Fountain Set (Holdings) Limited (0420) AI Stock Analysis

• Market Cap: €808.52M
• Dividend Yield: 2.04%
• Average Volume (3M): 272.20K
• Price to Earnings (P/E): 14.7
• Beta (1Y): 0.31
• Revenue Growth: -7.20%
• EPS Growth: -55.24%
• Country: HK
• Employees: 5,500
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Apparel - Manufacturers
• EPS (TTM): 0.03
• Shares Outstanding: 1,225,027,000
• 10 Day Avg. Volume: 151,600
• 30 Day Avg. Volume: 272,200
• PEG Ratio: -0.76
• Price to Book (P/B): 0.24
• Price to Sales (P/S): 0.18
• P/FCF Ratio: -30.87
• 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: N/A
• Price Target Upside: N/A
• Rating Consensus: Hold
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 54 Neutral
• Price Target: HK$0.50 ▼(-15.25% Downside)

The stock's overall score is driven by strong financial stability but is weighed down by operational challenges and bearish technical indicators. Valuation is moderate, offering some income potential but not enough to offset liquidity concerns and negative momentum.

Positive Factors

Financial Stability

A high equity ratio and low leverage indicate strong financial stability, providing a solid foundation for long-term operations and growth.

Cost Management

Improved gross profit margins suggest effective cost management, which can enhance profitability and competitiveness over time.

Vertically Integrated Model

A vertically integrated model allows better control over production, leading to cost efficiencies and potentially higher margins.

Negative Factors

Revenue Decline

Declining revenue trends can indicate weakening market demand or competitive pressures, challenging long-term growth prospects.

Negative EBIT Margins

Negative EBIT margins reflect operational inefficiencies, which can hinder profitability and require strategic adjustments.

Cash Flow Volatility

Volatile cash flow raises concerns about the company's ability to generate cash sustainably, impacting financial flexibility.

Fountain Set (Holdings) Limited Business Overview & Revenue Model

Company Description

Fountain Set (Holdings) Limited is a Hong Kong-based investment holding company primarily engaged in the manufacturing and distribution of textile products. The company operates through several segments, including the production of knitted fabrics, garment manufacturing, and the provision of related services. Fountain Set focuses on high-quality textiles, catering to both domestic and international markets, and offers a wide range of products that include fashion and functional fabrics for various applications.

How the Company Makes Money

Fountain Set generates revenue primarily through the sale of its textile products, including knitted fabrics and garments. The company operates a vertically integrated business model that allows it to control the entire production process, from yarn spinning to fabric finishing, which enhances efficiency and reduces costs. Key revenue streams include direct sales to garment manufacturers, retail brands, and wholesalers. Additionally, the company may benefit from strategic partnerships with fashion brands and retailers that require specialized fabric solutions. Factors contributing to its earnings include market demand for high-quality textiles, the ability to innovate in fabric technology, and maintaining strong relationships with key customers in the apparel industry.

Fountain Set (Holdings) Limited Financial Statement Overview

Summary

The company shows strong financial stability with a high equity ratio and low leverage. However, operational challenges are evident with negative EBIT margins and recent cash flow issues, indicating potential liquidity risks.

Income Statement

The company has experienced revenue fluctuations with a decline from 2021 to 2023. The gross profit margin improved to 11.96% in 2024 from 7.25% in 2023, suggesting better cost management. However, the company reported negative EBIT margins in recent years, indicating operational challenges. Despite a positive net income in 2024, the net profit margin remains low at 0.32%.

Balance Sheet

The balance sheet shows a strong equity position with an equity ratio of 70.16% in 2024, indicating financial stability. The debt-to-equity ratio improved to 0.06, reflecting low leverage. The company has consistently maintained a high level of cash and equivalents, enhancing liquidity.

Cash Flow

Cash flow analysis reveals volatility, with zero operating and free cash flows reported in 2024, a stark contrast to previous years. The lack of cash flow in the latest period raises concerns about cash generation and sustainability.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.14B	4.43B	4.44B	6.05B	6.75B	4.94B
Gross Profit	512.04M	529.41M	321.99M	577.82M	879.54M	611.13M
EBITDA	267.92M	252.01M	339.40M	204.77M	549.24M	377.72M
Net Income	54.84M	14.26M	50.90M	-115.53M	241.33M	85.71M
Balance Sheet
Total Assets	4.59B	4.61B	4.90B	5.05B	5.75B	5.43B
Cash, Cash Equivalents and Short-Term Investments	1.40B	1.30B	1.38B	1.39B	824.98M	1.26B
Total Debt	193.63M	182.67M	325.03M	579.25M	482.31M	414.18M
Total Liabilities	1.15B	1.16B	1.43B	1.62B	1.99B	1.85B
Stockholders Equity	3.21B	3.24B	3.27B	3.22B	3.56B	3.39B
Cash Flow
Free Cash Flow	47.18M	-25.39M	195.00M	741.49M	-372.07M	470.90M
Operating Cash Flow	213.51M	151.70M	293.76M	905.63M	-210.39M	601.30M
Investing Cash Flow	76.99M	11.07M	1.86M	-136.63M	-148.77M	-145.24M
Financing Cash Flow	-174.83M	-242.52M	-309.90M	-171.40M	-64.78M	-171.54M

Fountain Set (Holdings) Limited Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 0.59
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:0420, the sentiment is Negative. The current price of 0.59 is below the 20-day moving average (MA) of 0.62, below the 50-day MA of 0.64, and below the 200-day MA of 0.62, indicating a bearish trend. The MACD of -0.02 indicates Positive momentum. The RSI at 25.17 is Positive, neither overbought nor oversold. The STOCH value of 33.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HK:0420.

Fountain Set (Holdings) Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1425	75 Outperform	HK$812.50M	5.15	21.11%	8.89%	-8.00%	-11.37%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
1382	59 Neutral	$1.72B	10.32	5.75%	9.68%	8.41%	0.84%
0420	54 Neutral	€808.52M	14.73	1.77%	2.04%	-7.20%	-55.24%
0321	52 Neutral	$1.40B	11.00	2.58%	2.22%	-7.47%	-33.28%
3778	46 Neutral	HK$375.71M	-18.52	-2.76%	4.63%	-1.24%	5.98%

Fountain Set (Holdings) Limited Corporate Events

Fountain Set Reports Improved Interim Profits Amid Revenue Decline

Fountain Set (Holdings) Limited reported its interim results for the six months ended June 30, 2025, showing a decrease in revenue compared to the previous year. Despite the drop in revenue, the company achieved a profit of HK$35.8 million, a significant improvement from the previous year’s loss. This turnaround is attributed to reduced distribution and selling expenses, as well as lower finance costs. The results indicate a positive shift in the company’s financial performance, which may enhance its positioning in the textile industry and provide reassurance to stakeholders.

The most recent analyst rating on (HK:0420) stock is a Hold with a HK$0.50 price target. To see the full list of analyst forecasts on Fountain Set (Holdings) Limited stock, see the HK:0420 Stock Forecast page.