China Health Group (SEHK:673) Losses Deepen, Undercutting Bullish Value Narrative

China Health Group (SEHK:673) has released its H1 2026 financials, reporting revenue of HK$20.26 million and a basic EPS of -0.1027 HKD. Looking back, the company’s revenue was HK$18.68 million in H1 2025 and HK$31.66 million in H2 2024. Basic EPS figures were -0.0359 HKD and -0.0525 HKD for these periods. Persistently negative earnings reflect margins under pressure, raising ongoing concerns about the company’s ability to achieve profitability.

Next, we will compare these numbers with the market's narrative to see where the story aligns and where expectations may need to be adjusted.

Curious how numbers become stories that shape markets? Explore Community Narratives

Losses Deepen Faster Than Revenue Growth

• Net income losses accelerated to -HK$60.77 million over the trailing twelve months, while revenue reached HK$39.87 million. This highlights that revenue progress is being outpaced by widening losses.
• According to the prevailing narrative, over-diversification and complexity elevate execution risk, as seen by continued net losses despite a multi-segment business model.
  • Ongoing losses have grown 28.8% annually over the past five years, challenging the optimistic view that broad exposure would anchor more stable results.
  • Segment expansion into areas like property and factoring, rather than reducing risk, appears correlated to steeper negative margins and profit erosion.

Share Price Sits 43% Below DCF Fair Value, but Still Expensive by Sales

• The current share price is HK$0.62, trading 43.7% below its DCF fair value of HK$1.10. However, the company’s Price-To-Sales ratio is 20.8x, much higher than the Hong Kong healthcare sector average of 1x and peers at 1.4x.
• Bears contend that, even with a deep discount to DCF fair value, weak fundamentals such as high sales multiple and negative equity outweigh perceived value.
  • The disconnect between a discounted share price and an elevated price-to-sales ratio suggests that what looks cheap may still be pricey if profitability does not recover.
  • High volatility and negative shareholder equity compound the risks, supporting a skeptical stance on valuation upside.

Shareholders Face Negative Equity and Dilution

• Major risks in the last year include significant shareholder dilution and negative equity, with balance sheet weakness standing out alongside notable insider selling in recent months.
• The prevailing market view stresses that these structural issues limit management’s room for maneuver and heighten volatility for existing shareholders.
  • Continued negative equity signals sustained capital structure stress, making it harder for the business to fund a turnaround without further dilution.
  • Insider selling adds to concern, reinforcing that fundamentals more than external market sentiment drive the stock’s cautious outlook.

1 key reward and 5 important warning signs

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 China Health Group'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.

See What Else Is Out There

China Health Group continues to struggle with deepening losses, negative equity, and persistent dilution. These factors all point to ongoing balance sheet weakness.

If you want to focus on companies with stronger financial footing and less risk, use our solid balance sheet and fundamentals stocks screener (1940 results) to spot those built on a more stable foundation.

This article by Simply Wall St is general in nature. We provide commentary based on historical data 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 financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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