Linewell Software Co., Ltd. (603636.SS) Bundle
Investors eyeing Linewell Software Co., Ltd. will find a financial picture of sharp contrasts: in Q2 2025 revenue rose to CNY 143.34 million (+20.72% QoQ) even as trailing twelve‑month revenue fell to CNY 823.93 million (a 43.02% YoY decline) after 2024 annual revenue plunged 56.08% to CNY 736.73 million; profitability remains under pressure with a Q2 net loss of CNY 37.35 million and a net margin of -26.06% while 2024 gross margin slid to 24.92% (down 13.59 pp) and TTM EPS is -CNY 0.42, yet the company carries CNY 1.43 billion in debt against CNY 2.32 billion equity (debt‑to‑equity 61.2%), total assets of CNY 5.5 billion and liabilities of CNY 3.2 billion, supported by positive operating cash flow of CNY 442.25 million and free cash flow of CNY 338.90 million but facing liquidity strains (current ratio 1.11, quick ratio 0.85), a worrying Altman Z‑Score of 1.53 and Piotroski F‑Score 3, while market valuation metrics show a market cap near CNY 6.93 billion, a P/S of 7.09, P/B of 2.98 and enterprise value of CNY 8.19 billion - read on for a sector‑by‑sector breakdown of risks, leverage, and the company's AI and digital‑governance growth avenues.
Linewell Software Co., Ltd. (603636.SS) - Revenue Analysis
Linewell Software's recent top-line performance shows pockets of quarter-over-quarter recovery amid a pronounced multi-period decline. Key drivers include weakening demand in core verticals such as public safety and digital governance, which have materially impacted annual and trailing revenues despite a rebound in Q2 2025.
- Q2 2025 revenue: CNY 143.34 million (up 20.72% vs. prior quarter)
- TTM revenue: CNY 823.93 million (down 43.02% YoY)
- FY 2024 revenue: CNY 736.73 million (decline of 56.08% vs. prior year)
- Primary cause: reduced demand in public safety and digital governance sectors
- Market capitalization: ~CNY 6.84 billion
- Employees: 1,987; revenue per employee: CNY 414,660
| Metric | Amount (CNY) | Change | Notes |
|---|---|---|---|
| Q2 2025 Revenue | 143,340,000 | +20.72% QoQ | Quarterly rebound |
| Trailing Twelve Months (TTM) Revenue | 823,930,000 | -43.02% YoY | Reflects recent multi-quarter declines |
| FY 2024 Revenue | 736,730,000 | -56.08% YoY | Large annual contraction |
| Market Capitalization | 6,840,000,000 | - | Approximate |
| Employees | 1,987 | - | Headcount |
| Revenue per Employee | 414,660 | - | TTM revenue / employees |
For historical context and deeper company background, see: Linewell Software Co., Ltd.: History, Ownership, Mission, How It Works & Makes Money
Linewell Software Co., Ltd. (603636.SS) - Profitability Metrics
The following section presents core profitability indicators for Linewell Software Co., Ltd. (603636.SS) with recent-period figures and year-on-year movements where available.
- Q2 2025 net loss: CNY 37.35 million (loss widened 21.01% vs. Q2 2024)
- Q2 2025 net profit margin: -26.06%
- Gross margin (2024): 24.92% (down 13.59 percentage points YoY)
- Net margin (2024): -42.19% (declined 46.08 percentage points YoY)
- Operating margin (TTM): -31.22%
- Return on equity (ROE): -10.09%
- Earnings per share (EPS, TTM): -CNY 0.42
| Metric | Value | Period | Change (YoY or TTM) |
|---|---|---|---|
| Net profit / (loss) | -CNY 37.35 million | Q2 2025 | Loss ↑ 21.01% vs Q2 2024 |
| Net profit margin | -26.06% | Q2 2025 | N/A |
| Gross margin | 24.92% | FY 2024 | -13.59 pp YoY |
| Net margin | -42.19% | FY 2024 | -46.08 pp YoY |
| Operating margin (TTM) | -31.22% | Trailing twelve months | N/A |
| Return on equity (ROE) | -10.09% | Most recent reported | N/A |
| Earnings per share (EPS) | -CNY 0.42 | Trailing twelve months | N/A |
- Margins indicate pressure at both gross and operating levels; FY 2024 gross margin contracted materially while net margin swung deeply negative.
- Negative ROE and negative EPS (TTM) underscore that shareholder capital is currently not producing profits.
- Quarter-on-quarter and year-on-year deterioration in net loss and margins point to ongoing operational and profitability challenges that investors should monitor closely.
For company mission, vision and values context, see: Mission Statement, Vision, & Core Values (2026) of Linewell Software Co., Ltd.
Linewell Software Co., Ltd. (603636.SS) - Debt vs. Equity Structure
Key metrics as of June 2025 provide a snapshot of Linewell Software's capital structure and leverage profile.
