7Road Holdings Limited (0797) AI Stock Analysis

• Market Cap: HK$1.38B
• Dividend Yield: N/A
• Average Volume (3M): 475.67K
• Price to Earnings (P/E): ―
• Beta (1Y): -0.95
• Revenue Growth: 6.33%
• EPS Growth: 87.05%
• Country: HK
• Employees: 247
• Sector: Communication Services
• Sector Strength: 97
• Industry: Electronic Gaming & Multimedia
• EPS (TTM): 0.01
• Shares Outstanding: 2,753,200,000
• 10 Day Avg. Volume: 1,192,400
• 30 Day Avg. Volume: 475,666
• PEG Ratio: 0.74
• Price to Book (P/B): 1.59
• Price to Sales (P/S): 8.69
• P/FCF Ratio: 56.23
• 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: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 41 Neutral
• Price Target: HK$0.53 ▲(5.00% Upside)

7Road Holdings Limited is facing significant financial and operational challenges, with declining revenues and profitability being the most significant factors. Technical indicators suggest bearish momentum, and the valuation is unattractive due to negative earnings and lack of dividends. The company needs to address these issues to improve its stock performance.

Positive Factors

Strong Balance Sheet

A strong balance sheet with minimal leverage reduces financial risk and provides stability, allowing the company to weather operational challenges.

High Gross Profit Margin

A high gross profit margin indicates efficient cost management and pricing power, which can support profitability as revenues stabilize.

Cash Generation Ability

Effective cash generation relative to earnings in the past suggests the potential to manage liquidity effectively, even amid current challenges.

Negative Factors

Declining Revenues

Significant revenue decline indicates potential market challenges or competitive pressures, impacting the company's ability to sustain growth.

Negative Profit Margins

Negative profit margins highlight operational struggles and insufficient revenue to cover expenses, posing a risk to long-term profitability.

Cash Flow Challenges

Lack of positive free cash flow indicates potential liquidity issues, which could constrain the company's ability to invest in growth opportunities.

7Road Holdings Limited Business Overview & Revenue Model

Company Description

7Road Holdings Limited, an investment holding company, develops and distributes web and mobile games in the People's Republic of China and internationally. The company engages in the research, development, operation, and licensing of web games, such as DDTank, Wartune, Chuanqi, and Legend series. It is also involved in the provision of publishing online games; sandbox games development and operation; online game development, promotion, and management; and cloud computing and other related services, such as elastic computing, storage, GPU computing, and security, as well as engages in the culture media business. The company was founded in 2008 and is headquartered in Wuxi, China.

How the Company Makes Money

7Road Holdings Limited generates revenue primarily through in-game purchases, subscription fees, and advertising. The company monetizes its games by offering players the option to buy virtual goods, enhancements, and other premium content, which enhances their gaming experience. Additionally, 7Road may earn revenue from advertising partnerships by integrating ads into its games, providing a source of income without directly charging players. Strategic collaborations with other gaming companies or platforms can also lead to additional revenue streams through licensing agreements and joint ventures, further bolstering its financial performance.

7Road Holdings Limited Financial Statement Overview

Summary

7Road Holdings Limited is experiencing financial difficulties with declining revenues and profitability. Despite a strong balance sheet with low leverage, consistent net losses and declining cash flows suggest operational inefficiencies or adverse market conditions. The company needs to stabilize revenue streams and improve operational efficiency.

Income Statement

7Road Holdings Limited has faced significant challenges with declining revenues, dropping from HKD 627.7 million in 2023 to HKD 306.4 million in 2024. The gross profit margin remains solid at 69.3% for 2024, but the company posted negative net and EBIT margins at -23.97% and -19.72%, respectively, indicating operational struggles and insufficient revenue to cover expenses. Revenue growth has been negative, marking a steep decline of 51.2% from the previous year, pointing to potential market challenges or competitive pressures.

Balance Sheet

The company maintains a robust equity base with a strong equity ratio of 92.97%, reflecting a solid asset position relative to liabilities. The debt-to-equity ratio is low at 0.01, indicating minimal leverage, which reduces financial risk. However, the return on equity (ROE) is negative at -4.38%, due to ongoing net losses, which could impact investor confidence.

Cash Flow

Cash flow metrics reveal challenges, with no reported positive free cash flow in 2024, potentially impacting liquidity. The previous year's operating cash flow was strong at HKD 245 million, but the lack of recent cash flow data suggests a need for monitoring cash management closely. Operating cash flow to net income was positive in 2023, indicating effective cash generation relative to earnings, but the current lack of data poses uncertainty.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	343.39M	306.40M	627.73M	540.63M	420.54M	424.31M
Gross Profit	231.39M	212.28M	383.10M	261.20M	224.47M	313.48M
EBITDA	103.58M	51.46M	74.13M	69.82M	218.44M	191.84M
Net Income	-38.51M	-73.45M	-146.46M	282.50M	94.24M	81.31M
Balance Sheet
Total Assets	1.85B	1.80B	2.27B	2.65B	2.01B	2.11B
Cash, Cash Equivalents and Short-Term Investments	122.33M	93.63M	67.82M	200.37M	152.18M	417.85M
Total Debt	28.38M	23.46M	367.93M	408.40M	89.39M	64.88M
Total Liabilities	141.37M	125.01M	519.99M	745.29M	387.12M	602.45M
Stockholders Equity	1.70B	1.68B	1.75B	1.90B	1.61B	1.51B
Cash Flow
Free Cash Flow	0.00	47.34M	240.23M	63.25M	-244.41M	-40.56M
Operating Cash Flow	0.00	56.77M	245.40M	196.01M	175.13M	103.28M
Investing Cash Flow	0.00	33.52M	-219.80M	-338.33M	-369.79M	-63.06M
Financing Cash Flow	0.00	-76.97M	-82.50M	135.45M	-74.71M	295.72M

7Road Holdings Limited Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 0.50
• 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:0797, the sentiment is Negative. The current price of 0.5 is below the 20-day moving average (MA) of 0.52, below the 50-day MA of 0.61, and below the 200-day MA of 0.56, indicating a bearish trend. The MACD of -0.02 indicates Negative momentum. The RSI at 35.13 is Neutral, neither overbought nor oversold. The STOCH value of 39.02 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HK:0797.

7Road Holdings Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2660	72 Outperform	HK$2.66B	7.99	12.02%	13.83%	-27.66%	-51.96%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
3798	56 Neutral	HK$1.81B	-25.64	-3.33%	7.30%	-23.42%	-191.82%
6633	56 Neutral	HK$2.20B	26.79	4.10%	―	-41.86%	―
6820	51 Neutral	HK$1.06B	14.74	5.50%	―	30.71%	―
0797	41 Neutral	HK$1.38B	-35.17	-2.25%	―	6.33%	87.05%
0302	39 Underperform	HK$1.23B	-0.43	-57.29%	―	-36.80%	-666.80%