Zuoli Kechuang Micro-finance Co. Ltd. Class H (6866) AI Stock Analysis

• Market Cap: HK$430.70M
• Dividend Yield: 4.88%
• Average Volume (3M): 162.27K
• Price to Earnings (P/E): 7.1
• Beta (1Y): 0.18
• Revenue Growth: -12.94%
• EPS Growth: -15.93%
• Country: HK
• Employees: 77
• Sector: Financial
• Sector Strength: 70
• Industry: Financial - Credit Services
• EPS (TTM): 0.02
• Shares Outstanding: 300,000,000
• 10 Day Avg. Volume: 54,000
• 30 Day Avg. Volume: 162,266
• PEG Ratio: -0.16
• Price to Book (P/B): 0.16
• Price to Sales (P/S): 2.60
• P/FCF Ratio: 2.00
• 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: 64 Neutral
• Price Target: HK$0.41 ▲(47.14% Upside)

The score is driven primarily by middling financial performance: strong margins and improving leverage are offset by ongoing revenue contraction, weakening ROE, and less consistent cash flow. Technicals are supportive but look overbought, while valuation is a clear positive with a low P/E and meaningful dividend yield.

Positive Factors

High Net Profit Margins

Sustained very high net margins provide a durable earnings cushion and indicate strong pricing or cost advantages in core credit services. High margins support internal funding for operations, dividends and deleveraging, helping preserve profitability through industry cycles.

Improving Leverage

A steadily more conservative balance sheet reduces financial risk and increases strategic optionality. Lower leverage improves resilience to credit stress, lowers interest burden, and creates capacity to fund growth or returns without compromising solvency over the medium term.

Strong Cash Generation

Consistent conversion of earnings to operating and free cash flow supports durable capital allocation: reinvestment, dividend payments or debt reduction. Reliable cash generation enhances financial flexibility and reduces reliance on external financing over multiple quarters.

Negative Factors

Persistent Revenue Declines

A multi-year shrinking top line undermines long-term growth prospects and scalability of the business model. Persistent revenue contraction erodes the base that supports margins and cash flow, making it harder to sustain investment, market share and profitable expansion over coming quarters.

Weakening Return on Equity

A declining ROE signals deteriorating capital efficiency versus prior mid-to-high single-digit levels. Low ROE can limit long-term shareholder returns, reduce attractiveness for new equity, and indicates the firm is generating less profit per unit of shareholder capital over time.

Cash Flow Volatility

Intermittent negative and declining free cash flow raises execution and funding risk across cycles. Volatility can force higher liquidity buffers or external funding during downturns, constraining capital allocation to growth or returns and increasing the chance of procyclical cuts in tough periods.

Zuoli Kechuang Micro-finance Co. Ltd. Class H Business Overview & Revenue Model

Company Description

Zuoli Kechuang Micro-finance Company Limited operates as a microfinance company in the People's Republic of China. The company offers unsecured, guaranteed, collateralized, and pledged loans; enterprise loans, including agriculture loans and technology enterprises credit loans, as well as loans for other small and medium-sized enterprises and microenterprises; individual business, start-up, and other loans; and Internet micro-loans. The company was formerly known as Deqing Zuoli Kechuang Micro-finance Company Limited and changed its name to Zuoli Kechuang Micro-Finance Company Limited in April 2014. Zuoli Kechuang Micro-finance Company Limited was founded in 2011 and is headquartered in Huzhou, the People's Republic of China.

How the Company Makes Money

Zuoli Kechuang Micro-finance Co. Ltd. makes money by earning interest on the loans it provides to its clients, which include small and medium-sized enterprises and individual entrepreneurs. The company charges interest on both secured and unsecured loans, with interest rates determined by the risk profile of the borrower and prevailing market conditions. Additionally, the company may earn revenue from loan-related fees, such as origination fees, processing fees, and late payment penalties. Zuoli Kechuang Micro-finance may also benefit from partnerships with banks or financial institutions for funding and risk-sharing purposes, which can enhance its lending capacity and reduce operational risks.

Zuoli Kechuang Micro-finance Co. Ltd. Class H Financial Statement Overview

Summary

Strong reported profitability (very high net margins) and improving leverage support the score, but persistent revenue declines—especially the sharp 2024 drop—plus weaker ROE and some cash flow volatility (notably 2022 and softer 2024 vs. 2023) keep it in the mid range.

Income Statement

Profitability is a clear strength: the company reports very high net profit margins (about 45%–50% from 2022–2024), and 2024 shows strong operating profitability as well. However, growth is a key weakness—revenue has declined every year shown, with a steep drop in 2024 (down ~28% year over year) following smaller declines in prior years. Net income also fell in 2024 versus 2023, indicating earnings pressure alongside the shrinking top line.

