Arrail Group Ltd. (6639) AI Stock Analysis

• Market Cap: HK$1.29B
• Dividend Yield: N/A
• Average Volume (3M): 1.51M
• Price to Earnings (P/E): 53.4
• Beta (1Y): 1.15
• Revenue Growth: -4.30%
• EPS Growth: 13.83%
• Country: HK
• Employees: 3,296
• Sector: Healthcare
• Sector Strength: 41
• Industry: Medical - Care Facilities
• EPS (TTM): 0.03
• Shares Outstanding: 564,030,940
• 10 Day Avg. Volume: 1,549,240
• 30 Day Avg. Volume: 1,508,205
• PEG Ratio: 1.08
• Price to Book (P/B): 0.47
• Price to Sales (P/S): 0.47
• P/FCF Ratio: 4.62
• 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: HK$2.50
• Price Target Upside: 1.63% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1

• Rating: 58 Neutral
• Price Target: HK$2.50 ▲(1.63% Upside)

Arrail Group Ltd. receives a moderate score due to its mixed financial performance and high valuation. While technical indicators suggest some positive momentum, the high P/E ratio indicates the stock may be overvalued. The company's stable balance sheet and strong cash flow are positive factors, but inconsistent revenue growth and operational efficiency remain challenges.

Arrail Group Ltd. Business Overview & Revenue Model

Company Description

Arrail Group Ltd. (6639) is a leading healthcare services provider in China, specializing in dental and medical services. The company operates a network of dental clinics and healthcare facilities that offer a range of services, including preventive care, orthodontics, cosmetic dentistry, and general medical consultations. With a strong focus on quality care and customer satisfaction, Arrail Group aims to enhance oral health and overall wellness for its patients.

How the Company Makes Money

Arrail Group generates revenue primarily through its dental and medical service offerings. The company's revenue model is based on the fees charged for various treatments and consultations provided at its clinics. Key revenue streams include payments for dental procedures, cosmetic enhancements, routine check-ups, and specialized medical services. Additionally, Arrail Group may benefit from partnerships with health insurance providers, which can facilitate patient access to its services and create a steady flow of revenue from insured patients. The company's focus on expanding its clinic network and enhancing service offerings also contributes to its earnings growth.

Arrail Group Ltd. Financial Statement Overview

Summary

Arrail Group Ltd. exhibits promising growth with improving profitability and strong cash flow generation. While financial stability is evident through a strong equity ratio, moderate leverage requires careful management. The company is on a positive trajectory but must continue enhancing profitability and managing debt to sustain growth.

Income Statement

Arrail Group Ltd. has shown strong revenue growth of 18.47% in the most recent year, signaling positive momentum. The gross profit margin improved to 22.49%, reflecting better cost management. However, the net profit margin is still low at 0.98%, indicating limited profitability. The turnaround in EBIT and EBITDA margins to 1.49% and 18.46%, respectively, from negative figures in prior years demonstrates improving operational efficiency.

Balance Sheet

The company has a healthy equity position with an equity ratio of 53.95%, denoting financial stability. However, the debt-to-equity ratio of 0.60 suggests moderate leverage which could pose risks if not managed carefully. The return on equity is modest at 0.98%, reflecting the need for enhanced profitability to generate better shareholder returns.

Cash Flow

Operating cash flow grew significantly, supporting a strong free cash flow growth rate of 686.08%. The operating cash flow to net income ratio of 16.12 demonstrates good cash generation relative to earnings. A solid free cash flow to net income ratio of 10.74 further underscores the company's capability to generate cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.75B	1.69B	1.75B	1.47B	1.62B	1.52B
Gross Profit	364.84M	342.09M	392.68M	247.08M	336.56M	364.42M
EBITDA	93.34M	312.65M	322.35M	87.85M	42.10M	207.44M
Net Income	20.83M	21.99M	17.16M	-219.91M	-701.03M	-599.42M
Balance Sheet
Total Assets	3.13B	3.16B	3.25B	3.06B	2.99B	2.35B
Cash, Cash Equivalents and Short-Term Investments	997.94M	1.09B	1.10B	937.53M	1.26B	727.31M
Total Debt	1.05B	1.03B	1.05B	955.68M	890.67M	1.03B
Total Liabilities	1.39B	1.38B	1.42B	1.37B	1.38B	4.81B
Stockholders Equity	1.67B	1.71B	1.76B	1.61B	1.56B	-2.50B
Cash Flow
Free Cash Flow	172.32M	172.69M	184.21M	23.50M	108.63M	213.50M
Operating Cash Flow	217.17M	231.14M	276.65M	131.66M	224.28M	242.87M
Investing Cash Flow	74.11M	-153.52M	-176.00M	-342.44M	-203.94M	61.75M
Financing Cash Flow	-274.06M	-206.84M	-106.96M	-280.35M	380.86M	217.51M

