Yongmao Holdings Limited

Sources: FY2025–FY2026 from the FY2026 Results announcement (unaudited condensed statements). FY2022–FY2024 revenue, PBT and attributable net profit from the AR2026 Financial Highlights. Other FY2022–FY2024 line items from S&P Global Market Intelligence via StockAnalysis. All figures in RMB millions unless stated.

Income statement

Notes:

• EBITDA (derived) = profit before tax + finance costs + depreciation − interest income.

• EPS for FY2022–FY2024 is derived as attributable profit divided by 88,749,997 shares. FY2025–FY2026 EPS are as reported.

• FY2023 and FY2026 dividends each comprise 1 S cent first and final plus 1 S cent special.

• FY2025 net profit including non-controlling interests was RMB35.2 million; FY2026 was RMB12.6 million.

Margins

Revenue CAGR FY2022–FY2026 (4 years): −9.0% (derived).

Half-year profile

Sources: FY2026 Results; 1H FY2026 results via MiniChart. 1H FY2026 was a loss; 2H FY2026 recovered.

Commentary — income statement. Revenue peaked in FY2022 at RMB1.11 billion, when PRC construction was still strong. It fell for two years as the residential property downturn deepened. FY2025 recovered 11.3%, driven by mega-size cranes for wind and nuclear projects (AR2025). FY2026 fell back 13.3% because crane unit sales fell 17.1% and component sales fell 33.8%.

Two features stand out:

1. Gross margin has improved steadily, from 27.7% to 29.6%. Management attributes this to a mix shift toward higher-margin luffing models and a larger share of rental and service income. 2H FY2026 gross margin of 30.7% was the highest half-year figure in the period reviewed.

2. Below gross profit, earnings have been squeezed. Depreciation has risen 62% since FY2022 (RMB70.1 million to RMB113.9 million) as the rental fleet grew. Finance costs rose 35% to RMB23.0 million. FY2026 also had a net FX loss of RMB11.9 million, against a gain of RMB4.3 million in FY2025. The FX loss came mainly from a weaker HKD against RMB (net RMB liabilities in the Hong Kong subsidiary) and a weaker USD against RMB and SGD (net USD assets in the PRC and Singapore subsidiaries).

Administrative expenses fell 12.5% to RMB78.9 million on lower staff and professional costs, and distribution costs fell 5.6%. These savings were not enough to offset the lower gross profit. FY2026 also benefited from a RMB1.3 million tax credit, from using previously unrecognised tax losses.

Comprehensive income. FY2026 total comprehensive income was a loss of RMB26.3 million. The main items were a RMB29.8 million fair-value loss on the 11.6% stake in Tat Hong Equipment (China), held at fair value through OCI, and a RMB9.0 million translation loss.

Balance sheet

Notes:

• Total debt follows the S&P definition: bank loans, hire purchase, lease liabilities and short-term securities (tokenised commercial paper). For FY2025 (RMB43.2 million) and FY2026 (RMB39.7 million) it also includes amounts owed to a corporate shareholder of a subsidiary.

• On the company's own "borrowings" definition, total debt was RMB483.4 million in FY2025 and RMB498.6 million in FY2026.

• No goodwill or intangible assets are recorded.

FY2026 borrowings detail (FY2026 Results, Note 15; RMB M):

Secured bank loans are backed by bank deposits of RMB1.5 million and PPE of RMB102.6 million. Unsecured facilities are guaranteed by the company, a fellow subsidiary and certain directors.

Cash flow

As a rough illustration only: adding back the self-built rental cranes gives "pre-fleet-investment" operating cash flow of about RMB165.6 million in FY2025 and RMB127.3 million in FY2026 (derived). The underlying rental business does generate cash; the Group has been reinvesting all of it, and more, in fleet expansion.

Ratios

Notes:

• ROIC (derived) = operating income × (1 − 25% notional tax) ÷ (total equity + net debt).

• DSO, DIO and DPO use year-end balances. DSO includes non-current instalment receivables.

• S&P reports trailing-twelve-month ROE of 1.25% and ROIC of 2.93% on its own methodology.

Receivables quality (FY2026 Results, Note 12). Gross trade receivables were RMB516.3 million at 31 March 2026, with a credit-loss allowance of RMB52.2 million (10.1%). Of RMB504.2 million in financial-asset receivables:

• RMB147.7 million were current;

• RMB138.4 million were 0–3 months past due;

• RMB52.4 million were 3–6 months past due;

• RMB165.7 million (33%) were more than 6 months past due, up from RMB133.8 million a year earlier.

Commentary — balance sheet and cash flow. The balance sheet has moved from low leverage to moderate leverage in two years:

• Net debt rose from RMB93 million (FY2023) to RMB360 million (FY2026).

• Net debt to EBITDA went from 0.56x to 2.46x.

• Interest cover fell below 2x.

