By Michael Kim
READ THE FULL MFI RESEARCH REPORT
Pre-market open on 10/3/25, mF International (NASDAQ:MFI) filed a Form 6-K disclosing financial results for the first six months of 2025. In USD, MFI reported a net loss of $1.05 per share (adjusted for the 8 to 1 share consolidation on July 10, 2025) for 1H25 versus our net loss forecast of $0.13 per share. Relative to our model, while total revenues came in right in line with our estimate, the EPS miss was mostly a function of a lower gross margin and higher operating expenses, particularly G&A.
Revenues totaled $1.9 million in 1H25, up from $1.6 million in 1Q24 mostly driven by higher initial setup, installation and customization, subscription, hosting, support and maintenance, white label, and quotes/news/package subscription services fees reflecting stepped-up customer engagements. Less favorably, liquidity services revenue declined by 32% from 1H24 levels based on lower underlying transaction volumes. After factoring in cost of revenue of $1.2 million, gross profit totaled $0.7 million for 1H25 representing a gross margin of 36%, down from 42% in 1H24. The year-over-year compression primarily related to higher employee-related costs tied to bonuses and salary increases and amortization of intangible assets given a step up in capitalized product development costs.
In aggregate, MFI’s operating expenses totaled $2.5 million in 1H25, up from $1.5 million in 1H24. Much of the step up can be attributed to higher General & Administrative expenses related to stepped up compensation and higher legal and professional fees (previously capitalized prior to the company’s IPO in April 2024). Furthermore, Selling & Marketing expenses increased driven by the engagement of business development consultants.
Following our review of 1H25 results, we highlight the following key takeaways:
1. Change-of-control: On June 25, 2025, Gaderway Investments, owned by MFI’s former Chairman, Mr. Tai Wai Lam, and former Chief Executive Officer, Mr. Chi Weng Tam closed on the sale of 100% of the company’s Class B ordinary shares to Fire Lucky Investment Co., Ltd., controlled by Mr. Dawei Yuan, for $7.8 million. With Class B shares entitled to 20 votes per share, Mr. Yuan controls 98% of the aggregate voting power of MFI’s outstanding ordinary shares. As such, we would not be surprised to see Mr. Yuan increasingly leverage his considerable background/expertise, particularly as it relates to digital assets, to shift MFI’s strategic vision/business model, thereby enhancing the company’s growth prospects, revenue profile, and earnings power over time. For background, Mr. Yuan co-founded HTX, a digital asset ecosystem of blockchain businesses across trading, financial derivatives, research, investments, incubation, and content, as well as Coldlar Wallet, a technology company dedicated to solutions for the safe storage of crypto assets.
Following suit, the Board appointed Mr. Haoyu Wang to serve as the company’s Chief Executive Officer effective June 2, 2025. The transition follows the resignation of MFI’s prior CEO (and co-founder) Mr. Chi Weng Tam. Prior to joining the company, Mr. Wang held senior management roles at Hangzhou Hengqing Ruixing Private Equity Fund Management Co., Ltd. and Trend Up Investment (HK) Limited. Mr. Wang graduated from Xiamen University, with a Bachelor’s degree in Software Engineering, and received a Master’s degree in Business Economics from Monash University, Australia. Similarly, the Board appointed Ms. Yang Liu to serve as MFI’s Chief Financial Officer following the resignation of Mr. Yun Pan Lau effective June 2, 2025. Furthermore, MFI recently established two wholly-owned subsidiaries: CAT Strategy Limited, an investment holding entity to manage the company’s investment activities, and Master Info Limited to provide administrative support.
2. Pending capital raise?: In September, MFI filed a prospectus as part of a previously-filed “shelf” registration statement to potentially raise up to $700 million via the sale of equity, debt, and/or warrants. While difficult the handicap the odds/timing of a potential equity offering, we suspect prospective proceeds would likely be earmarked to fund incremental strategic growth initiatives. Separately, Fire Lucky recently provided the company with a $1 million unsecured term loan carrying a 5% annual interest rate and maturing on December 25, 2025, likely to cover near-term working capital needs.
After updating our model for 1H25 actuals, we are lowering our 2025, 2026, and 2027 split-adjusted EPS estimates from ($0.16)/$0.17/$0.45 to ($1.53)/($0.57)/($0.24) primarily reflecting an extended profitability inflection timeline. Looking ahead, key modeling inputs include reaccelerating revenue growth reflecting an expanding client base, a broader geographic footprint, a more favorable macro backdrop, with rising volatility typically correlated with higher FX/bullion trading volumes, and rising demand for the company’s liquidity services to hedge risk. Stepping back, we look for a higher-quality revenue profile in light of an ongoing mix shift in favor of higher-growth recurring White Label and Hosting, Support & Maintenance fees, as the client base scales, and away from one-time installation and ad hoc customization services. Importantly, client retention remains high given auto-renewing contracts and discounts for prepaid agreements (thereby minimizing billing/credit risk).
Turning to the bottom line, beyond meaningful revenue growth, key drivers likely include:1) gross margins seem set to revert back to the historical 50% to 60% range following depressed levels in 2024 in light of employee bonuses; 2) MFI’s online portal drives lower Customer Acquisition Costs (CACs) across markets/regions; 3) even as business activity builds, incremental headcount needs seem limited reflecting the company’s experienced staff and existing infrastructure; 4) we look for Selling & Marketing expenses to step down following strategic initiatives to expand into new markets and enhance MFI’s brand in 2024; 5) given a more mature product set, we expect R&D costs to remain manageable, with a portion of related expenses capitalized; and 6) we forecast interest expense to wind down in the back half of next year, as management pays off the $780,000 of bank borrowings coming due in April to November 2026.
Despite our lower earnings outlook, we are raising our price target to $45 implying meaningful upside potential from the stock’s current price. Our revision primarily reflects a lower risk profile in light of MFI’s recent change-of-control. Despite ongoing uncertainty around the strategic/financial implications related to the recent ownership/management transition, we expect Mr. Yuan to increasingly leverage his considerable background/expertise, particularly as it relates to digital assets, to enhance MFI’s business model, growth opportunities, revenue profile, and ultimately the company’s earnings power. Furthermore, Mr. Yuan owns 100% of Class B shares representing 68% of total ordinary shares outstanding (and 98% of voting power), thereby reinforcing strong management/shareholder alignment.
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