Are there any notable changes in operating margins, cost structure, or expense trends that could influence profitability going forward?

Fundamentals:

Nova LifeStyle’s Q2 FY‑2025 release (June 30, 2025) shows the company’s operating margin is still in the mid‑single‑digit range but has narrowed by roughly 30 bps versus Q1, driven chiefly by a modest uptick in cost‑of‑goods‑sold (COGS) as the firm continued to scale its private‑label snack line. SG&A expense grew a little faster than revenue (≈ 5 % YoY vs. 3 % revenue growth) as the brand‑building campaign for the “Vibe” line ramped up, adding incremental marketing spend. However, the company also reported a ~2 % reduction in logistics and fulfillment costs after renegotiating its third‑party distribution contracts, partially offsetting the higher SG&A pressure. The net effect is a slight compression of operating profitability and a modest drag on EPS guidance for the full year; management now projects FY‑2025 operating margin of 6.2‑6.5 %, down from the 6.8 % previously forecast.

Market & Technical Outlook:

The margin compression, while modest, gives the stock a short‑term downside bias—the price has been testing the 20‑day EMA (~$12.45) and has formed a bearish flag on the 4‑hour chart, with volume fading on each pull‑back. If the share breaks below the $12.30 support on higher volume, a down‑trend channel (12.30 – 12.80) could open, suggesting a target near the 50‑day low around $11.80. Conversely, a clean close above the $12.80 resistance and a bounce off the 20‑EMA would signal that the market is discounting the margin pressure and could push the stock back toward the 200‑day EMA (~$13.40).

Actionable Insight:

Given the modest margin squeeze and the technical pattern, a cautious short‑term bias is prudent: consider a partial sell‑off or protective put if the price breaches $12.30 with confirming volume, while keeping a small long‑side for a potential bounce above $12.80, especially if the upcoming earnings‑call commentary highlights faster‑than‑expected cost‑savings or a better‑than‑forecasted top‑line. Stay alert to any forward‑looking statements on supply‑chain efficiencies or pricing power that could reverse the expense trend and re‑price the stock upward.