Maiyue Technology Ltd (2501.HK) Q3 2024 Earnings Report

Maiyue Technology delivered a solid top-line pickup in QQ3 2024, with revenue of 126.34 million CNY, up 5.5% year over year and a robust gross margin of 24.0%. Operating income rose to 11.81 million CNY, yielding an operating margin of 9.35% and net income of 7.66 million CNY (net margin 6.06%). The quarter showcased a material quarter-on-quarter ramp driven by higher activity in education and government IT deployments, signaling a potential re-acceleration of project-related contributions after a softer prior period. However, the company faced pronounced working-capital consumption, producing negative free cash flow of about -1.89 million CNY as receivables surged and overall working capital changed by roughly -46.41 million CNY. From a balance sheet perspective, Maiyue maintains a solid asset base and a meaningful accumulated other comprehensive income (OCI) position, alongside a moderate leverage profile. Total debt stands at 223.34 million CNY with net debt of 182.84 million CNY, while cash and short-term investments total about 114.53 million CNY. The liquidity profile remains comfortable on a current basis (current ratio ~1.58; quick ratio ~1.57), but cash conversion efficiency needs improvement to convert operating momentum into stronger free cash flow. The investment thesis is, for now, cautiously constructive but conditional. The QQ3 rebound appears to come from higher project activity in the PRC education and government IT markets. Absent explicit management guidance, the key questions for investors center on duration and quality of new contracts, the sustainability of the improved mix, and the trajectory of working-capital improvements. Valuation appears reasonable for an IT services provider with a single-country exposure and government/education focus, but the stock faces downside risk if receivables growth persists or if government project cycles soften.