Yau Lee Holdings Limited (0406) AI Stock Analysis

• Market Cap: HK$315.40M
• Dividend Yield: 6.94%
• Average Volume (3M): 36.34K
• Price to Earnings (P/E): 6.7
• Beta (1Y): 0.05
• Revenue Growth: 23.19%
• EPS Growth: -247.32%
• Country: HK
• Employees: 4,100
• Sector: Industrials
• Sector Strength: 73
• Industry: Engineering & Construction
• EPS (TTM): -0.28
• Shares Outstanding: 438,053,600
• 10 Day Avg. Volume: 14,832
• 30 Day Avg. Volume: 36,344
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: HK$0.50
• Price Target Upside: -30.56% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 1

• Rating: 46 Neutral
• Price Target: HK$0.50 ▼(-30.56% Downside)

Yau Lee Holdings Limited's overall stock score is primarily influenced by its financial performance and technical analysis. The company's financial instability, marked by high leverage and negative profitability, is a significant concern. Technical indicators also suggest bearish momentum. While the high dividend yield offers some appeal, the negative P/E ratio highlights ongoing financial challenges.

Positive Factors

Revenue Growth

The company has demonstrated a solid revenue growth trend, indicating strong demand for its services and effective market penetration strategies.

Strategic Partnerships

These partnerships enhance market presence and provide a steady pipeline of projects, contributing to long-term revenue stability and growth.

Sustainable Practices

Commitment to sustainability and innovation attracts clients and offers a competitive edge, aligning with global trends towards eco-friendly construction.

Negative Factors

High Leverage

Significant leverage increases financial risk and limits flexibility, potentially impacting the company's ability to invest in growth opportunities.

Profitability Challenges

Low profitability margins indicate operational inefficiencies and pressure on earnings, which could hinder long-term financial health.

Cash Flow Strain

Strained cash flow management limits the company's ability to fund operations and growth initiatives, posing a risk to financial stability.

Yau Lee Holdings Limited Business Overview & Revenue Model

Company Description

Yau Lee Holdings Limited, an investment holding company, engages in the construction business in Hong Kong, Macau, Singapore, and Mainland China. The company operates through Construction, Electrical and Mechanical Installation, Building Materials Supply, Property Investment and Development, and Hotel Operations segments. It contracts for various private developers and government institutions; and constructs resorts, hotels, and residential buildings. The company also provides architectural and engineering, theme painting, curtain wall and steel work, plumbing and drainage, GRC, GRG, GRP, and construction IT services. In addition, it offers construction IT services, including software development, project management, system development, and integration and IT outsourcing services. Further, the company trades in construction and building materials; provides a range of import/export services, such as applying for certificate of origin and 3C, cargo insurance agency, prepayment of import/export tax and charges, etc.; and invests in, develops, and operates residential, commercial, and industrial properties. Additionally, it offers building information modeling, and other virtual design and construction; electrical, mechanical, ventilation and air conditioning, fire, plumbing, and environmental engineering; energy optimization and environmental protection; water treatment; project management and consultancy; hotel management; patent licensing; and training services. The company is also involved in the design, installation, maintenance, renovation, and fitting-out of buildings; environmental protection related software and programming activities; manufacture and sale of precast products and building materials; distribution of books; provision of welding services for pipes and fillings, and lift repair and maintenance services; and trading of environmental technology products. Yau Lee Holdings Limited was founded in 1958 and is headquartered in Kowloon Bay, Hong Kong.

How the Company Makes Money

Yau Lee Holdings generates revenue primarily through its construction contracts, which include building construction and civil engineering projects. The company's revenue model is based on a combination of fixed-price contracts, unit-price contracts, and cost-plus contracts, allowing for flexibility in pricing depending on the project requirements. Key revenue streams include income from completed projects, ongoing contracts, and consultancy services. Additionally, Yau Lee has established strategic partnerships with various governmental and private entities, which help secure contracts and expand its market presence. The company's focus on sustainable construction practices and innovation also plays a crucial role in attracting clients and enhancing its competitive edge, further contributing to its earnings.

Yau Lee Holdings Limited Financial Statement Overview

Summary

Yau Lee Holdings Limited faces financial challenges across all major financial statements. Despite revenue growth, profitability and cash flow metrics are under pressure, and the company is highly leveraged. The balance sheet shows a high debt burden, and cash flow management is strained, indicating potential financial instability.

Income Statement

The income statement reveals a challenging financial period for Yau Lee Holdings Limited. Despite a revenue growth rate of 10.35% in the most recent year, the company experienced a significant decline in profitability, with a negative net profit margin of -1.03% and a gross profit margin of only 1.40%. The EBIT and EBITDA margins also decreased, indicating pressure on operational efficiency. These factors suggest difficulties in maintaining profitability amidst revenue growth.

Balance Sheet

The balance sheet shows a high debt-to-equity ratio of 2.03, indicating significant leverage and potential financial risk. Return on equity is negative at -7.19%, reflecting the company's struggle to generate returns for shareholders. However, the equity ratio stands at 20.93%, suggesting a moderate level of equity financing relative to total assets. The high leverage poses a risk, but the equity ratio provides some stability.