• 62% of company-defined borrowings (RMB309.9 million) fall due within 12 months, against cash of RMB177.8 million. The Group relies on rolling short-term bank lines, plus three-month digital commercial paper as a supplement.

The causes are fleet expansion (PPE up 62% since FY2022, with machinery at gross cost rising from RMB691 million to RMB1,181 million) and a long cash conversion cycle (about 390 days). Equity of about RMB990 million and a P/B near 0.33x leave a large book-value cushion. However, the Altman Z-score of 1.13 (S&P via StockAnalysis) signals balance-sheet stress under standard screens. Dividends are small, about RMB5 million a year, and have been kept even as free cash flow turned negative. The FY2026 special dividend doubles the cash payout to about RMB9–10 million.

Management guidance

There is no numerical guidance. Management expects a "challenging" environment, commits to cost discipline, and names three priorities: deepen the position in wind and nuclear, expand overseas, and build digital and intelligent controls into its cranes. It notes Hong Kong's early property recovery and steady Singapore construction demand as supports.

Consensus growth expectations

None available, because there is no analyst coverage.

Bull case

1. Mix-driven margin expansion carries through. 2H FY2026 gross margin reached 30.7%, and gross profit grew 8.0% even as revenue fell 5.4%. If luffing and STF demand from the 15th Five-Year Plan's energy priorities stabilises volumes, operating leverage could rebuild earnings toward the FY2023–FY2024 level of RMB43–51 million.

2. Deep asset discount. At about 0.33x book, with no goodwill, a large depreciating fleet that throws off rental cash, and a RMB63 million minority stake, the stock is priced for distress that the operations do not show. EV/EBITDA is under 5x.

3. Overseas revenue offsets China. The 2H FY2026 rebound in USA & Europe (+190.6%), the Middle East (+24.3%) and Asia outside the PRC (+16.8%), plus a London reference project, suggests export growth can offset domestic weakness.

Bear case

1. Cash burn and leverage. Two consecutive years of negative operating cash flow, net debt up nearly fourfold since FY2023, interest cover of 1.7x and a cash conversion cycle near 390 days leave little margin for error. Paying a special dividend while free cash flow is negative is hard to justify from a credit standpoint.

2. Worsening receivables quality. Receivables more than 6 months past due rose to RMB165.7 million, a third of the book. Future credit-loss charges could wipe out the thin profits.

3. Governance and litigation overhang. Family control, independent directors in the minority, low Chairman attendance, large related-party flows and four years of unresolved fatal-accident prosecutions in Hong Kong all justify a persistent discount. Thin liquidity makes the discount hard to close.

Catalysts and monitorables (next 12 months)

• 1H FY2027 results (about November 2026): whether the 2H FY2026 margin and profit recovery holds, the direction of PRC revenue, operating cash flow, and receivables ageing.

• Hong Kong litigation: next Labour Department hearing on 29 Jan 2027, and the status of the Buildings Department cases.

• Further SDAX commercial paper series: issuance sizes, coupon levels and continued access.

• Order wins in wind and nuclear projects, and further heavy luffing deployments overseas.

• Hong Kong yard utilisation and YMHK's return to segment profit.

• Fair-value changes in the Tat Hong Equipment (China) stake.

• FY2027 dividend decision (May 2027 results), especially whether the special dividend is repeated.

• Board and succession developments, given that both founders are 70.

Analyst verdict

Yongmao Holdings is a capable niche engineer stuck in a weak cycle and constrained by its own balance sheet. Operationally, the company is moving in the right direction. It has deliberately shifted from residential mid-size cranes to high-capacity luffing and wind-specific cranes, and the mix change shows up in gross margins that have improved every year since FY2023 and peaked at 30.7% in 2H FY2026. Its 13-year run in the ICm20 tower crane top ten, its rental franchise in two regulated Asian cities, and its links to Tat Hong give it real standing, despite being small next to the Chinese conglomerates.

The financial profile is much weaker. Net profit attributable has fallen for four years to RMB12.8 million. Operating cash flow has been negative for two years, partly because self-built rental cranes are classified as inventory. Net debt has nearly quadrupled since FY2023 to RMB360 million, and receivables are both long-dated and ageing. The FY2026 special dividend reflects founder confidence but does little for financial resilience. Governance is adequate on paper: independent-only committees, a new Lead Independent Director, and an independent audit firm. In practice, power sits with one family through a 57% holding, and the litigation from the 2022 fatal collapse is still pending.

For investors, the stock is a deep-value, illiquid special situation. It trades at about one-third of book value and under 5x EV/EBITDA, with no analyst coverage. An investment case needs evidence on three points: that 2H FY2026 marks a turning point in earnings; that working capital, especially receivables, can be brought under control to stop the cash burn; and that the Hong Kong litigation ends without a material penalty. Until those are in place, the discount to book looks justified, and earnings visibility is low.