Exchange: TWO | Sector: Healthcare | Industry: Medical Care Facilities
Q2 2024
Published: Jun 30, 2024
Earnings Highlights
Revenue of $235.77M up 15.6% year-over-year
EPS of $0.16 decreased by 27.3% from previous year
Gross margin of 11.8%
Net income of 9.56M
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Qing Song Health CoLtd (6931.TWO) QQ2 2024 Financial Results: Revenue Growth in Taiwan’s Long-Term Care Sector with Margin Expansion Yet Leverage Pressure
Executive Summary
Qing Song Health CoLtd reported QQ2 2024 revenue of 235.77 million TWD, up 15.6% year over year, supported by solid occupancy and service demand in Taiwan’s long-term care market. Despite top-line growth, net income declined approximately 28% YoY to 9.56 million TWD, driven by factors including depreciation, interest and non-operating items, and a higher tax base, resulting in a net margin of about 4.06% and an EPS of 0.16 TWD. The company generated positive operating cash flow of 62.15 million TWD and free cash flow of ~29.98 million TWD, underscoring cash-generation capability from core operations. However, leverage remains a material consideration: total debt stood at ~1,057.31 million TWD with long-term debt accounting for ~977.76 million and a debt-to-capitalization of ~62.5%, highlighting balance sheet risk that investors should monitor alongside occupancy-driven revenue volatility.
Net Income: 9,561,000 TWD; net margin ~4.06%; YoY -28.20%;
EPS: 0.16 TWD; YoY -27.27%;
Financial Highlights
- Revenue: 235,769,500 TWD; YoY +15.61%; QoQ 0.00% (QQ2 2024 vs QQ2 2023/QQ1 2024).
- Gross Profit: 27,777,500 TWD; gross margin ~11.78%; YoY gross profit +19.91%;
- Operating Income: 9,737,500 TWD; operating margin ~4.13%; YoY +24.13%;
- Net Income: 9,561,000 TWD; net margin ~4.06%; YoY -28.20%;
- EPS: 0.16 TWD; YoY -27.27%;
- EBITDA: 23,030,500 TWD; EBITDA margin ~9.77%;
- Cash from operations: 62,153,500 TWD; Free Cash Flow: 29,978,501 TWD;
- Cash/Equivalents: reported 251,437,000 TWD on the balance sheet; cash flow statements indicate net change in cash of 8,744,000 TWD; potential data reconciliation discrepancy to be clarified.
- Balance sheet: Total assets 1,879,939,000 TWD; total liabilities 1,212,881,000 TWD; total stockholders’ equity 634,326,000 TWD. Current ratio 2.18; Debt/Capitalization 62.5%; Net Debt ~805.87 million TWD.
- Valuation metrics (as reported): price/book ~8.74x, price/ sales ~23.53x, price/earnings ~145.04x.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
235.77M
15.61%
0.00%
Gross Profit
27.78M
19.91%
0.00%
Operating Income
9.74M
24.13%
0.00%
Net Income
9.56M
-28.20%
0.00%
EPS
0.16
-27.27%
0.00%
Key Financial Ratios
currentRatio
2.18
grossProfitMargin
11.8%
operatingProfitMargin
4.13%
netProfitMargin
4.06%
returnOnAssets
0.51%
returnOnEquity
1.51%
debtEquityRatio
1.67
operatingCashFlowPerShare
$1.04
freeCashFlowPerShare
$0.5
priceToBookRatio
8.74
priceEarningsRatio
145.04
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings transcript provided in the data set for QQ2 2024. Consequently, there are no management quotes to group by themes (strategy, operations, market conditions). If a transcript becomes available, we can rapidly incorporate key quotes and contextualize them against the quantified results.
