to larger peers; sensitivity to capex cycles and macro trade conditions; potential disruption from competitive leasing models or new entrants.
Financial Position
Strong liquidity with a substantial net cash position (approximately HKD -102.45m net debt), minimal leverage (Total debt ~HKD 3.41m), and solid balance sheet with equity of HKD 442.73m; consistent free cash flow generation supports dividend policy and potential funding of growth initiatives.
SWOT Analysis
Strengths
Robust liquidity position with net cash (net debt approximately -HKD 102.45m); cash and cash equivalents HKD 105.86m
Diversified revenue streams across sales, leasing, and maintenance services within heavy equipment segment
Strong financial position with high current ratio (11.40x) and cash ratio (3.77x) indicating cushion against cyclicality
Weaknesses
Quarterly revenue is highly seasonally influenced, showing a -48.39% QoQ drop from Q4 2024 to QQ1 2025
Relatively modest scale compared to larger regional players; potential exposure to a narrow geographic market (Hong Kong)
Limited forward guidance in the disclosed materials increases uncertainty around near-term targets
Opportunities
Increasing fleet utilization and expansion of the maintenance/ancillary services to improve recurring revenue streams
Potential market expansion beyond Hong Kong, including PRC-related opportunities in agricultural machinery and sky-rocketing demand in rural infrastructure projects
Ability to optimize working capital and potentially enhance shareholder value through dividends given solid cash flow
Threats
Macro and cyclical downturn affecting capital expenditures in agriculture and construction equipment
Competition from local and regional heavy equipment dealers and leasing companies
Regulatory changes or import/export policy shifts impacting procurement or spare parts supply
Currency and inflationary pressures in the broader APAC region could influence pricing and costs