Balance Sheet

Leverage appears manageable for the period, with debt-to-equity improving over time (from ~0.44 in 2019 down to ~0.23 in 2024) and equity building gradually. The main offset is softer profitability on capital: return on equity has trended down and is relatively low in 2024 (~3.1%) versus mid-to-high single digits earlier in the period, suggesting weaker capital efficiency despite a more conservative balance sheet.

Cash Flow

Cash generation is generally solid, with free cash flow closely matching net income in most years (near 1.0) and strong operating cash flow in 2023–2024. That said, cash flow has been volatile—2022 posted negative operating and free cash flow, and free cash flow declined in 2024 versus 2023, which is consistent with the recent earnings and revenue downturn.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	131.12M	123.77M	195.08M	180.61M	199.13M	212.08M
Gross Profit	129.74M	123.77M	195.08M	208.27M	251.94M	212.08M
EBITDA	36.58M	96.77M	0.00	140.73M	181.41M	0.00
Net Income	49.40M	62.44M	92.65M	93.34M	116.49M	110.24M
Balance Sheet
Total Assets	2.52B	2.58B	2.66B	2.79B	2.65B	2.60B
Cash, Cash Equivalents and Short-Term Investments	10.28M	10.52M	17.48M	16.59M	42.68M	78.23M
Total Debt	446.97M	463.26M	596.46M	761.88M	649.97M	663.06M
Total Liabilities	459.56M	537.41M	654.60M	826.12M	722.59M	755.45M
Stockholders Equity	2.00B	1.98B	1.94B	1.90B	1.86B	1.75B
Cash Flow
Free Cash Flow	0.00	160.85M	284.92M	-5.50M	69.12M	142.81M
Operating Cash Flow	0.00	160.85M	284.95M	-5.46M	70.28M	148.84M
Investing Cash Flow	0.00	58.00K	96.00K	-26.00K	118.00K	-7.04M
Financing Cash Flow	0.00	-167.85M	-284.04M	-19.51M	-104.22M	-118.83M

Zuoli Kechuang Micro-finance Co. Ltd. Class H Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 0.28
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:6866, the sentiment is Neutral. The current price of 0.28 is below the 20-day moving average (MA) of 0.36, below the 50-day MA of 0.32, and below the 200-day MA of 0.30, indicating a neutral trend. The MACD of 0.01 indicates Positive momentum. The RSI at 55.67 is Neutral, neither overbought nor oversold. The STOCH value of 31.79 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HK:6866.

Zuoli Kechuang Micro-finance Co. Ltd. Class H Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1577	80 Outperform	HK$680.00M	6.20	8.46%	5.46%	-24.04%	60.24%
1669	71 Outperform	HK$360.00M	7.35	5.24%	5.43%	-1.47%	2.86%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
6866	64 Neutral	HK$430.70M	7.13	2.75%	4.88%	-12.94%	-15.93%
1563	59 Neutral	HK$282.38M	19.88	0.49%	―	8.77%	-76.88%
1543	51 Neutral	HK$382.39M	8.57	2.04%	6.48%	-15.82%	2.51%

Zuoli Kechuang Micro-finance Co. Ltd. Class H Corporate Events

Zuoli Kechuang to Surrender Parent-Level Micro-Finance License and Rebrand as Holding Company

Zuoli Kechuang Micro-finance Company Limited plans to surrender the micro-finance license held at the listed parent-company level and formally reposition itself as a general holding company, while keeping the micro-finance license and operating activities concentrated in its main subsidiary, Deqing Jinhui Micro-finance Company Limited. Subject to regulatory approval from the Zhejiang Provincial Financial Bureau, the move will be accompanied by a change of company name and business scope, aiming to eliminate overlapping licensing and management structures, streamline operations, comply with PRC naming rules on the use of “micro-finance,” and ultimately enhance efficiency and shareholder value.

The most recent analyst rating on (HK:6866) stock is a Hold with a HK$0.32 price target. To see the full list of analyst forecasts on Zuoli Kechuang Micro-finance Co. Ltd. Class H stock, see the HK:6866 Stock Forecast page.

Zuoli Kechuang Reports Decrease in Nine-Month Profit for 2025

Zuoli Kechuang Micro-finance Co. Ltd. announced its unaudited consolidated results for the nine months ending September 30, 2025, showing a decrease in profit compared to the previous year. The company reported a net interest income of RMB 110,597,000 and a profit of RMB 53,689,000, reflecting a decline in interest income and increased impairment losses, which may impact its financial stability and stakeholder confidence.