Yian Intelligent plans to list on the New Third Board: More than 90% of the revenue comes from Zhangzhou, Fujian Province, and the future growth is facing a certain bottleneck

Per reporter: Zhang Mingshuang Per editor: Yang Xia

Recently, Fujian Yian Intelligent Technology Co., Ltd. (hereinafter referred to as Yian Intelligent) disclosed the public transfer prospectus (application draft) in the national share transfer system, which intends to be listed on the basic layer of the New Third Board, and has received feedback from the listing review department. Yian Intelligent mainly provides smart city integrated services with smart city solutions as the core, and its business scope includes public safety, smart transportation, smart communities, smart parks, etc.

Yian Intelligent is located in Zhangzhou City, Fujian Province, and its business is also concentrated in Zhangzhou City. In 2019, 2020 and January to July 2021 (hereinafter referred to as the reporting period), Yian Intelligent achieved operating income of 50.0026 million yuan, 75.0604 million yuan and 36.8611 million yuan respectively, of which the revenue from Zhangzhou City accounted for 76.14%, 95.8% and 93.63% of the operating income, showing the characteristics of regional concentration of business. Yian Intelligent said that the concentration of business regions makes the company's business more susceptible to regional economic fluctuations or regional policy changes, and future growth faces certain bottlenecks.

Risk of concentration of business areas

The main business of Yian Intelligent is smart city solutions, equipment sales, system operation and maintenance services, of which smart city solutions are the core business, and the revenue accounted for 87.93%, 91.56% and 91.73% during the reporting period. In 2020, the operating income of Yian Intelligent increased by 50.11%, of which the revenue of smart city solutions increased by 56.31%, mainly due to the expansion of the company's business scale, and the expansion of business scale benefited from the strong support of industrial policies and the rapid development of the industry.

From the perspective of customer geographical distribution, from January to July 2020 and 2021, more than 93% of The revenue of Yian Intelligent came from Zhangzhou City, and about 97% came from Fujian Province. At present, the construction of smart cities in mainland China is still dominated by government investment, so the scale of smart city expenditure in Zhangzhou has a greater impact on the income of Yian Intelligent.

From the perspective of market share, the main business income of Yian Intelligent in 2020 is 74.9209 million yuan, accounting for about 18.32% of the expenditure scale of Zhangzhou Smart City, and its market share in the regional market is relatively high, and it has become one of the main participants in the regional market.

However, Yian Intelligent also said that the concentration of business regions makes the company's business more susceptible to regional economic fluctuations or regional policy changes, and future growth faces certain bottlenecks. At the same time, the business is concentrated in Zhangzhou City, Fujian Province, which means that the company's project experience, customer resources and brand influence accumulation in other regions are relatively insufficient, which is not conducive to the development of smart city markets and customers in other regions.

At present, Yian Intelligent has undertaken some business in Xiamen, Ningde and other places, but the revenue from Zhangzhou City still accounts for more than 90%, and whether it can change this situation is still unknown.

In addition, Yian Intelligent also prompted the "risk of intensified market competition", in the context of the rapid expansion of market scale, the existing enterprises in the industry continue to exert efforts, new entrants continue to pour in, will lead to a more complex competitive environment in the smart city industry.

The "Daily Economic News" reporter noted that Yian Intelligent has a number of competitors in Fujian Province, Zhangzhou City and surrounding cities, among which Changwei Information Technology Development Co., Ltd. successfully passed the science and technology innovation board in March 2021, and then terminated registration; Cheng Daxing (831884, NQ) and Dianjing Technology (838364, NQ) have been listed on the New Third Board for several years.

Operating net cash flow continued to be negative

According to the public transfer prospectus (draft declaration), the smart city industry where Yian Intelligent is located has high financial barriers, the main reasons include municipal administration, transportation, environmental protection and other fields, there are large investment amounts, long construction time characteristics; government projects generally have a long settlement time, easy to cause pressure on enterprise accounts receivable. Therefore, enterprises need to invest more working capital.

And Yian Intelligent has a situation of insufficient working capital. In 2019, 2020 and January to July 2021, the net cash flow generated by the company's operating activities was 4.4955 million yuan, -3.1584 million yuan and -13.0281 million yuan, respectively, and the operating net cash flow continued to be negative, mainly due to the general need to advance more money in the process of project implementation, and the long payment approval of major customers led to the company being occupied with a large amount of working capital. Yian Intelligent said that the lack of working capital limits the company's development space on the one hand, and on the other hand, there is a certain liquidity risk.

However, Yian Intelligent said that the company has recognized the important role of working capital in the company, and will raise funds through a variety of financing methods to improve cash flow and maintain the benign growth of the company's business, and working capital will not become a constraint on the company's development.

At the end of each reporting period, the scale of accounts receivable of Yian Intelligent also continued to grow, and after the provision for bad debts, the carrying amount of accounts receivable (including contract assets) at the end of each period was 18.8001 million yuan, 20.2125 million yuan and 27.1022 million yuan, accounting for 18.24%, 23.34% and 32.39% of the total assets, respectively. In this regard, Yian Intelligent said that the increase in the balance of accounts receivable in 2020 is mainly due to the expansion of the company's business scale and the growth of operating income; 1-7 months of 2021 is not a complete fiscal year, and the company generally collects more money in the fourth quarter.

In addition, at the end of each reporting period, the asset-liability ratio (consolidated) of Yian Intelligent was 94.96%, 86.62% and 80.82% respectively, showing a relatively high level overall, the current ratio and quick ratio were low, and the company's solvency was not strong. In this regard, the feedback requires Yian Intelligent to explain the maturity time and expected repayment arrangement of the main liabilities, analyze whether the company has debt repayment risks, whether the company's use of low funds affects the company's production and operation, and whether the relevant risk disclosure and response measures are sufficient.

For matters related to the declaration of listing on the New Third Board, on February 10, the daily economic news reporter called Yian Intelligence, but the company did not accept an interview.

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