Executive Summary
Cheerwin Group Limited reported QQ3 2024 results characterized by a solid top-line expansion on a year-over-year basis, but with profitability pressures driven by operating expenses and a seasonal/quarterly mix shift. Revenue reached 285.49M CNY, up 18.3% from Q3 2023 (241.41M) but down 54.3% versus the prior quarter (Q2 2024 at 624.57M), reflecting a pronounced QoQ decline likely tied to seasonality and channel mix. Gross profit stood at 157.67M CNY, yielding a gross margin of 55.2%, while operating income was negative at -18.86M CNY and EBITDA was -4.99M CNY, highlighting ongoing operating leverage challenges.
Key Performance Indicators
QoQ: -54.29% | YoY:18.26%
QoQ: -45.54% | YoY:25.89%
QoQ: -122.75% | YoY:-210.71%
QoQ: -86.67% | YoY:-37.90%
QoQ: -86.63% | YoY:-37.50%
Key Insights
Despite the operating loss, Cheerwin delivered a positive pre-tax result driven by other income of 30.08M CNY, resulting in income before tax of 11.23M CNY and net income of 11.96M CNY (net margin 4.19%). Diluted EPS remained at 0.0090 CNY. The company generated strong operating cash flow of 84.53M CNY and free cash flow of 81.42M CNY, supporting a robust balance sheet with a net cash position. Key balance-sheet highlights include cash and short-term investments totaling 2.874B CNY and total ass...
Financial Highlights
Despite the operating loss, Cheerwin delivered a positive pre-tax result driven by other income of 30.08M CNY, resulting in income before tax of 11.23M CNY and net income of 11.96M CNY (net margin 4.19%). Diluted EPS remained at 0.0090 CNY. The company generated strong operating cash flow of 84.53M CNY and free cash flow of 81.42M CNY, supporting a robust balance sheet with a net cash position. Key balance-sheet highlights include cash and short-term investments totaling 2.874B CNY and total assets of 3.801B CNY, with total liabilities of 0.812B CNY and total stockholders’ equity of 2.990B CNY. The liquidity position is reinforced by current and quick ratios of 4.25 and 3.83 respectively, and a cash ratio of 1.14. The company paid dividends of 78.53M CNY, contributing to a payout ratio of 5.92% and a dividend yield of 3.02%.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
285.49M |
18.26% |
-54.29% |
| Gross Profit |
157.67M |
25.89% |
-45.54% |
| Operating Income |
-18.86M |
-210.71% |
-122.75% |
| Net Income |
11.96M |
-37.90% |
-86.67% |
| EPS |
0.01 |
-37.50% |
-86.63% |
Key Financial Ratios
operatingProfitMargin
-6.6%
Management Commentary
Transcript data is not provided in the supplied material. No management quotes or call transcripts are available to extract themes or quotes at this time.
Forward Guidance
There is no formal forward guidance disclosed in the provided materials. In a qualitative sense, upside for Cheerwin hinges on continued margin stabilization and revenue growth in its China-focused consumer defensive portfolio. Investors should monitor: (1) operating expense control and potential cost-saving initiatives to convert Gross Margin into Operating Margin, (2) working-capital dynamics (notably inventory levels and receivables days) to sustain strong cash flow, (3) channel mix optimization (retail vs. e-commerce) and product mix shifts, and (4) potential capex or strategic actions that could unlock additional profitability or scale. Given the company’s net cash position, there is flexibility to fund growth initiatives or return capital, should management choose to do so.