$Concentrix (CNXC.US)$🎯 Loss floated by 29% on 2023.7.14, m...

New data 2023Q2

Revenue and operating profit continued to grow, and net profit fell sharply by 30%. This is also due to a sharp increase in interest expenses. Currently, it seems that this year's profit contraction is a probable event.

Looking closely at net investment, we found that there were major acquisitions in 2022. Currently, the acquisition increased long-term loans from 800 million to 2,224 billion yuan, and in 2023Q2, it still accounts for 75% of net assets of 2,854 billion yuan, while goodwill and other intangible assets have reached 3.814 billion yuan. The actual leverage ratio is very high. Interest expenses in 2022 account for 11% of operating profit, and interest expenses account for 25% of operating profit in the first half of 2023. This completely changed the profit structure.

Currently, the price-earnings ratio is 10.5, and the price-earnings ratio is raised to 12. If net profit falls 25% for the whole year, the price-earnings ratio will rise to 14. At present, the risk is too high. Close positions and watch for a few more quarters.