Microware Group Ltd. (1985) AI Stock Analysis

• Market Cap: HK$405.00M
• Dividend Yield: 8.55%
• Average Volume (3M): 151.40K
• Price to Earnings (P/E): ―
• Beta (1Y): -0.14
• Revenue Growth: -1.86%
• EPS Growth: -105.19%
• Country: HK
• Employees: 273
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): <0.01
• Shares Outstanding: 300,000,000
• 10 Day Avg. Volume: 259,000
• 30 Day Avg. Volume: 151,400
• PEG Ratio: -0.58
• Price to Book (P/B): 1.60
• Price to Sales (P/S): 0.24
• P/FCF Ratio: 4.49
• 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: 55 Neutral
• Price Target: HK$1.50 ▲(16.28% Upside)
• Action: Reiterated Date: 11/30/25
• Date: Action: Reiterated 11/30/25

Microware Group Ltd. has a moderate financial performance with strong cash flow and a stable balance sheet, but faces challenges in profitability and valuation. The technical analysis indicates bearish momentum, which is a significant risk. The high dividend yield is a positive aspect but is overshadowed by the negative P/E ratio and technical indicators.

Positive Factors

Low Leverage / Strong Balance Sheet

Low leverage (D/E 0.31) provides durable financial flexibility for an IT services firm. It reduces insolvency risk, supports bidding on multi-year public and private contracts, and allows management to fund working capital, strategic hires, or targeted acquisitions without stressing liquidity.

Robust Cash Generation

A >1000% rise in free cash flow signals strong cash conversion from operations, supporting sustainable funding for managed services, maintenance contracts and reinvestment. Reliable cash generation strengthens the firm's ability to finance growth and return capital without relying on new debt.

Recurring Services / Diversified Revenue

A business mix heavy in maintenance, managed services and licensing creates recurring revenue and higher customer retention. This structural revenue base improves visibility, enables cross-sell of cloud/cybersecurity services, and makes revenue less cyclically sensitive than pure project-led peers.

Negative Factors

Declining Profitability Margins

Falling EBIT and net margins reflect persistent pressure on operational efficiency or pricing. For an integration and managed-services provider, margin erosion can be structural—driven by competitive tendering, higher labor or subcontract costs—and may limit free cash flow expansion long-term.

Severely Negative EPS Growth

An EPS decline of over 100% indicates earnings volatility or recent losses, undermining sustainable profit generation. Persistent negative EPS trends reduce retained earnings, constrain reinvestment, and raise questions about recurring profitability in project-driven IT services.

Low Return on Equity

ROE at ~3.7% signals weak capital efficiency versus peers. Low ROE can persist if margins remain compressed or the business is asset- or labor-intensive, limiting shareholder value creation and reducing headroom for dividend increases or sizable reinvestment without operational improvement.

Microware Group Ltd. Business Overview & Revenue Model

Company Description

Microware Group Limited, an investment holding company, provides information technology (IT) infrastructure solutions and IT managed services for the government, educational institutions, public bodies, non-profits organizations, and commercial organizations in Hong Kong. The company offers consultancy and advisory; and hardware and software procurement services, as well as cyber securities training programs. In addition, it engages in the management and maintenance of the IT infrastructure solutions. The company was incorporated in 2016 and is headquartered in Kwun Tong, Hong Kong. Microware Group Limited is a subsidiary of Microware International Holdings Limited.

How the Company Makes Money

Microware Group Ltd. generates revenue through multiple streams, primarily by selling software licenses for its operating systems and development tools. The company also earns money through service contracts, providing technical support, and consulting services to clients who require assistance in integrating and optimizing their systems. Additionally, Microware Group Ltd. has established partnerships with key players in the telecommunications and automotive sectors, which help to drive sales through collaborative projects and joint ventures. The company may also receive revenue from training programs and workshops aimed at educating clients on using its products effectively.

Microware Group Ltd. Financial Statement Overview

Summary

Microware Group Ltd. demonstrates moderate financial health with consistent revenue growth and strong cash flow generation. The company maintains a stable balance sheet with low leverage, though profitability margins have faced pressure. The overall financial position is solid, with opportunities for improving operational efficiency and profitability.

Income Statement

Microware Group Ltd. has shown consistent revenue growth over the years, with a recent growth rate of 2.4%. However, profitability margins such as net profit margin and EBIT margin have declined, indicating pressure on operational efficiency. The gross profit margin has improved slightly, suggesting better cost management. Overall, the income statement reflects moderate growth with some profitability challenges.

