SK Target Group Ltd. (8427) AI Stock Analysis

• Market Cap: HK$220.68M
• Dividend Yield: N/A
• Average Volume (3M): 57.21K
• Price to Earnings (P/E): ―
• Beta (1Y): -0.67
• Revenue Growth: 8.17%
• EPS Growth: -22.45%
• Country: HK
• Employees: 70
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Communication Equipment
• EPS (TTM): 0.09
• Shares Outstanding: 16,567,633
• 10 Day Avg. Volume: 48,400
• 30 Day Avg. Volume: 57,210
• PEG Ratio: 0.89
• Price to Book (P/B): 0.55
• Price to Sales (P/S): 0.64
• P/FCF Ratio: 7.91
• 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: 54 Neutral
• Price Target: HK$15.00 ▼(-39.95% Downside)
• Action: Reiterated Date: 03/06/26
• Date: Action: Reiterated 03/06/26

The score is held back primarily by weak technicals (downtrend below major moving averages with negative MACD) and very low profitability (near-zero net margin and ROE). These are partially offset by a stable balance sheet with low leverage and improving gross margin, but declining free cash flow and limited valuation visibility keep the overall score in the mid-range.

Positive Factors

Low leverage and strong equity base

A low debt-to-equity ratio and high equity ratio give the company durable financial flexibility. This reduces default risk, supports investment or acquisition optionality, and allows the business to withstand cyclical downturns without urgent refinancing pressure.

Revenue growth with improving gross margin

Consistent revenue growth coupled with an improving gross margin indicates the company is gaining traction and managing cost of goods sold. Over months this supports stronger operating leverage potential and better ability to absorb SG&A or invest in product/service improvements.

Positive operating cash flow

Positive operating cash flow signals the core business generates cash from operations, a durable source for funding working capital and routine capex. It underpins financial stability and creditor confidence even if free cash flow has recently weakened.

Negative Factors

Extremely low profitability

Very low net margin and ROE indicate the company returns minimal profit on sales and shareholder capital. Persistently weak profitability limits ability to self-fund growth, accumulate reserves, and deliver meaningful shareholder returns without structural improvements to pricing or cost base.

Declining free cash flow

A material decline in free cash flow reduces capacity for capital investments, dividends, and debt reduction. Over a multi-month horizon this raises reliance on external financing for strategic moves and weakens resilience to demand shocks or unexpected expenses.

Negative EPS growth

Falling EPS points to deteriorating profitability or one-off hits that are eroding earnings power. If the negative trend persists, it will constrain reinvestment and undermine management's ability to improve margins, making long-term recovery more challenging.

SK Target Group Ltd. Business Overview & Revenue Model

Company Description

SK Target Group Limited, an investment holding company, manufactures and trades in precast concrete junction boxes under the Target brand name in Malaysia. The company operates through Manufacturing and Trading; Other Building Materials and Services; Japanese Catering Services; and Sourcing Services segments. Its concrete junction boxes are used in telecommunication and electrical infrastructures upgrade and expansion works, as well as in construction projects. The company also trades in junction box accessories and pipes, including emergency telephone plinth and street lighting footing; and provides mobile crane rental and ancillary services, such as uplifting services for precast concrete junction boxes. In addition, it offers catering services; and materials sourcing services. The company was founded in 1993 and is headquartered in Seri Kembangan, Malaysia.

How the Company Makes Money

SK Target Group Ltd. generates revenue through multiple streams, primarily by offering logistics and supply chain management services to a wide range of clients. Key revenue streams include fees for warehousing services, transportation charges for freight services, and consulting fees for supply chain optimization projects. Additionally, the company may engage in partnerships with major retailers and manufacturers to provide tailored logistics solutions, which can lead to long-term contracts and stable revenue. The integration of technology in its operations also allows SK Target Group Ltd. to improve efficiency and reduce costs, further contributing to its profitability.

SK Target Group Ltd. Financial Statement Overview

Summary

Financials are mixed: revenue growth is modest and gross margin improved to 29.75%, but profitability is very weak (net margin 0.26% and ROE 0.22%). Balance sheet leverage is low (debt-to-equity 0.19; equity ratio 66.56%), while cash flow is a concern due to a significant decline in free cash flow and only moderate cash conversion (FCF to net income 0.39).

Income Statement

SK Target Group Ltd. has shown a steady improvement in revenue with a growth rate of 2.23% in the latest year. The gross profit margin has improved to 29.75%, indicating better cost management. However, the net profit margin remains low at 0.26%, suggesting limited profitability. The EBIT and EBITDA margins are moderate, reflecting operational efficiency improvements.

Balance Sheet

The company maintains a healthy debt-to-equity ratio of 0.19, indicating low leverage and financial stability. The equity ratio stands at 66.56%, showing a strong equity base. However, the return on equity is low at 0.22%, suggesting limited returns on shareholder investments.

Cash Flow

The operating cash flow is positive, but the free cash flow has decreased significantly, indicating potential cash management issues. The free cash flow to net income ratio is 0.39, which is moderate but suggests room for improvement in cash generation relative to net income.

Breakdown	May 2024	May 2023	May 2022	May 2021	May 2020
Income Statement
Total Revenue	31.55M	30.68M	30.30M	21.29M	21.07M
Gross Profit	9.39M	8.56M	6.92M	3.57M	4.67M
EBITDA	2.49M	2.64M	2.18M	-118.00K	-1.01M
Net Income	82.00K	108.00K	88.00K	-1.92M	-4.85M
Balance Sheet
Total Assets	55.16M	50.61M	50.66M	41.69M	42.41M
Cash, Cash Equivalents and Short-Term Investments	21.55M	28.23M	28.07M	23.64M	23.20M
Total Debt	7.04M	3.85M	4.31M	1.45M	1.53M
Total Liabilities	18.45M	14.31M	15.48M	8.78M	8.82M
Stockholders Equity	36.71M	36.30M	35.17M	32.91M	33.59M
Cash Flow
Free Cash Flow	2.54M	-1.00M	3.21M	-1.04M	-1.62M
Operating Cash Flow	6.47M	-441.00K	3.50M	-845.00K	122.00K
Investing Cash Flow	-12.13M	1.24M	390.00K	141.00K	-1.28M
Financing Cash Flow	-285.00K	-54.00K	1.10M	434.00K	1.56M

SK Target Group Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 24.98
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:8427, the sentiment is Negative. The current price of 24.98 is above the 20-day moving average (MA) of 16.49, above the 50-day MA of 18.61, and below the 200-day MA of 25.16, indicating a bearish trend. The MACD of -1.45 indicates Positive momentum. The RSI at 20.78 is Positive, neither overbought nor oversold. The STOCH value of 2.69 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HK:8427.

SK Target Group Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1473	68 Neutral	HK$539.12M	7.47	12.27%	2.53%	19.80%	―
1617	65 Neutral	HK$894.43M	1.60	7.40%	―	-9.34%	605.26%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
1202	59 Neutral	HK$556.00M	169.09	-0.09%	―	-23.93%	-109.41%
1720	56 Neutral	HK$682.00M	3.36	3.54%	―	8.78%	160.00%
8427	54 Neutral	HK$220.68M	―	1.30%	―	8.17%	-22.45%
1613	46 Neutral	HK$94.31M	-1.99	-30.44%	―	-58.81%	-10.51%