EPS of $-0.08 increased by 13.3% from previous year
Gross margin of 24.5%
Net income of -61.00M
"Not disclosed in the provided transcript data." -
Kidsland International Holdings Limited (2122.HK) QQ4 2024 Results Analysis – Revenue Decline and Balance Sheet Headwinds in China’s Specialty Toy Retail Market
Executive Summary
Kidsland International reported QQ4 2024 revenue of 240.42 million CNY, a 16.2% year-over-year decline, with gross profit of 58.97 million CNY and a gross margin of 24.53%. The quarter remained unprofitable at the operating level (EBITDA -43.17 million CNY; operating income -57.16 million CNY) and net income declined to -60.998 million CNY, yielding an EPS of -0.0762. Despite a narrow operating cash flow of 6.28 million CNY for the quarter and modest free cash flow of 0.834 million CNY, the company continues to grapple with structural profitability and balance-sheet stress, including negative equity of -89.79 million CNY and total debt of 335.52 million CNY, resulting in a leveraged balance sheet and liquidity pressure (current ratio 0.962).
The four-quarter view shows sales softness in 2024 relative to the prior year while margins compressed by fixed cost absorption and product mix. Though year-on-year metrics show some improvement in profitability (operating income and EPS are relatively stable in the context of continued losses), the company’s balance-sheet position and cash flow profile imply a high sensitivity to working-capital dynamics and macro consumer demand.
Looking forward, management commentary (not provided in the prompt) and industry dynamics would need to emphasize margin stabilization, working-capital optimization, and a credible deleveraging plan to drive investor confidence. In the near term, the risk/reward appears skewed to the downside given the negative equity base and the dependency on discretionary consumer spending in Macau, Hong Kong, and Mainland China.
Revenue and profitability snapshot (CNY):
- Revenue: 240,418,000 (-16.21% YoY, 0.00% QoQ)
- Gross Profit: 58,969,000 with gross margin 24.53%
- Operating Expenses: 116,131,500; EBITDA: -43,165,000; EBIT: -57,162,500; EBITDARatio: -0.18
- Income Before Tax: -60,598,000; Net Income: -60,998,500; Net Margin: -25.37%
- EPS: -0.0762 (diluted -0.0762); Weighted Avg Shs: 800,001,311
Balance sheet and liquidity (as of 2024-12-31, CNY):
- Total Assets: 454,217,000; Total Liabilities: 538,117,000; Total Stockholders’ Equity: -89,790,000
- Cash and Cash Equivalents: 16,636,000; Net Debt: 318,882,000
- Current Ratio: 0.962; Quick Ratio: 0.313; Cash Ratio: 0.0472
- Debt to Capitalization metrics indicate elevated leverage (Total Debt to Capitalization: 1.365; Debt to Equity negative due to negative equity)
Efficiency and working capital (ratios):
- Receivables Turnover: 4.81x; Inventory Turnover: 0.79x; DSO: 18.72 days; DIO: 113.54 days; DPO: 58.01 days; Cash Conversion Cycle: 74.25 days
Notes on peer context and valuation indicators:
- Price-to-Sales: 0.15x; Price-to-Book: -0.40x; Enterprise Value Multiple: -8.22x; reflects negative equity and ongoing losses despite limited asset-light growth signals.
- Compared with listed peers in the Hong Kong retail/toy space, margin profiles and balance-sheet health vary markedly; Kidsland shows a more stressed balance sheet and thinner liquidity cushion despite a modest cash flow contribution.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
240.42M
-16.21%
0.00%
Gross Profit
58.97M
-20.15%
0.00%
Operating Income
-57.16M
5.20%
0.00%
Net Income
-61.00M
4.55%
0.00%
EPS
-0.08
13.31%
0.00%
Key Financial Ratios
currentRatio
0.96
grossProfitMargin
24.5%
operatingProfitMargin
-23.8%
netProfitMargin
-25.4%
returnOnAssets
-13.4%
returnOnEquity
67.9%
debtEquityRatio
-3.74
priceToBookRatio
-0.4
priceEarningsRatio
-0.15
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings call transcript data was provided in the prompt. Management commentary or quotes from the QQ4 2024 earnings call are not accessible in the supplied text. If you can share the transcript or key management remarks, I will incorporate them with precise quotes and theme-based analysis (Strategy, Operations, Market Conditions, etc.).
Not disclosed in the provided transcript data.
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Not disclosed in the provided transcript data.
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Forward Guidance
No explicit forward guidance was included in the provided data. Given the company’s negative equity, substantial leverage, and modest operating cash flow, the near-term guidance would plausibly emphasize efforts to stabilize topline, control costs, optimize working capital, and deleverage. In scenario analysis, potential catalysts include: (1) stabilization or modest growth in Mainland China/Macau toy demand and online penetration; (2) improved gross margin through product mix optimization and supplier terms; (3) capital restructuring to address negative equity and strengthen liquidity. Key monitors for investors include: quarterly revenue trajectory, gross margin progression toward the mid-20s percent range, working-capital days (DIO and DSO), capex intensity vs. cash flow, and steps taken to reduce net debt toward a neutral or positive equity position.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
2122.HK Focus
24.53%
-23.80%
67.90%
-14.80%
2022.HK
46.80%
-37.60%
-2.58%
-4.78%
2116.HK
19.70%
7.77%
1.53%
12.36%
2182.HK
22.30%
-2.90%
-0.77%
-8.53%
2113.HK
-0.67%
-12.70%
48.40%
-2.12%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Tall order for near-term profitability given persistent losses and negative equity. However, the company shows some positive cash flow contribution and a potential path to deleveraging if topline stability improves and margin discipline is achieved. The valuation signals (P/S ~0.15x, negative P/B, negative EV) imply high risk but possible upside if management executes a credible turnaround plan. Investors should require clear plans for balance-sheet repair, margin stabilization (target gross margin mid-20s to mid-30s depending on mix), and a credible working-capital optimization program. In the meantime, the stock warrants a high-risk, long-horizon stance with close monitoring of liquidity, capital structure stability, and any management-guided milestones.
Key Investment Factors
Growth Potential
Channel expansion (particularly online) and licensing partnerships in Mainland China and Macau; potential category shifts toward STEM/education-oriented toys; potential efficiency gains in inventory management and procurement.
Profitability Risk
Negative equity and high leverage; liquidity constraints; ongoing quarterly losses; sensitivity to consumer sentiment in key geographies; potential regulatory or competitive challenges in cross-border retail.
Financial Position
Negative shareholders’ equity (-89.79m CNY) with total debt of 335.52m CNY and net debt of 318.88m CNY; current ratio under 1 indicates near-term liquidity stress; modest operating cash flow offsetting some capex but insufficient to fully deleverage in the near term.
SWOT Analysis
Strengths
Established regional toy retailer with diversified brand portfolio and multi-channel presence (retail, distributors, online stores).
Certain brands and licensing relationships can provide differentiated SKU mix and customer traffic.
Weaknesses
Negative equity and elevated leverage; persistent quarterly losses; limited liquidity cushion; working-capital intensity (DIO ~113.5 days) and reliance on discretionary consumer demand; thin gross margin relative to broader toy peers.
Opportunities
Growth opportunities through online channels, cross-border e-commerce, and Macau/Greater China expansion; licensing partnerships and exclusive distributions; potential rebound in consumer toys cycle as macro conditions stabilize.
Threats
Intense competition from global brands and local toy retailers; macroeconomic slowdown impacting discretionary spending; supply-chain volatility and cost pressures; regulatory changes in cross-border retail and e-commerce; currency/FX tensions in cross-border flows.
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