Cash Flow

Cash flow analysis indicates negative operating and free cash flows, with a free cash flow growth rate of -4.69%. The operating cash flow to net income ratio is negative, highlighting cash flow challenges. However, the free cash flow to net income ratio is 1.61, suggesting some ability to cover net losses with free cash flow. Overall, cash flow management appears strained, with significant room for improvement.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	8.72B	9.62B	7.81B	6.69B	6.73B	6.79B
Gross Profit	699.97M	134.94M	682.48M	552.31M	659.23M	575.68M
EBITDA	223.04M	150.21M	226.98M	193.36M	211.00M	288.80M
Net Income	53.45M	-98.88M	67.09M	49.64M	68.19M	150.43M
Balance Sheet
Total Assets	6.26B	6.57B	5.73B	4.85B	4.74B	5.11B
Cash, Cash Equivalents and Short-Term Investments	808.09M	718.65M	905.59M	742.58M	934.31M	650.75M
Total Debt	2.44B	2.79B	2.31B	1.38B	1.35B	1.76B
Total Liabilities	4.72B	5.20B	4.22B	3.35B	3.20B	3.63B
Stockholders Equity	1.54B	1.38B	1.51B	1.51B	1.54B	1.48B
Cash Flow
Free Cash Flow	-472.85M	-450.67M	-623.19M	-285.56M	750.49M	656.70M
Operating Cash Flow	-246.00M	-280.08M	-463.32M	-237.30M	813.44M	677.19M
Investing Cash Flow	-198.34M	-133.15M	-148.43M	-26.21M	-20.28M	15.52M
Financing Cash Flow	1.40B	270.77M	791.25M	25.95M	-517.72M	-627.56M

Yau Lee Holdings Limited Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 0.72
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:0406, the sentiment is Neutral. The current price of 0.72 is below the 20-day moving average (MA) of 0.73, below the 50-day MA of 0.76, and below the 200-day MA of 0.90, indicating a neutral trend. The MACD of >-0.01 indicates Negative momentum. The RSI at 54.66 is Neutral, neither overbought nor oversold. The STOCH value of 55.00 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HK:0406.

Yau Lee Holdings Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
8188	77 Outperform	HK$503.20M	6.19	45.61%	7.48%	-6.68%	-25.58%
Sector *	63 Neutral	$10.70B	15.26	7.37%	2.02%	2.87%	-14.59%
0924	59 Neutral	HK$295.00M	86.76	1.59%	―	39.98%	―
8305	54 Neutral	HK$430.92M	―	-8.56%	―	-0.84%	72.06%
0406	46 Neutral	HK$315.40M	6.72	-6.86%	6.94%	23.19%	-247.32%
1183	―	HK$676.72M	121.43	1.51%	―	―	―
6063	46 Neutral	HK$366.00M	114.38	2.51%	―	7.08%	-5.88%

Yau Lee Holdings Limited Corporate Events

Yau Lee Holdings Schedules AGM with Key Resolutions

Yau Lee Holdings Limited has announced its upcoming annual general meeting to be held on September 3, 2025. The meeting will address several key resolutions, including the re-election of directors, the re-appointment of the independent auditor, and the authorization for the board to manage share allotments and repurchases. These resolutions aim to strengthen the company’s governance and financial strategies, potentially impacting its market operations and shareholder value.

Yau Lee Holdings Reports Revenue Growth Amidst Financial Challenges

Yau Lee Holdings Limited reported a significant increase in revenue for the year ended 31 March 2025, reaching HK$9.62 billion compared to HK$7.81 billion in the previous year. However, the company faced a challenging year with a gross profit decline to HK$134.94 million from HK$682.48 million and a net loss of HK$101.18 million, contrasting with a profit of HK$65.80 million in 2024. This financial downturn reflects increased costs and reduced profitability, impacting the company’s market position and shareholder value.

Yau Lee Holdings Updates on Insurance Agreements

Yau Lee Holdings Limited has announced a supplemental update regarding its insurance agreements. The company determined the annual premiums for these agreements by evaluating market rates and obtaining multiple quotations, ultimately selecting Asia Insurance based on favorable pricing, policy coverage, and reputation. The board considers these transactions to be fair, reasonable, and in the best interest of the company and its shareholders.

Yau Lee Holdings Issues Profit Warning Amid Market Challenges

Yau Lee Holdings Limited has issued a profit warning, anticipating a net loss between HK$100 million and HK$130 million for the fiscal year ending March 2025, compared to a net profit of HK$66 million the previous year. This downturn is attributed to negative contract price fluctuations in government housing projects, unrealized revaluation losses in commercial investment properties, and reduced profit margins in the fitting-out business. Despite these challenges, the company experienced some offsetting gains from in-kind compensation related to a relocation agreement.

Yau Lee Holdings to Announce Year-End Financial Results

Yau Lee Holdings Limited has scheduled a board meeting on June 25, 2025, to approve and publish the final results for the fiscal year ending March 31, 2025, and to consider recommending a final dividend. This meeting is crucial for stakeholders as it will provide insights into the company’s financial performance and potential returns on investment.

Yau Lee Holdings Enters Connected Transaction for Medical Insurance

Yau Lee Holdings Limited, through its subsidiary REC Engineering Company Limited, has entered into Medical Insurance Agreements with Asia Insurance to provide group medical insurance from June 2025 to May 2026. This transaction is classified as a connected transaction under Hong Kong’s Listing Rules, requiring reporting and announcement due to the involvement of a connected person, but it is exempt from circular and independent shareholders’ approval.