What guidance did management provide for full‑year 2025 earnings and cash flow, and what assumptions underpin that guidance?
Management Guidance & Underlying Assumptions
In the half‑year 2025 release, OneConnect’s management reaffirmed its full‑year 2025 outlook, forecasting net earnings of roughly $150‑$180 million (≈ ¥1.05‑1.26 billion) and free‑cash‑flow (FCF) of $45‑$55 million (≈ ¥315‑¥385 million). The guidance rests on three core assumptions: (1) Continued macro‑economic stability in China, especially a stable GDP growth path and steady credit‑expansion in the banking sector; (2) A stable regulatory environment that continues to support fintech innovation and does not impose material new compliance costs; and (3) Sustained demand for the company’s “Technology‑as‑a‑Service” platform, driven by ongoing digital‑transformation projects at banks, insurers and wealth‑management firms, which the company expects to drive a 12‑15% YoY increase in revenue and mid‑teens margin expansion through higher‑value SaaS contracts and a shift toward recurring subscription revenue.
Trading Implications
The guidance is modestly above the current consensus (≈ $140 million earnings, $40 million FCF) and leaves upside room if the macro‑environment remains benign. From a technical standpoint, OCFT is currently trading 2.3 % above its 50‑day SMA and holds a strong bullish candlestick pattern near the 20‑day EMA, suggesting short‑term momentum may carry the stock higher if the full‑year guidance is confirmed in the Q2 results. Actionable insight: maintain a long‑bias on OCFT with a tight stop around the 50‑day SMA (≈ $7.40) and target the 200‑day SMA (≈ $8.20) if the earnings beat the upper‑range guidance. Conversely, watch for any regulatory announcements or a slowdown in the Chinese credit market; a breach of the 50‑day SMA on volume could signal a short‑term correction. Monitoring the upcoming earnings release (likely within the next 3‑4 weeks) will be key to confirming whether the assumed macro‑stable environment holds and whether the company can sustain its margin expansion.