MTT Group Holdings (2350) H1 2024 earnings summary

Executive summary

• H1 FY2024 revenue fell 11.3% YoY to HK$360.063m; net profit declined 95.5% to HK$1.368m as gross margin compressed and prior-year subsidies did not recur.

• Weaker CDN licence sales and lower project demand in a softer economy weighed on both operating segments; no interim dividend was declared.

Financial highlights

• Revenue was HK$360.063m versus HK$406.141m; cost of sales was HK$321.616m versus HK$332.072m.

• Gross profit fell to HK$38.447m from HK$74.069m; gross margin contracted to 10.7% from 18.2%.

• Profit before tax was HK$1.490m versus HK$38.130m; net profit was HK$1.368m versus HK$31.110m.

• Basic EPS was HK0.22 cents versus HK6.18 cents; prior-period listing costs of HK$4.892m did not recur.

• Other income and net gains fell to HK$0.6m from HK$3.6m, mainly because the prior period included HK$2.099m of Employment Support Scheme subsidies; selling, administrative and finance expenses rose 4.4%, 8.9% and 21.4%, respectively.

Outlook and guidance

• Enterprise digital transformation is expected to support demand for hyperconverged infrastructure, AI servers and systems integration services; cloud migration and data-centre investment are also opportunities.

• AI adoption is expected to increase demand for infrastructure supporting machine learning and deep learning.

• Remaining IPO proceeds were expected to be fully utilized by 31 March 2024; hiring and systems upgrades were delayed.