- Total debt: CNY 1.43 billion
- Total equity: CNY 2.32 billion
- Debt-to-equity ratio: 61.2%
- Total assets: CNY 5.5 billion
- Total liabilities: CNY 3.2 billion
- Operating cash flow covers 31.1% of total debt
- Net cash per share: -CNY 2.04 (negative)
- Interest coverage ratio: Not available
| Metric | Value | Interpretation |
|---|---|---|
| Total Debt | CNY 1,430,000,000 | Mix of short- and long-term borrowings |
| Total Equity | CNY 2,320,000,000 | Shareholder capital and retained earnings |
| Debt-to-Equity Ratio | 61.2% | Moderate financial leverage |
| Total Assets | CNY 5,500,000,000 | Asset base supporting operations |
| Total Liabilities | CNY 3,200,000,000 | Includes debt and other obligations |
| Operating Cash Flow / Debt | 31.1% | Operational cash covers less than one-third of debt annually |
| Net Cash per Share | -CNY 2.04 | Net liabilities on a per-share basis |
| Interest Coverage Ratio | Not available | Limits assessment of interest-paying capacity |
Implications for investors:
- The 61.2% debt-to-equity ratio indicates moderate leverage-debt is significant but not excessive relative to equity.
- Negative net cash per share (-CNY 2.04) signals reliance on external financing and potential dilution or refinancing risk.
- Operating cash flow covering 31.1% of debt suggests operational cash generation contributes to debt servicing but may be insufficient for rapid deleveraging.
- Lack of a published interest coverage ratio constrains assessment of near-term interest-payment resilience; monitor for disclosure updates.
For broader context on corporate direction and priorities, see Mission Statement, Vision, & Core Values (2026) of Linewell Software Co., Ltd.
Linewell Software Co., Ltd. (603636.SS) Liquidity and Solvency
Key liquidity and solvency indicators for Linewell Software Co., Ltd. (603636.SS) paint a mixed picture of short-term coverage, cash-generation ability, and elevated financial distress risk.
- Current ratio: 1.11 - slightly more current assets than current liabilities.
- Quick ratio: 0.85 - suggests potential difficulty meeting short-term obligations without selling inventory.
- Operating cash flow (TTM): CNY 442.25 million - positive cash generation from core operations.
- Free cash flow: CNY 338.90 million - cash remaining after capital expenditures.
- Altman Z-Score: 1.53 - indicates increased bankruptcy risk under the Z-Score model.
- Piotroski F-Score: 3 - signals weak fundamentals on profitability, leverage, and operational efficiency metrics.
| Metric | Value | Implication |
|---|---|---|
| Current Ratio | 1.11 | Marginal cushion for short-term liabilities |
| Quick Ratio | 0.85 | Insufficient liquid assets excluding inventory |
| Operating Cash Flow (TTM) | CNY 442.25 million | Healthy operational cash generation |
| Free Cash Flow | CNY 338.90 million | Positive post-capex cash available to reinvest or return to shareholders |
| Altman Z-Score | 1.53 | Heightened financial distress risk (below safe zone) |
| Piotroski F-Score | 3 | Weak financial health across key operational and profitability checks |
Practical considerations for investors include working-capital management (given the quick ratio 0.85), the importance of continuing strong operating cash flow (CNY 442.25M) to service obligations, and monitoring leverage and profitability improvements to move Altman and Piotroski scores toward safer ranges.
Further company background and strategic context: Linewell Software Co., Ltd.: History, Ownership, Mission, How It Works & Makes Money
Linewell Software Co., Ltd. (603636.SS) - Valuation Analysis
Linewell Software presents a mixed valuation profile: a mid-single-digit market cap with relatively high multiples versus sales and book value, coupled with negative profitability metrics that warrant investor scrutiny.- Market capitalization: CNY 6.93 billion
- Enterprise value (EV): CNY 8.19 billion
- Price-to-Sales (P/S): 7.09x
- Price-to-Book (P/B): 2.98x
- EBITDA margin: -19.13%
- 52-week stock price change: -1.65%
- Beta: 0.45
| Metric | Value | Interpretation |
|---|---|---|
| Market Capitalization | CNY 6.93 billion | Size indicator - mid-cap on Shanghai Stock Exchange |
| Enterprise Value (EV) | CNY 8.19 billion | Includes net debt; useful for takeover valuation |
| Price-to-Sales (P/S) | 7.09x | Investors pay 7.09x annual sales - implies high revenue premium |
| Price-to-Book (P/B) | 2.98x | Market values equity at nearly 3x book - growth expectations or intangible value |
| EBITDA Margin | -19.13% | Negative operating profitability - operational inefficiencies or high non-cash adjustments |
| 52-Week Change | -1.65% | Relatively flat year performance |
| Beta | 0.45 | Low volatility vs. broader market |
- High P/S (7.09x) combined with negative EBITDA margin suggests the market values future growth or unique product positioning despite current unprofitable operations.
- P/B near 3x implies intangible assets, deferred revenue value, or investor willingness to pay premium over net asset value.
- EV above market cap (CNY 8.19B vs CNY 6.93B) signals net debt or lease obligations that modestly increase takeover cost.
