Lesi Group Limited (2540) AI Stock Analysis

• Market Cap: HK$625.00M
• Dividend Yield: N/A
• Average Volume (3M): 100.92K
• Price to Earnings (P/E): 10.5
• Beta (1Y): -0.21
• Revenue Growth: N/A
• EPS Growth: N/A
• Country: HK
• Employees: 150
• Sector: Communication Services
• Sector Strength: 97
• Industry: Advertising Agencies
• EPS (TTM): 0.02
• Shares Outstanding: 500,000,000
• 10 Day Avg. Volume: 50,250
• 30 Day Avg. Volume: 100,916
• PEG Ratio: -0.86
• Price to Book (P/B): 1.19
• Price to Sales (P/S): 1.07
• P/FCF Ratio: -50.27
• 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: 70 Outperform
• Price Target: HK$1.50 ▲(20.97% Upside)

The score is primarily supported by strong profitability trends and a low-leverage balance sheet, partially offset by weak cash flow conversion. Technicals are a headwind with the stock trading below major moving averages and negative MACD, while the low P/E provides a valuation cushion.

Positive Factors

Balance sheet strength

Very low leverage and a high equity ratio provide durable financial resilience, reducing default risk and preserving capacity to fund projects or absorb losses. Strong ROE indicates capital is used effectively, supporting sustained investment and strategic flexibility over months.

Improving profitability and margins

Consistent revenue growth alongside rising net margins and stable gross margins shows the business is improving pricing, cost control, or mix. Healthy EBIT/EBITDA margins imply operational efficiency that can support earnings durability and reinvestment over the medium term.

Diversified revenue streams and partnerships

Multiple revenue lines and strategic joint ventures reduce single-project dependency and allow risk sharing with partners and governments. This diversified model supports steadier project pipelines and revenue visibility across cycles over the next several months.

Negative Factors

Weak cash conversion

Negative operating cash flow despite reported profits signals difficulty turning earnings into spendable cash. That constrains the company's ability to fund capex, service obligations or pursue new projects without external financing, a material medium-term operational risk.

Project-driven revenue volatility

Heavy reliance on large projects and property sales makes revenues lumpy and sensitive to execution timing. Joint-venture dependence and milestone billing can create durable volatility in cash flow and earnings recognition over quarters, complicating planning and predictability.

Exposure to cyclical construction and property markets

Core operations tied to construction and real estate expose the company to macro and property-cycle swings. Demand slowdowns or tighter financing in these sectors can reduce contract awards and property sales, pressuring revenues and margins across the 2–6 month horizon.

Lesi Group Limited Business Overview & Revenue Model

Company Description

Lesi Group Limited operates as a mobile advertising service provider in the People's Republic of China. It offers mobile advertising services, such as mobile marketing planning, traffic acquisition, production of ad creatives, ad placements, ad optimization, ad campaign management, and ad distribution to customers for marketing of their brands, products, and/or services on media platforms operated by its media partners. The company formerly known as Lesi Technology Holdings Limited. Lesi Group Limited was founded in 2015 and is headquartered in Beijing, the People's Republic of China.

How the Company Makes Money

Lesi Group Limited generates revenue through multiple streams, primarily from its construction contracts and property development projects. The company undertakes large-scale construction projects, earning income from contract fees and project management services. Additionally, Lesi Group profits from selling developed properties, which can include residential units, commercial spaces, and mixed-use developments. Strategic partnerships with local governments and private developers enhance their project pipeline and provide access to lucrative contracts. Furthermore, the company may also engage in joint ventures or collaborations that allow for shared resources and risk management, thus contributing to its overall earnings.

Lesi Group Limited Financial Statement Overview

Summary

Lesi Group Limited demonstrates strong revenue and profit growth, supported by efficient operations and a robust balance sheet with low leverage. However, cash flow management remains a challenge, with negative operating cash flow impacting overall financial health. Continued focus on improving cash flow conversion will be crucial for sustaining growth.

Income Statement

The company shows strong revenue growth with a 8.5% increase from 2023 to 2024. Gross profit margin is stable at approximately 14.9% for 2024. Net profit margin improved to 10.6% in 2024, indicating enhanced profitability. EBIT and EBITDA margins are also healthy, reflecting efficient operations.

Balance Sheet

The debt-to-equity ratio is low at 0.07, indicating low leverage and financial stability. Return on Equity (ROE) is strong at 11.8%, showcasing effective use of equity. The equity ratio is high at 75.1%, suggesting a strong equity base. Overall, the balance sheet reflects a solid financial position with low risk.

Cash Flow

The company experienced a decline in free cash flow, with negative growth from 2023 to 2024. Operating cash flow to net income ratio is negative, indicating challenges in converting income to cash. However, the free cash flow to net income ratio is improving, suggesting potential for future cash flow stabilization.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.06B	681.51M	628.03M	492.57M	470.18M	424.38M
Gross Profit	91.69M	101.44M	104.00M	119.24M	112.45M	86.07M
EBITDA	59.71M	75.99M	72.81M	74.53M	64.75M	56.31M
Net Income	54.87M	72.49M	65.23M	67.29M	57.49M	49.77M
Balance Sheet
Total Assets	976.98M	815.66M	585.37M	564.32M	568.63M	454.18M
Cash, Cash Equivalents and Short-Term Investments	106.35M	149.42M	76.85M	59.20M	55.91M	25.90M
Total Debt	126.66M	39.96M	58.08M	36.03M	43.55M	48.39M
Total Liabilities	354.60M	203.65M	159.68M	158.14M	209.54M	174.30M
Stockholders Equity	622.38M	612.02M	423.76M	360.52M	359.08M	279.88M
Cash Flow
Free Cash Flow	77.61M	-14.54M	103.00K	15.47M	48.95M	-18.22M
Operating Cash Flow	77.88M	-14.24M	269.00K	15.52M	49.42M	-18.02M
Investing Cash Flow	-266.00K	-290.00K	-166.00K	-24.00K	-155.00K	388.00K
Financing Cash Flow	0.00	87.33M	17.55M	-11.21M	-13.08M	3.80M

Lesi Group Limited Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1.24
• 50DMA: Negative
• 100DMA: Negative
• 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:2540, the sentiment is Negative. The current price of 1.24 is below the 20-day moving average (MA) of 1.31, below the 50-day MA of 1.37, and below the 200-day MA of 1.40, indicating a bearish trend. The MACD of -0.04 indicates Positive momentum. The RSI at 43.07 is Neutral, neither overbought nor oversold. The STOCH value of 49.02 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HK:2540.

Lesi Group Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2540	70 Outperform	HK$625.00M	10.52	9.22%	―	―	―
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
8121	55 Neutral	HK$25.81M	-6.31	-7.45%	―	34.13%	-139.87%
8627	49 Neutral	HK$104.00M	-33.33	-3.32%	―	-55.47%	-205.41%
1736	46 Neutral	HK$25.49M	-1.40	―	―	-1.46%	71.80%
8238	40 Underperform	HK$20.47M	-1.02	―	―	22.85%	76.33%
8401	40 Underperform	HK$66.41M	-12.10	-17.66%	―	236.80%	80.53%