First Tractor (SEHK:38) Q4 Loss And Margin Softness Test Bullish Growth Narratives

Simply Wall St.03-27 20:18

First Tractor (SEHK:38) closed out FY 2025 with fourth quarter revenue of C¥1,120.1 million and a basic EPS loss of C¥0.16, while trailing twelve month EPS stood at C¥0.72 on revenue of C¥10.8 billion...

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Over recent quarters, revenue has ranged from C¥4,556.5 million in Q1 2025 to C¥2,371.1 million in Q2 and C¥2,774.9 million in Q3, with basic EPS moving from C¥0.47 in Q1 to C¥0.21 in Q2 and C¥0.20 in Q3 as profitability has shifted through the year. For investors, the picture is one of solid...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"601038":"一拖股份","00038":"第一拖拉机股份","BLSX":"Tradr 2X Long BLSH Daily ETF","BLSG":"2倍做多BLSH ETF-Leverage Shares","FIRRY":"第一拖拉机股份ADR","BK1174":"农用农业机械","BK1543":"农业股票概念","BK4112":"金融交易所和数据"},"translate_title":"First Tractor(SEHK：38)第四季度亏损和利润率疲软测试看涨增长叙事","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"601038":1.98,"BLSG":0.6,"00038":1.98,"BLSX":0.6,"FIRRY":1.98},"content_text":"First Tractor (SEHK:38) closed out FY 2025 with fourth quarter revenue of C¥1,120.1 million and a basic EPS loss of C¥0.16, while trailing twelve month EPS stood at C¥0.72 on revenue of C¥10.8 billion. Over recent quarters, revenue has ranged from C¥4,556.5 million in Q1 2025 to C¥2,371.1 million in Q2 and C¥2,774.9 million in Q3, with basic EPS moving from C¥0.47 in Q1 to C¥0.21 in Q2 and C¥0.20 in Q3 as profitability has shifted through the year. For investors, the picture is one of solid full year profit paired with a soft fourth quarter, which puts the focus squarely on how comfortably margins can be sustained from here. See our full analysis for First Tractor. With the headline numbers on the table, the next step is to see how this earnings print lines up with the widely held stories about First Tractor's growth, risks, and profitability and where those narratives may now need a rethink. Curious how numbers become stories that shape markets? Explore Community Narratives SEHK:38 Revenue & Expenses Breakdown as at Mar 2026 AdvertisementMargins Softened With 7.5% Net Profit  Over the last 12 months, First Tractor earned C¥811.9 million of net income on C¥10.8b of revenue, which works out to a 7.5% net profit margin compared with 7.7% the prior year. What challenges the bullish idea of a simple, steady compounding story is that five year EPS growth averaged 17.1% a year, yet the latest trailing period shows earnings contracting against that trend, even as revenue forecasts point to around 17.1% annual growth and about 22.3% annual EPS growth.  Quarterly Swings Around C¥4.6b To C¥1.1b Revenue  Within FY 2025, quarterly revenue ranged from C¥4,556.5 million in Q1 to C¥2,371.1 million in Q2, C¥2,774.9 million in Q3 and C¥1,120.1 million in Q4, while net income moved from a profit of C¥529.5 million in Q1 to a loss of C¥182.2 million in Q4. Critics who take a bearish stance on heavy machinery cyclicality point to this pattern, as the company shifted from quarterly EPS of C¥0.47 in Q1 to a basic EPS loss of C¥0.16 in Q4, even though the trailing 12 month margin remained positive at 7.5% and EPS over that period was C¥0.72, which shows that the weaker end to the year sits against a still profitable full year base.  The bearish view is supported by the fact that both Q4 2025 and Q4 2024 showed quarterly net losses alongside lower revenue of around C¥1.1b to C¥1.2b. At the same time, the presence of three profitable quarters in FY 2025, with Q1 net income above C¥500 million, challenges the idea that recent losses define the whole period.   On top of these swings, some investors will want to see how the market is pricing that volatility against expected growth and quality of earnings, not just the latest quarterly loss, in the fuller company report and valuation tools they use.\n\nP/E Of 10.7x And DCF Value Above Price  First Tractor is trading on a P/E of 10.7x, below both the peer average of 13.6x and the Hong Kong machinery industry average of 12.8x, while the supplied DCF fair value of HK$11.93 sits above the current share price of HK$8.79. Supporters of a bullish angle argue that forecasts of about 22.3% yearly earnings growth, revenue expected to grow around 17.1% a year and the share price sitting roughly 26.3% below the DCF fair value together point to a potentially underappreciated earnings stream, even though the most recent trailing year showed weaker earnings versus the prior five year trend and the dividend track record is described as unstable.  The combination of a lower P/E than peers and C¥811.9 million of trailing net income provides concrete support for arguments that the stock screens as inexpensive on standard metrics. However, the slight slip in net margin from 7.7% to 7.5% and the unstable dividends give bears specific points to counter the idea that valuation alone makes the case.   If you want to see how this mix of growth forecasts, margin behavior and valuation multiples fits into different long term storylines around the stock, it is worth reading how other investors connect the dots in the Curious how numbers become stories that shape markets? Explore Community Narratives. Next Steps Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on First Tractor's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move. With mixed signals on growth, margins and valuation, now is a good time to look through the numbers yourself and decide how the risk reward trade off feels. To frame that view, take a closer look at the 3 key rewards and 1 important warning sign. See What Else Is Out There First Tractor's weaker Q4 loss, softer net margin and unstable dividends all raise questions about how consistently earnings and shareholder returns can hold up. If those bumps leave you wanting steadier income, now is a smart moment to scan the 470 dividend fortresses and compare higher yielding income ideas side by side.  This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: AI Stock Screener & AlertsOur new AI Stock Screener scans the market every day to uncover opportunities.• Dividend Powerhouses (3%+ Yield)• Undervalued Small Caps with Insider Buying• High growth Tech and AI CompaniesOr build your own from over 50 metrics.Explore Now for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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