UOB Kay Hian
Date of Report: 6 August 2025
Launch Tech Surges Ahead in 1H25: Record Overseas Revenue, Software Boom, and Attractive Dividends Signal Strong Outlook
Company Overview: Launch Tech Company Ltd (2488 HK)
Launch Tech Company Ltd stands at the forefront of the automotive aftermarket sector, specializing in advanced diagnostic and scan tools, calibration equipment, and cutting-edge diagnostic software for automotive repair businesses. With a robust global footprint and a growing emphasis on AI-powered solutions, Launch Tech has positioned itself as a leader in intelligent automotive diagnostics.
- Share Price: HK\$12.03
- Market Cap: HK\$4,965 million (US\$633 million)
- Shares Issued: 413 million
- GICS Sector: Industrials
- Major Shareholder: Mr. Liu Xin (45.0%)
- 52-Week High/Low: HK\$15.34 / HK\$3.81
Stellar 1H25 Results: Double-Digit Growth in Revenue and Net Profit
Launch Tech delivered an impressive performance in the first half of 2025, with revenue climbing 9.8% year-on-year to Rmb981.7 million and net profit soaring by 27.7% to Rmb194.7 million. This robust growth was powered by record-breaking overseas revenues, an expanding software and data services segment, stringent cost controls, and lower impairment losses.
Key Financial Highlights (1H25)
|
1H25 |
YoY % |
1H24 |
2024 (Full Year) |
| Revenue (Rmb’000) |
981,713 |
9.8 |
894,477 |
1,882,044 |
| Gross Profit (Rmb’000) |
477,584 |
10.9 |
430,510 |
895,080 |
| Net Profit (Rmb’000) |
194,736 |
27.7 |
152,454 |
339,506 |
| Gross Margin (%) |
48.6 |
+0.5ppt |
48.1 |
47.6 |
| Net Margin (%) |
19.8 |
+2.8ppt |
17.0 |
18.0 |
Growth Drivers: Overseas Expansion and High-Margin Software
- Overseas Revenue: Hit a record Rmb746 million (including e-commerce), representing a significant 76% of total revenue.
- Software Purchases: Surged by 28% year-on-year to Rmb104 million, highlighting the company’s successful shift toward high-margin, recurring revenue streams.
- Remote Diagnostic Services: Revenue jumped 53% to Rmb8.7 million, reinforcing Launch Tech’s leadership in intelligent diagnostics.
- Automotive Data Business: Recorded a remarkable 61% growth, with revenue rising to Rmb7.9 million.
Shareholder Rewards: Higher Dividends and Buybacks
Launch Tech is delivering substantial returns to shareholders:
- Interim Dividend Per Share: Rmb31.0 cents in 1H25.
- Dividend Payout Ratio: Increased to 65% (from 55% in 1H24).
- Share Buyback: Approximately 3 million shares repurchased in 1H25, equivalent to 0.7% of total outstanding shares.
Operational Excellence: Customer Engagement and Cost Control
- Customer Training: Conducted 6,201 global training sessions in 1H25, more than double the 2,892 sessions held in 2024, to enhance distributor and end-customer knowledge.
- Service System: Established an intelligent, localized, and grid-based service network to continuously boost user satisfaction.
- Cost Management: Despite increased investment in AI and customer engagement, operating expense to core revenue ratio dropped by 1ppt year-on-year to 30% in 1H25, reflecting strong cost discipline.
Positive Outlook for 2H25 and Beyond
Management projects a bullish trajectory for the remainder of 2025, supported by:
- Continued Overseas Expansion: Sustained momentum in international markets.
- Software & Data Services: Ongoing development of LAUNCH AI and expansion of the super remote diagnostics platform transaction volume.
- Efficiency Improvements: Further operating cost optimization through enhanced work processes and AI integration.
Valuation Snapshot: Attractive Yield and Reasonable Multiples
- Dividend Yield (trailing 12 months): 5.4%
- Trailing Price/Earnings (2024): 13.5x
Historical Financial Performance and Key Metrics
| Year (Rmbm) |
2020 |
2021 |
2022 |
2023 |
2024 |
| Net Turnover |
1,069 |
1,345 |
1,177 |
1,598 |
1,882 |
| Gross Profit |
479 |
528 |
433 |
686 |
895 |
| Operating Profit |
(80) |
123 |
70 |
186 |
342 |
| Net Profit (Adjusted) |
(120) |
92 |
328 |
169 |
340 |
| EPS (fen) |
(27.9) |
21.4 |
75.9 |
39.3 |
81.7 |
| Dividend Yield (%) |
– |
– |
– |
4.8 |
5.4 |
| Net Margin (%) |
(11.3) |
6.9 |
27.9 |
10.6 |
18.0 |
| Net Debt/(Cash) to Equity (%) |
6.2 |
(2.2) |
5.1 |
(21.1) |
(23.3) |
| ROE (%) |
n.a. |
13.2 |
36.1 |
15.8 |
27.4 |
Profit & Loss, Balance Sheet, and Cash Flow Overview (2021–2024)
| Year (Rmbm) |
2021 |
2022 |
2023 |
2024 |
| Net Turnover |
1,345 |
1,177 |
1,598 |
1,882 |
| EBITDA |
181 |
120 |
227 |
382 |
| Net Profit |
92 |
328 |
169 |
340 |
| Total Assets |
1,556 |
1,987 |
1,855 |
1,997 |
| Shareholders’ Equity |
745 |
1,072 |
1,067 |
1,238 |
| Net Cash Inflow/(Outflow) |
42 |
74 |
121 |
(71) |
| Gross Margin (%) |
39.2 |
36.8 |
43.0 |
47.6 |
| Net Margin (%) |
6.9 |
27.9 |
10.6 |
18.0 |
| ROE (%) |
13.2 |
36.1 |
15.8 |
27.4 |
Conclusion: Launch Tech Well-Positioned for Sustained Growth
Launch Tech’s outstanding 1H25 performance underscores its successful strategy of international expansion, AI-led product innovation, and focus on high-margin software and data services. With a strong commitment to shareholder returns through higher dividends and buybacks, robust cost management, and a clear growth roadmap, Launch Tech remains a compelling choice for investors seeking exposure to the fast-evolving automotive technology sector.
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