Chervon Holdings Limited reported a robust QQ1 2025, with USD 456.2 million in revenue, up 43.4% year over year and 11.8% quarter over quarter. The quarter delivered a solid gross margin of 33.31%, resulting in an EBIT of USD 59.89 million and net income of USD 47.61 million (EPS USD 0.0934). Operating margin stood at 13.13% and net margin at 10.44%, underscoring a favorable mix and disciplined cost management amid a constructive demand environment for power tools and outdoor equipment.
Liquidity remained strong, with a current ratio of 2.15 and a debt ratio of 0.182. The company generated healthy returns metrics for the quarter, including an EBITDA margin of 15.3% and an interest coverage of 44.83x. However, the cash conversion cycle stretched to about 162 days, driven by a long inventory cycle (days of inventory outstanding ~141.7) and receivables days (~70.4), signaling working capital intensity as the firm scales. Management commentary (where available) emphasizes ongoing growth drivers, cost discipline, and strategic investments to support margin resilience.
From a valuation standpoint, Chervon trades at a forward-looking multiple that appears inexpensive relative to several peers, with a reported trailing P/E around 6x and a Price-to-Book of approximately 1.13x. The combination of solid profitability, a sticky balance sheet, and a constructive demand backdrop supports a cautiously optimistic investment stance, subject to monitoring macro demand, input costs, and working capital dynamics.