Huichuangda’s capital chain is under pressure, and there are contradictions between its business data and its customers

[global network reporter Chen Chao] Shenzhen huichuangda Technology Co., Ltd. focuses on the independent research and development of micro nano hot embossing production process of light guide structure. Its end customers include Lenovo, HP, Dell, ASUS and other mainstream notebook computer brands, as well as Huawei, oppo, vivo and other world-famous mobile phone manufacturers. According to the data of the prospectus, the company’s revenue and net profit have continued to grow in recent years, but in addition to the surface performance data, some details of huichuangda deserve attention.

according to the financial data, the balance of monetary funds of huichuangda from 2017 to the end of 2019 is 57.8367 million yuan, 108.3411 million yuan and 19.0124 million yuan respectively, which leads to a substantial loss of funds in 2019; at the same time, the company still has a short-term loan balance of 20 million yuan at the end of 2019.

one of the reasons for the large loss of funds of huichuangda is the occupation of working capital by accounts receivable and inventory. By the end of 2019, the company’s inventory balance reached 61.8605 million yuan, a significant increase compared with 36.2077 million yuan at the end of 2018. There are also hidden dangers in the accounts receivable of huichuangda. At the end of 2019, the net value of accounts receivable reached 200 million yuan, a net increase of more than 110 million yuan compared with 85.5856 million yuan at the end of the first half of 2019, and the turnover of the company in the second half of 2019 was only about 260 million yuan, which corresponded to the sharp weakening of the efficiency of operation collection of huichuangda.

according to the prospectus, Chuanyi technology is not only the main customer of huichuanda, but also the main supplier of the company. In 2019, huichuangda’s sales amount to Chuanyi technology was 40.4386 million yuan, but in the annual report data disclosed by Chuanyi technology in the same year, the corresponding purchase amount of the top five suppliers did not match the corresponding purchase amount of 40.4386 million yuan.

not only that, as of the end of 2019, the balance of accounts payable of huichuangda to Chuanyi technology was as high as 44.3768 million yuan; however, at the same time, the balance of accounts receivable disclosed by Chuanyi technology in the 2019 annual report was only 25.4234 million yuan, nearly 20 million yuan less than the amount of accounts payable disclosed by huichuangda. In terms of sales and operating debts, huichuangda has conflicts with its main customers.

according to the disclosure of the prospectus, huichuangda’s IPO plan includes “Shenzhen Shantou huichuangda production base construction project”, with a total investment of 407 million yuan, and a new production scale of 21 million sets of backlight modules and 200 million pieces of precision key switches.

but on the other hand, the capacity utilization information disclosed in the prospectus shows that the market demand of huichuangda’s “metal film switch” products is not optimistic. In 2017, the sales volume of this product was as high as 143 million, while in 2018 and 2019, it was only about 103 million. Even the production capacity of this product was reduced from 144 million in 2017 to 130 million in the next two years.

in other words, huichuangda plans to increase large-scale production capacity for products forced to reduce production capacity in previous years, and the new capacity is more than 1.5 times of the existing capacity.

in addition, according to the disclosure of the prospectus, huichuangda was identified as a “high-tech enterprise” as early as September 2010, and has passed the review successfully for many times since then. However, it is worth noting that according to the information on the education background composition of employees disclosed in the prospectus, the proportion of huichuangda employees with secondary school education or below is as high as 80%, and there are only 3 employees with master’s degree at the end of 2019.

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