Global New Material International Holdings Limited (6616.HK) QQ2 2025 Earnings Analysis: Strong Revenue Growth in Pearlescent Pigments; Margin Resilience Amid Working Capital Intensity
Executive Summary
Global New Material International Holdings Limited (6616.HK) delivered a robust QQ2 2025 performance, highlighted by a substantial year-over-year revenue expansion and strong gross and operating margins, underpinned by its pearlescent pigment product line (Chesir Pearl). Revenue reached 912.0 million CNY in QQ2 2025, up 108.7% from 437.1 million CNY in QQ2 2024, with gross profit of 479.8 million CNY and a gross margin of 52.6%. EBITDA stood at 340.6 million CNY, yielding an EBITDA margin of 37.3%, while operating income was 292.5 million CNY (operating margin 32.1%). Net income was 62.2 million CNY, a YoY decline of 7.9% despite the revenue surge, translating to a net margin of 6.8% and basic EPS of 0.0502 CNY. These results reflect solid profitability on gross and operating lines but are tempered by higher taxes and some other expenses that affected net income and by ongoing working capital needs. On the balance sheet, liquidity remains strong with current ratio at 3.81 and cash ratio at 2.89, while leverage remains elevated (debt ratio 0.364; debt/equity 0.870). Cash per share stood at 2.91 CNY, with a price-to-book of 1.57 and a price-to-sales of 5.94, suggesting a premium against book value but within the typical range for specialty chemical players. The company shows notable growth potential from its pigment product portfolio and geographic reach, yet faces near-term risks from working capital intensity and potential raw material cost fluctuations. Management commentary from the earnings call is not provided in the data set; as such, the narrative focuses on the disclosed financials and market context to inform investment considerations.
Operating Income: 292.5 million CNY; Operating Margin 32.07%
Net Income: 62.20 million CNY; Net Margin 6.82%; YoY -7.93%; EPS 0.0502 (Diluted 0.0490)
Financial Highlights
Key QQ2 2025 Metrics and YoY/QoQ Trends
- Revenue: 912.0 million CNY; YoY +108.7%; QoQ 0.0%
- Gross Profit: 479.8 million CNY; Gross Margin 52.61%; YoY +95.24%; QoQ 0.0%
- EBITDA: 340.6 million CNY; EBITDA Margin 37.34%
- Operating Income: 292.5 million CNY; Operating Margin 32.07%
- Net Income: 62.20 million CNY; Net Margin 6.82%; YoY -7.93%; EPS 0.0502 (Diluted 0.0490)
- Revenue mix strengths: Pearlescent pigment production and sales across coatings, plastics, cosmetics, and ceramic applications (Chesir Pearl brand)
- Cash Flow: Operating cash flow per share -0.0538 CNY; Free cash flow per share -0.637 CNY; Cash per share 2.91 CNY; Cash conversion cycle (CCC) 114.71 days
- Liquidity: Current ratio 3.81; Quick ratio 3.51; Cash ratio 2.89
- Leverage: Debt ratio 0.364; Debt/equity 0.870; Long-term debt to capitalization 0.368; Total debt to capitalization 0.465
- Efficiency: Receivables turnover 1.483x; Payables turnover 4.01x; Inventory turnover 1.177x; Asset turnover 0.111x; Fixed asset turnover 0.389x
- Valuation optics: P/B 1.57; P/S 5.94; P/E 21.76; Enterprise Value Multiple 14.18
- Tax rate: Effective tax rate ~32.6%
- Shareholder metrics: Weighted avg shares 1,270,851,211; Dividends paid 0 (dividend payout ratio 0%)
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
912.04M
108.67%
0.00%
Gross Profit
479.83M
95.24%
0.00%
Operating Income
292.51M
96.20%
0.00%
Net Income
62.20M
-7.93%
0.00%
EPS
0.05
-7.89%
0.00%
Key Financial Ratios
currentRatio
3.81
grossProfitMargin
52.6%
operatingProfitMargin
32.1%
netProfitMargin
6.82%
returnOnAssets
0.75%
returnOnEquity
1.8%
debtEquityRatio
0.87
operatingCashFlowPerShare
$-0.05
freeCashFlowPerShare
$-0.64
priceToBookRatio
1.57
priceEarningsRatio
21.76
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Note: The earnings call transcript was not provided in the data set. As a result, there are no management quotes or explicit call-out themes captured. The analysis below integrates the disclosed financials with typical thematic risk/driver areas for a pearlescent pigment producer (market demand, raw materials, capacity, and margins).
—
—
Forward Guidance
No formal forward guidance was included in the QQ2 2025 data. Given the observed revenue acceleration and stable gross/operating margins, the near-term trajectory could benefit from continued demand for pearlescent pigments in automotive coatings, plastics, cosmetics, and industrial coatings. Key factors to monitor include:
- Raw material cost and supply dynamics for mica-based and silicon oxide-based pigments, which can influence margin progression.
- Capacity expansions or new product introductions under the Chesir Pearl portfolio that could support higher ASPs or higher-volume sales.
- Global and China-specific demand trends in end markets (automotive, electronics, plastics) and potential cyclicality in coatings applications.
- Working capital requirements and cash conversion cycle, given the current elevated CCC and negative per-share operating cash flow indicators, which could pressure free cash flow despite solid profitability.
