Huaibei GreenGold (2450.HK) Q3 2024 Earnings Report

Huaibei GreenGold delivered a challenging QQ3 2024, with revenue of 62.708 million CNY, down 9.83% year over year from 69.542 million CNY in QQ3 2023, while gross profit rose to 21.676 million CNY and gross margin remained solid at 34.6%. Despite a positive operating margin (operating income of 15.033 million CNY and EBITDA of 36.774 million CNY), the company reported a net loss of 7.147 million CNY for the quarter, driven by a substantial non-operating expense unwind (total other income/expenses net of -25.356 million CNY) and one-off items in other lines. Cash flow generation remained robust: operating cash flow reached 58.086 million CNY, supporting a free cash flow of 55.791 million CNY after modest capital expenditure of 2.295 million CNY. The balance sheet shows a highly leveraged position: total debt of 1.36 billion CNY against cash and equivalents of 321.426 million CNY, with total assets of 2.475 billion CNY and total stockholders’ equity of 469.697 million CNY. Leverage is pronounced, with a debt-to-capitalization ratio of 0.743 and a debt-to-equity ratio of 2.90, constraining near-term profitability despite strong cash-generation fundamentals. The near-term investment thesis hinges on stabilizing revenue, reducing leverage, and sustaining cash flow generation to support deleveraging and potential margin improvement as input costs and demand evolve—however, the stock trades at a depressed multiple (P/B around 0.63) given the current profitability profile. Key takeaways for investors: (i) the firm is cash-flow positive and able to fund capital needs and some debt service from ongoing operations, (ii) profitability remains fragile with a negative net income quarter, (iii) leverage dominates the balance sheet with meaningful long-term debt, and (iv) the valuation remains sensitive to any sustained improvement in volume, pricing, or cost controls that can lift margins and ROIC toward more sustainable levels.