Exchange: HKSE | Sector: Technology | Industry: Information Technology Services
Q2 2025
Published: Jun 30, 2025
Earnings Highlights
Revenue of $6.01B up 137.6% year-over-year
EPS of $-0.02 increased by 74% from previous year
Gross margin of 3.8%
Net income of -22.73M
"N/A" - N/A
HC Group Inc (2280.HK) QQ2 2025 Results – Revenue Acceleration Amid Margin Pressures in China’s IT Services Landscape
Executive Summary
Executive Summary: HC Group Inc. posted QQ2 2025 revenue of 6,012,968,000 CNY, up 137.6% year over year, signaling solid top-line momentum across its Technology-Driven New Retail, Platform, and Corporate Services segments. However, the margin profile remained compressed, with gross profit of 226,290,000 CNY and a gross margin of 3.76%, and the company reported a net loss of 22,728,000 CNY for the quarter. EBITDA was 20,096,000 CNY and operating income was 14,491,000 CNY, indicating limited initial operating leverage despite positive operating earnings. The bottom line was pressured by higher non-operating costs and tax effects, culminating in a negative net income despite a modest operating profit level.
Overview of QQ2 2025 results (CNY):
- Revenue: 6,012,968,000; YoY +137.6%; QoQ 0.0%
- Gross Profit: 226,290,000; Gross Margin 3.76% (YoY +112.15%; QoQ 0.00%)
- Operating Income: 14,491,000; Operating Margin 0.24%
- EBITDA: 20,096,000; EBITDA Margin 0.34%
- Net Income: -22,728,000; Net Margin -0.38%
- EPS: -0.0174; Diluted EPS: -0.0174; Weighted Avg Shs: 1,306,206,896
- Cash Flow Metrics: Operating Cash Flow per Share -0.0406; Free Cash Flow per Share -0.0416; Cash per Share 0.240
- Liquidity: Current Ratio 1.282; Quick Ratio 1.204; Cash Ratio 0.240
- Leverage: Debt Ratio 0.271; Debt to Equity 2.33; Total Debt to Capitalization 0.699; Equity Multiplier 8.57
- Efficiency: Asset Turnover 3.05; Receivables Turnover 25.14; Inventory Turnover 56.68; DSO 3.58 days; DIO 1.588 days; Payables Turnover 21.98; CCC 1.074 days
- Valuation: Price to Book 0.859x; Price to Sales 0.0329x; Price to Earnings -2.18x; Enterprise Value to Sales 20.91x; Price Fair Value 0.859
- Dividends: Dividend Yield 0.0%; Dividend Payout Ratio 0%
Note: The earnings transcript provided in the dataset is empty; as a result, there are no management quotes to integrate in the transcript analysis.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
6.01B
137.61%
0.00%
Gross Profit
226.29M
112.15%
0.00%
Operating Income
14.49M
154.26%
0.00%
Net Income
-22.73M
79.89%
0.00%
EPS
-0.02
73.99%
0.00%
Key Financial Ratios
currentRatio
1.28
grossProfitMargin
3.76%
operatingProfitMargin
0.24%
netProfitMargin
-0.38%
returnOnAssets
-1.15%
returnOnEquity
-9.87%
debtEquityRatio
2.33
operatingCashFlowPerShare
$-0.04
freeCashFlowPerShare
$-0.04
priceToBookRatio
0.86
priceEarningsRatio
-2.18
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript Highlights: No QQ2 2025 earnings call transcript data is provided in the input. Consequently, management quotes and Q&A themes could not be extracted or summarized.
N/A
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N/A
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Forward Guidance
Forward Guidance: Explicit guidance for QQ3 2025 or full-year 2025 is not disclosed in the provided data. The QQ2 2025 results suggest ongoing investments in platform monetization, B2B ecosystem expansion, and digital services, which imply potential for margin expansion if scale-driven operating leverage materializes. Investors should monitor (1) gross margin trajectory and mix effects as platform services scale, (2) progression toward positive free cash flow, and (3) the pace of monetization across key segments (HC360, ZOL, Union Cotton, iBuyChem). External factors such as China’s macro environment, regulatory dynamics in technology services, and competitive intensity in online platforms will influence the achievability of any margin expansion and cash-flow objectives.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
2280.HK Focus
3.76%
0.24%
-9.87%
-2.18%
2298.HK
46.40%
4.56%
2.78%
2.03%
2329.HK
1.35%
-38.70%
-2.32%
-69.70%
2255.HK
10.40%
-22.20%
-20.60%
-4.95%
2393.HK
16.70%
4.53%
1.23%
10.43%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, HC Group is at a crossroads: strong top-line momentum is evident, but profitability and cash generation remain fragile in the QQ2 2025 quarter. The stock may re-rate if management demonstrates clear progress toward gross-margin expansion, sustained positive operating leverage, and meaningful free cash flow conversion. Key performance triggers to watch over the next two to four quarters include (1) a sustained gross-margin uplift through product mix and pricing, (2) reduction in cash burn and improvement in operating cash flow per share toward breakeven, and (3) clarity on capex commitments and monetization timelines for high-potential segments. In the near term, the valuation remains creditable only if the market consensus embeds a credible path to earnings recovery and cash-flow normalization given the current negative bottom line.
Key Investment Factors
Growth Potential
HC Group benefits from a diversified, China-focused B2B ecosystem (HC360, ZOL, Union Cotton, iBuyChem) and scalable Platform/Technology-Driven New Retail initiatives. The 137.6% YoY revenue uplift in QQ2 2025 indicates meaningful top-line momentum, with potential upside as monetization of services and advertising scales across sectors (industrial internet, 3C sectors, and textile supply chains). If the company successfully improves gross margin through mix optimization, price optimization, and higher-margin service offerings, operating leverage could translate into sustainable earnings growth.
Profitability Risk
Key risks include continued gross-margin compression due to competitive pricing and mix, high leverage (Debt to Equity 2.33; Debt Ratio 0.271; capitalization exposure), and cash-flow fragility (Operating Cash Flow per Share -0.0406; Free Cash Flow per Share -0.0416). Execution risk exists in monetizing a broad portfolio of platforms and services, dependence on macro stability in China, and potential volatility in non-operating items that can swing net income and sentiment. Valuation multiple (EV/Sales 20.91x) reflects high growth expectations but also elevates sensitivity to any deviation from plan.
Financial Position
Balance sheet shows liquidity with Current Ratio 1.282 and Quick Ratio 1.204, but leverage remains pronounced. Cash per share is modest at 0.240 CNY, while the equity base supports a high asset turnover figure (3.05x) yet an elevated equity multiplier (8.57x). The low gross margin (3.76%) and net margin (-0.38%) suggest limited near-term earnings resiliency; sustained revenue growth must translate into positive operating and net income and improved cash conversion to unlock intrinsic value.
SWOT Analysis
Strengths
Large revenue scale in QQ2 2025 (6.01B CNY) with diverse, China-focused B2B platforms (HC360, ZOL, Union Cotton, iBuyChem).
Diversified business lines spanning technology services, industrial internet, and digital platforms that can create cross-sell opportunities.