- Regulatory or environmental considerations affecting pigment production and export markets.
Overall, the investment thesis hinges on sustainable top-line growth from pigment demand, margin resilience as production scales, and improving cash conversion efficiency; absence of dividend payments suggests capital returns may focus on reinvestment rather than income for the near term.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
6616.HK Focus
52.61%
32.10%
1.80%
21.76%
2192.HK
59.00%
10.10%
3.21%
15.96%
6626.HK
21.30%
13.40%
6.65%
4.13%
6608.HK
73.00%
12.50%
4.02%
5.08%
2137.HK
1.00%
-175.48%
-5.96%
-1.88%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, Global New Material International Holdings Limited presents a compelling top-line growth story driven by its Chesir Pearl pearlescent pigment line, with a resilient gross margin and a solid EBITDA framework. The QQ2 2025 results show meaningful revenue expansion (YoY +108.7%) and strong profitability on the gross and operating lines, even as net income was dampened by taxes and other non-operating items. The storage of cash and robust liquidity supports ongoing investment in capacity and product development, yet negative operating cash flow per share highlights a working capital and capital expenditure footprint that needs to be managed to convert earnings into free cash flow.
Valuation metrics sit at a premium on a price-to-earnings and price-to-book basis relative to some peers (P/E ~21.8x; P/B 1.57x; P/S 5.94x), reflecting the niche segment’s growth potential and the company’s pricing power. The stock appears best suited for investors with a longer horizon who can tolerate near-term working capital intensity in exchange for continued revenue growth and margin resilience. In the near term, focus should be on: (1) management’s ability to optimize cash conversion and reduce the cash flow gap, (2) the trajectory of raw material costs and supply stability, and (3) capacity expansion plans and their impact on margins and utilization of assets. If the company can translate EBITDA strength into positive free cash flow and modestly improve net income through tax optimization and cost control, the outlook would be favorable for a higher-beta, growth-oriented exposure within the Basic Materials sector. Investors should monitor factors such as raw material pricing, end-market demand in automotive coatings, and any announced strategic initiatives or partnerships that could scale production and expand the addressable market.
Key Investment Factors
Growth Potential
- Strong YoY revenue expansion driven by Chesir Pearl pigment sales; potential to expand into additional pigment families (natural vs synthetic mica) and expand geographic reach beyond PRC and select export markets.
- Gross and operating margins demonstrate pricing power and cost discipline; potential upside from product mix optimization and higher-value pigment variants.
Profitability Risk
- Working capital intensity indicated by CCC of 114.71 days and negative operating cash flow per share; sensitivity to supplier pricing and raw material costs.
- Tax and other expenses contributed to muted net income despite high EBITDA; potential volatility in tax regime or non-operating items.
- Competitive intensity in specialty pigments; reliance on automotive and coatings end-markets which are cyclically sensitive.
- Regulatory and environmental risks in pigment production and export markets; currency and geopolitical factors can influence cross-border sales and costs.
Financial Position
- Liquidity remains robust with current ratio 3.81 and cash ratio 2.89, plus cash per share of 2.91 CNY.
- Leverage remains elevated (debt ratio 0.364; debt/equity 0.870), with long-term debt capitalization contributing to a total debt capitalization of 0.465.
- Solid asset base with modest asset turnover (0.111) but high gross margins indicating a value-creation potential through scale and mix optimization.
SWOT Analysis
Strengths
High gross margin (52.61%) and solid EBITDA margin (37.34%) in QQ2 2025 reflect pricing power and product mix strength in Chesir Pearl pigments.
Revenue growth Y/Y of 108.7% demonstrates demand for pearlescent pigments across coatings, plastics, and cosmetics.
Strong liquidity profile (current ratio 3.81; quick 3.51; cash ratio 2.89) supports near-term working capital needs and capex plans.
Significant scale with 1.27 billion weighted average shares and a diversified product portfolio.
Brand and product positioning in specialty pigments catering to automotive, coatings, and ceramics.
Weaknesses
Net income declined ~7.9% YoY despite revenue surge, indicating tax impact and other expenses erode bottom-line profitability.
Operating cash flow per share is negative (-0.0538 CNY), signaling working capital or capex absorption that may affect free cash flow.
CCC of ~114.7 days and inventory days of 76.44 days point to substantial working capital requirements.
Capitalizing on rising demand for pearlescent pigments in automotive coatings and plastics in Asia and export markets.
Potential expansion of Chesir Pearl line and entry into additional pigment formats to broaden addressable market.
Opportunities to optimize working capital and convert EBITDA to cash flow through supply chain and production efficiency improvements.
Possible strategic partnerships or joint ventures to scale production and distribution.
Threats
Raw material price volatility and supply disruptions impacting pigment production costs.
Competition from peers with varying margin profiles in the pigment space; sensitivity to demand cycles in key end markets like automotive and heavy industry.
Regulatory changes and environmental compliance costs in China and export markets affecting margins and capex needs.
Currency exposure and cross-border trade risks in PRC and international markets.
Global New Material International Holdings Limited (6616.HK) QQ4 2024 Earnings Review: Revenue Growth, Robust Margins, and Capex-driven Capacity Expan...
Global New Material International Holdings Limited (6616.HK) QQ3 2024 Results: Robust Revenue Growth, Healthy Margins and Net Cash Position Amid Expan...