Balance Sheet

The company maintains a healthy balance sheet with a low debt-to-equity ratio of 0.31, indicating low leverage and financial stability. Return on equity has decreased to 3.66%, reflecting reduced profitability. The equity ratio remains strong, suggesting a solid capital structure. Overall, the balance sheet is stable with low financial risk.

Cash Flow

Microware Group Ltd. has significantly improved its free cash flow, with a growth rate of over 1000%, indicating strong cash generation capabilities. The operating cash flow to net income ratio is positive, reflecting efficient cash conversion. However, the free cash flow to net income ratio has decreased, suggesting potential reinvestment or operational challenges. Overall, the cash flow statement shows robust cash generation with some areas for improvement.

Breakdown	TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement
Total Revenue	1.43B	1.49B	1.23B	1.17B	1.15B	1.11B
Gross Profit	196.13M	188.26M	144.96M	121.57M	132.62M	142.03M
EBITDA	36.35M	39.15M	57.59M	45.17M	51.67M	64.97M
Net Income	-1.59M	8.16M	36.23M	33.18M	31.97M	47.33M
Balance Sheet
Total Assets	576.39M	727.33M	516.94M	516.83M	543.22M	489.47M
Cash, Cash Equivalents and Short-Term Investments	128.62M	170.40M	165.19M	293.33M	269.61M	267.57M
Total Debt	131.29M	70.06M	20.57M	12.61M	22.88M	7.27M
Total Liabilities	385.30M	504.72M	335.63M	304.36M	332.42M	268.65M
Stockholders Equity	191.09M	222.62M	181.31M	212.47M	211.76M	221.79M
Cash Flow
Free Cash Flow	37.41M	79.19M	-24.86M	74.92M	43.77M	82.99M
Operating Cash Flow	44.90M	86.78M	-24.62M	77.21M	45.97M	86.47M
Investing Cash Flow	47.49M	-60.99M	4.26M	-1.48M	-1.38M	6.84M
Financing Cash Flow	-72.44M	-24.67M	-68.10M	-52.06M	-42.56M	-67.72M

Microware Group Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1.29
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:1985, the sentiment is Negative. The current price of 1.29 is below the 20-day moving average (MA) of 1.38, below the 50-day MA of 1.31, and below the 200-day MA of 1.39, indicating a neutral trend. The MACD of 0.02 indicates Positive momentum. The RSI at 49.11 is Neutral, neither overbought nor oversold. The STOCH value of 28.21 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HK:1985.

Microware Group Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1522	71 Outperform	HK$692.06M	3.78	6.75%	7.27%	7.39%	2.23%
0046	70 Outperform	HK$337.32M	11.45	5.83%	7.24%	-1.26%	-10.80%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
0771	61 Neutral	HK$705.12M	4.59	6.77%	3.66%	5.84%	94.89%
1985	55 Neutral	HK$405.00M	-201.49	-0.83%	8.55%	-1.86%	-105.19%
1204	54 Neutral	HK$925.00M	1,321.43	0.21%	―	1.52%	-83.72%
1075	51 Neutral	HK$881.02M	41.47	1.79%	2.52%	8.90%	―

Microware Group Ltd. Corporate Events

Microware Replaces Deloitte With HLB to Cut Audit Costs Amid PRC Expansion

Microware Group Limited has announced a change of auditor after failing to reach agreement with Deloitte Touche Tohmatsu on audit fees for the year ending 31 March 2026, citing additional audit work arising from its business expansion in the mainland China market and newly acquired investments. Deloitte confirmed there were no other matters requiring shareholder attention, and the board and audit committee likewise reported no disagreements beyond fees.

After reviewing proposals from several firms, the board, on the audit committee’s recommendation, chose HLB Hodgson Impey Cheng Limited as the new auditor, pointing to its competitive pricing together with relevant industry experience and resources. Microware expects the switch to enhance cost-effectiveness and lower operating expenses without affecting audit quality or delaying the release of its 2026 annual results, as Deloitte had not yet commenced audit work.

The most recent analyst rating on (HK:1985) stock is a Hold with a HK$1.50 price target. To see the full list of analyst forecasts on Microware Group Ltd. stock, see the HK:1985 Stock Forecast page.