- Negative EBITDA margin (-19.13%) is a red flag for operational efficiency; investors should reconcile this with cash flow, non-recurring items, and R&D or expansion spending.
- Low beta (0.45) and a small 52-week decline (-1.65%) point to relative stability in share price despite earnings pressures-appealing to risk-averse investors if turnaround prospects exist.
- How much of the current valuation is premised on revenue growth vs. margin recovery?
- What is the company's net debt position and near-term cash runway implied by EV and recent cash flow trends?
- Are there one-off charges or accounting items driving negative EBITDA that could normalize?
- How does implied growth required to justify a 7.09x P/S compare with peers in the sector?
Linewell Software Co., Ltd. (603636.SS) - Risk Factors
Linewell Software Co., Ltd. (603636.SS) exhibits several risk indicators that materially affect its financial stability and investor outlook. Revenue has contracted sharply, profitability metrics are negative, leverage is moderate, and score-based measures flag heightened distress.- Revenue decline: reported a 56.08% drop in 2024 and a further 43.02% decline over the trailing twelve months (TTM), signaling severe top-line pressure.
- Profitability: net profit margin of -26.06% in Q2 2025 and a negative return on equity (ROE) of -10.09% - both indicate the company is losing money and destroying shareholder equity.
- Leverage: debt-to-equity ratio stands at 61.2%, reflecting moderate financial leverage that could magnify downside if earnings do not recover.
- Distress signals: Altman Z-Score is 1.53, which places the company in the distress/borderline bankruptcy zone.
- Operational weakness: Piotroski F-Score of 3 points to weak operational and accounting fundamentals versus healthy peers.
- Concentration risk: significant dependence on government contracts exposes revenue to policy shifts, procurement cycles, and budgetary cuts.
| Metric | Value | Implication |
|---|---|---|
| Revenue change (2024) | -56.08% | Severe top-line contraction |
| Revenue change (TTM) | -43.02% | Continued decline beyond fiscal year |
| Net profit margin (Q2 2025) | -26.06% | Unprofitable operations |
| Return on Equity (ROE) | -10.09% | Negative shareholder returns |
| Debt-to-Equity | 61.2% | Moderate leverage risk |
| Altman Z-Score | 1.53 | Elevated bankruptcy risk |
| Piotroski F-Score | 3 | Weak financial health |
- Cash-flow volatility: with negative margins and falling revenue, operating cash flow is likely strained - increasing the probability of liquidity issues or the need for external financing.
- Refinancing and covenant risk: moderate debt levels combined with deteriorating profitability raise the risk that future borrowing costs will increase or covenants could be breached.
- Execution risk: turnaround requires restoring revenue growth and margin improvement; operational missteps could worsen financial metrics quickly.
- Customer concentration: reliance on a narrow set of government contracts can lead to abrupt revenue shifts as policy priorities or procurement rules change.
Linewell Software Co., Ltd. (603636.SS) - Growth Opportunities
Linewell Software has signaled several growth vectors tied to AI, digital governance, and corporate actions that have direct implications for investors and strategic partners.
- New Hainan technology company focused on artificial intelligence public service platforms - a strategic entry into AI-enabled municipal services and public safety solutions.
- Planned share reduction: the company intends to reduce holdings by no more than 2% within three months after the completion of the 15 trading days following June 20, 2025, driven by funding needs.
- Positive operating cash flow of CNY 442.25 million provides internal funding capacity for R&D, platform development, or bolt-on acquisitions.
- Market capitalization of CNY 6.93 billion underpins balance-sheet strength for strategic M&A or partnerships to accelerate scale.
- Alignment with national priorities: digital governance, smart city, and public safety initiatives in China present addressable market expansion opportunities.
| Metric | Value | Implication |
|---|---|---|
| Operating Cash Flow (latest) | CNY 442.25 million | Reinvestment capacity for AI platform development |
| Market Capitalization | CNY 6.93 billion | Financial headroom for M&A and strategic investments |
| Planned Share Reduction | ≤ 2% within 3 months post-15 trading days from 2025-06-20 | Temporary supply-side pressure; proceeds to address funding needs |
| New Business Unit | AI public service platforms (Hainan) | Entry into AI-driven public sector solutions and smart city projects |
| Strategic Focus | Digital governance & public safety | High policy alignment with central and local government priorities |
Potential investor considerations and near-term catalysts:
- Revenue diversification: AI public-service offerings could create new SaaS/transactional revenue streams and recurring license models.
- Margin expansion: platformization and software-as-a-service deliveries typically improve gross margins versus one-off projects.
- M&A optionality: at CNY 6.93 billion market cap, targeted acquisitions in AI, data analytics, or vertical public-safety tech are feasible to accelerate go-to-market.
- Funding vs. dilution: the ≤2% share reduction addresses immediate funding but may transiently affect share supply; monitoring timing and use of proceeds is critical.
- Policy-driven demand: sustained government investment in smart city/digital governance projects could underpin multi-year contract pipelines.
Further context on mission and strategic orientation: Mission Statement, Vision, & Core Values (2026) of Linewell Software Co., Ltd.
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