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Forward Guidance
There is no explicit quarterly guidance disclosed for QQ3 2024 in the provided data. Given the current leverage and the high fixed-cost structure typical of long-term care facilities, investors should monitor: (1) occupancy/causality trends and patient mix (clinical occupancy vs. private-pay), (2) wage inflation and staffing costs, (3) regulatory/reimbursement developments in Taiwan’s healthcare financing, and (4) debt maturities and covenant compliance. If management reiterates targets around occupancy stabilization and cost containment, the path to earnings stability rests on sustaining revenue growth while structurally reducing financing costs. Our assessment: achievable if occupancy remains strong and cost controls are effective, but the high debt load represents a meaningful risk to downside scenarios in a slowing demand environment.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
6931.TWO Focus
11.78%
4.13%
1.51%
145.04%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Qing Song Health’s QQ2 2024 results present a mixed but informative picture: revenue growth is encouraging in a growing, aging population market, while profitability is being challenged by leverage and fixed-cost structure. The company demonstrated positive cash generation, which supports liquidity and capital allocation flexibility, yet the substantial long-term debt remains a core risk that could constrain earnings expansion if occupancy or reimbursement dynamics soften. Absent explicit management guidance, the investment thesis centers on: (1) sustainability of occupancy-driven revenue growth, (2) the company’s ability to optimize cost structures and de-leverage over time, and (3) the effectiveness of using free cash flow to reduce financial risk or reinvest in higher-margin services. Investors should monitor occupancy metrics, wage inflation pressures, capex discipline, debt maturities, and any updated guidance from Qing Song Health. Given the current data, the stock presents a cautious stance with potential upside tied to structural demand in Taiwan’s elderly care sector and the company’s ability to improve profitability while maintaining strong liquidity.
Key Investment Factors
Growth Potential
Taiwan’s aging population supports durable demand for long-term care services. Potential growth from expanding community-based services and residential care, along with potential price adjustments for private-pay components, could lift utilization and revenue modestly. The company’s asset-light or asset-lean expansion would be a positive if capex is disciplined and occupancy remains high.
Profitability Risk
High leverage (total debt ~1,057.31m TWD; long-term debt ~977.76m) with debt-to-capitalization ~62.5% and debt-to-equity ~1.67; interest coverage not disclosed, implying refinancing and material rate risk. Margin pressure evidenced by muted net income growth amid revenue gains; data inconsistencies in cash balances suggest need for clarification on cash balance accounting. Operational risks include wage inflation, staffing shortages, and regulatory changes affecting reimbursement.
Financial Position
Solid liquidity ratios (current and quick ratios at 2.18) but substantial non-current liabilities and long-term debt. Positive operating cash flow and free cash flow indicate healthy cash generation from core operations, though financing activities have been used to support leverage. Equity base ~634.33m with an asset-heavy balance sheet (PPE ~1,324.90m) underscores fixed-cost exposure and depreciation impact on profitability.
SWOT Analysis
Strengths
Evidence of revenue growth in QQ2 2024 (YoY +15.6%) signaling demand stability in Taiwan’s long-term care segment.
Positive operating cash flow (OCF) of 62.15m TWD and free cash flow (FCF) of ~29.98m TWD, supporting liquidity.
Current ratio of 2.18 indicates solid short-term liquidity to fund operations and capex.
Established presence in Taiwan with asset base supporting service delivery.
Weaknesses
Net income declined by 28.2% YoY despite top-line growth, suggesting cost pressures or non-operating items affecting profitability.
High leverage with total debt ~1,057m TWD and long-term debt nearly 978m TWD; relatively modest equity base (~634m TWD) against heavy liabilities.
Low gross margin (~11.78%) and reliance on fixed-cost structure (PPE strong) exposing earnings to occupancy and wage volatility.
Inconsistencies in reported cash balance between cash flow statement and balance sheet (end-of-period cash vs. cash and equivalents) requiring clarification.
Opportunities
Demographic tailwinds from Taiwan’s aging population can support continued demand for long-term care and related services.
Potential expansion into community-based and residential care offerings to broaden revenue base.
Operational improvements and selective pricing for private-pay services could improve margins if occupancy is preserved.
Threats
Regulatory and reimbursement changes could alter revenue mix or cost structures.
Competitive intensity in Taiwan’s long-term care market; potential pricing pressure on private-pay segments.
External shocks (e.g., healthcare policy shifts or macroeconomic downturn) could impact occupancy and utilization.