Microware Group Ltd. (1985) AI Stock Analysis

• Market Cap: HK$396.00M
• Dividend Yield: 8.55%
• Average Volume (3M): 151.40K
• Price to Earnings (P/E): 48.1
• Beta (1Y): -0.12
• 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

Recurring revenue from managed services and maintenance

Microware’s business mixes project revenues with recurring maintenance, managed services and software licensing. That revenue mix creates structural cash visibility and client stickiness, reducing revenue volatility and supporting predictable earnings and long-term service renewals over 2–6 months and beyond.

Very strong free cash flow improvement

A >1000% uplift in free cash flow signals durable cash generation capacity and operating efficiency. Strong cash conversion supports reinvestment in services, working capital needs, and potential shareholder returns while providing flexibility to fund growth or buffer margin pressure over the medium term.

Low leverage and solid capital structure

A debt-to-equity of 0.31 and a strong equity ratio imply limited financial risk and capacity to fund operations or pursue selective investments without distress. Low leverage preserves flexibility for contract-backed working capital and reduces refinancing risk, improving balance-sheet resilience.

Negative Factors

Pressure on profitability margins

Declining EBIT and net margins point to margin compression from pricing pressure, higher input costs, or lower project mix leverage. Sustained margin erosion can impair return generation even with steady revenue, reducing funds available for reinvestment and pressuring long-term profitability metrics.

Low and falling return on equity

ROE of 3.66% indicates weak profit generation relative to equity capital. Persistently low ROE limits shareholder return potential and suggests the company struggles to convert assets and capital into profitable growth, which is a structural concern for long-term capital allocation decisions.

Earnings volatility and negative EPS trend

A sharply negative EPS growth rate signals recent earnings deterioration or one-off losses, highlighting volatility in reported profitability. Such swings can reflect project timing, margin shocks or non-recurring items, and undermine confidence in sustainable earnings power over the medium term.

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. primarily makes money by selling and delivering enterprise IT projects and recurring IT services. Key revenue streams typically include: (1) Solution/integration project revenue: fees from designing, supplying, and implementing IT systems (e.g., infrastructure, security, end-user computing, and related enterprise solutions). This often bundles hardware/software procurement with professional services such as deployment, configuration, migration, and systems integration. (2) Maintenance and support: recurring income from maintenance contracts, technical support, and warranty/repair arrangements for deployed systems. (3) Managed services/outsourcing: recurring service fees for operating, monitoring, and managing customers’ IT environments (e.g., managed infrastructure, managed security, service desk, and operational support), usually under multi-month or multi-year contracts. (4) Software and licensing-related revenue: margin and service fees associated with reselling software subscriptions/licenses and providing associated implementation and renewal services where applicable. (5) Professional services: consulting, assessment, and project-based advisory services billed on a fixed-price or time-and-materials basis. Significant factors that can contribute to earnings include vendor/technology-partner ecosystems (resale authorizations, solution certifications, and referral/partner incentives), the scale of long-term support and managed-service contracts, and public/private-sector procurement cycles. null

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: Negative
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 1.36, below the 50-day MA of 1.33, and below the 200-day MA of 1.39, indicating a bearish trend. The MACD of >-0.01 indicates Positive momentum. The RSI at 47.65 is Neutral, neither overbought nor oversold. The STOCH value of 11.11 is Positive, 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$681.57M	5.80	6.75%	7.27%	7.39%	2.23%
0046	70 Outperform	HK$342.18M	4.94	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$663.15M	3.67	6.63%	3.66%	5.84%	94.89%
1985	55 Neutral	HK$396.00M	48.09	-0.77%	8.55%	-1.86%	-105.19%
1204	54 Neutral	HK$975.00M	191.08	0.21%	―	1.52%	-83.72%
1075	51 Neutral	HK$889.71M	14.63	1.74%	2.52%	8.90%	―

Microware Group Ltd. Corporate Events

Microware Adds Pricing Details on 29.9 Million Share Awards in 2025 Report

Microware Group Limited has issued a supplemental announcement to its annual report for the year ended 31 March 2025, providing additional details on its share award scheme. The board clarified that 29,998,000 awarded shares granted under the scheme required no purchase price from awardees upon vesting, and that the weighted average closing price immediately before vesting during the year was HK$1.147.

The company emphasized that this new disclosure does not alter any other information in the 2025 annual report, which otherwise remains unchanged. The clarification refines transparency around Microware’s equity-based remuneration, offering investors and stakeholders more precise data on the cost and pricing context of the awarded shares without signalling any change to previously reported financials or operations.

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.

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.