Arrail Group Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 2.46
• 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:6639, the sentiment is Negative. The current price of 2.46 is below the 20-day moving average (MA) of 2.55, above the 50-day MA of 2.31, and below the 200-day MA of 2.48, indicating a bearish trend. The MACD of 0.03 indicates Positive momentum. The RSI at 43.00 is Neutral, neither overbought nor oversold. The STOCH value of 12.00 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HK:6639.

Arrail Group Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2373	76 Outperform	HK$7.07B	27.88	26.24%	1.68%	17.69%	5.37%
2219	75 Outperform	HK$2.14B	9.87	8.35%	8.20%	0.61%	-15.89%
1951	69 Neutral	HK$8.78B	27.95	2.78%	1.99%	-1.04%	-20.43%
1846	68 Neutral	HK$1.02B	12.84	7.39%	2.59%	0.20%	-36.95%
Sector *	60 Neutral	HK$18.32B	5.45	-4.00%	3.31%	9.92%	-18.97%
6639	58 Neutral	HK$1.29B	53.36	1.27%	―	-4.30%	13.83%
3309	54 Neutral	HK$2.34B	33.92	-7.51%	1.06%	-0.56%	-323.09%

Arrail Group Ltd. Corporate Events

Arrail Group Ltd. Announces 2025 AGM with Key Resolutions

Arrail Group Ltd. has announced its 2025 Annual General Meeting to be held on September 26, 2025, in Beijing. Key agenda items include the adoption of the company’s audited financial statements, re-election of executive directors Mr. Zou Qifang and Mr. Zhang Jincai, re-appointment of PricewaterhouseCoopers as auditors, and authorizing the board to manage director and auditor remunerations. The meeting will also address resolutions regarding the issuance of additional shares, which could impact the company’s capital structure and shareholder value.

Arrail Group Waives Default Interest Amid Positive Loan Negotiations

Arrail Group Limited, a company incorporated in the British Virgin Islands and continued in the Cayman Islands, announced a supplemental update regarding its loan agreement. The company has waived a default interest amounting to US$53,041 due to positive negotiations for a loan extension and additional collateral provided by the borrower. The waiver is considered fair and reasonable, aiming to maintain a strong relationship with the borrower and minimize financial losses.

Arrail Group Limited Establishes Nomination Committee to Strengthen Governance

Arrail Group Limited, a company incorporated in the British Virgin Islands and continued in the Cayman Islands, has announced the terms of reference for its Nomination Committee. The committee will be comprised of a majority of independent non-executive directors and will be responsible for reviewing the board’s structure, identifying qualified individuals for board positions, and making recommendations on director appointments and succession planning. This move is expected to enhance the company’s governance practices and ensure a diverse and skilled board to support its corporate strategy.

Arrail Group Announces Loan Agreement Amendment and Additional Share Pledge

Arrail Group Limited, a company incorporated in the British Virgin Islands and continued in the Cayman Islands, has announced a connected transaction involving an amendment to a loan agreement and the pledge of additional shares by its controlling shareholder. The principal amount of the loan has been reduced from US$11 million to US$7.5 million, and the loan term extended by another year. To secure the loan, additional shares have been pledged, representing approximately 9.13% of the company’s total issued share capital. This transaction is subject to reporting and announcement requirements under the Listing Rules but is exempt from circular and independent shareholders’ approval.

Arrail Group Ltd. Reports Increased Profits Despite Revenue Decline

Arrail Group Ltd. announced its annual results for the year ended March 31, 2025, reporting a 3.3% decrease in revenue to RMB1,688.4 million, attributed to the economic environment affecting treatment prices. Despite the revenue decline, the company achieved a 39.4% increase in operating profit and a 20.5% rise in annual profit, driven by cost reduction and efficiency measures. The company also expanded its operations by opening a new dental hospital in Wuxi, increasing its total dental chairs to 1,566, and reported a slight increase in patient visits.