Recently, Zhongjuxin Technology Co., Ltd. (stock abbreviation: Zhongjuxin-U; stock code: 688549.SH) disclosed its first annual report after listing on the Science and Technology Innovation Board. We found that the products of Zhongjuxin are all self-produced, and the ending inventory has increased significantly when the sales volume is higher than the output.
Source: Photo.com
Changes in production and sales may contradict inventory growth
Zhongjuxin is mainly engaged in the R&D, production and sales of electronic wet chemicals, electronic special gases and precursor materials, including electronic grade hydrofluoric acid, electronic grade nitric acid, high-purity chlorine, high-purity tungsten hexafluoride, etc., which are used in the manufacturing process of integrated circuits, display panels and other fields, and will be listed on the Science and Technology Innovation Board in September 2023.
On March 28, 2024, Zhongjuxin released its first annual report after listing. The annual report shows that in 2023, the company will achieve an operating income of 894.0159 million yuan, a year-on-year increase of 11.89%, an attributable net profit of 13.6959 million yuan, a year-on-year increase of 30.16%, and a non-net profit of -9.5683 million yuan, with a year-on-year increase in losses. The difference between the attributable net profit and the non-net profit deducted is mainly the non-recurring profit and loss of 28.5098 million yuan formed by the government subsidy, and the company did not disclose the details of the subsidy.
According to the rule of the lower net profit before and after the deduction of non-profit, Zhongjuxin will not achieve profitability in 2023. Zhongjuxin said that due to the impact of market competition, the sales unit price of some products has declined, resulting in a decline in sales gross profit margin, and at the same time, the revenue generated by some products is small, and the scale effect has not yet been realized, and the impact of R&D investment, management costs, share payment and other period expenses has been superimposed, resulting in a decline in profitability in 2023.
In 2023, the electronic-grade sulfuric acid and electronic-grade ammonia plants of Zhongjuxin's fundraising project (Phase I) will be completed and put into operation, and the scale of production and sales will be expanded. According to the annual report, in 2023, the company's electronic wet chemicals production volume will be 97,459.23 tons, a year-on-year increase of 25.40%, sales volume will be 100,869.74 tons, a year-on-year increase of 44.11%, and the production volume of electronic special gases and precursors will be 1,858.38 tons, a year-on-year increase of 21.18%, and sales volume will be 1,780.09 tons, a year-on-year increase of 18.83%.
It should be noted that there seems to be a contradiction between the changes in production and sales volume and the changes in inventory of Zhongjuxin. According to basic common sense, if the current sales volume is greater than the production volume, the ending inventory will decline if all the products are self-produced. However, the annual report of Zhongjuxin disclosed that the company's products are all independently produced, and there is no outsourcing, commissioned processing, etc., and the sales volume of electronic wet chemicals in 2023 will be higher than the output, but the ending inventory will increase by 67.39% year-on-year.
There are many doubts in the disclosure of related party transaction information
Up to now, Juhua shares (600160. SH) is the joint largest shareholder of Zhongjuxin, and Zhongjuxin is an associate of Juhua Co., Ltd.
Juhua Group Co., Ltd. (hereinafter referred to as Juhua Group), including Juhua Co., Ltd., has long been among the top five suppliers of Zhongjuxin, and 2023 will be no exception. According to the annual report, in 2023, the second largest supplier among the top five suppliers of Zhongjuxin will have an affiliated relationship with the company, with a corresponding purchase amount of 87.2639 million yuan, and the supplier is Juhua Group. In fact, the total amount of purchases from Juhua Group is higher than the amount, in addition to raw material procurement, there are equipment procurement, energy procurement, and labor procurement, with a total procurement amount of 113.8586 million yuan.
The 30,000 tons/year PPT electronic-grade hydrofluoric acid technical transformation project (hereinafter referred to as the hydrofluoric acid project) of Zhejiang Kaisheng Fluorine Chemical Co., Ltd. (hereinafter referred to as Kaisheng Fluorine Chemical), a subsidiary of Zhongjuxin, will be completed and consolidated in 2022. According to the EIA document of the hydrofluoric acid project, the project consumes 8,000 tons of anhydrous hydrogen fluoride per year, and the anhydrous hydrogen fluoride comes from Zhejiang Quzhou Fluorine Chemical Co., Ltd. (hereinafter referred to as Fluorine New Chemical) and is transported through pipelines.
According to the EIA documents, after the hydrofluoric acid project is put into operation, Kaisheng Fluorine Chemical will purchase a large amount of raw material anhydrous hydrogen fluoride from Fluorine New Chemical. However, Zhongjuxin's annual report shows that the hydrofluoric acid project has been consolidated in 2022, and the company's purchase amount from fluorine new chemical in 2023 is zero.
Kaisheng Fluorine Chemical's 100,700 tons/year electronic wet chemicals expansion and transformation project (hereinafter referred to as the expansion project) is a project under construction of Zhongjuxin. According to the EIA document of the expansion project, the company will dismantle the existing tank yard in the plant area and relocate to the regional plot of Zhejiang Quzhou Jusu Chemical Co., Ltd. (hereinafter referred to as Jusu Chemical) leased by the company. Jusu Chemical is also a wholly-owned subsidiary of Juhua Co., Ltd., and its housing land is located in Fluorine New Road, Quzhou City. According to the EIA documents, Kaisheng Fluorine Chemical leased part of the land to Jusu Chemical, which constituted a connected transaction, but Zhongjuxin did not disclose the related party transaction information of leasing housing land to Jusu Chemical.
In terms of current account balances, both 2022 and 2023 figures are flawed. The annual report "Other receivables of the top five closing balances collected by the debtor" shows that at the end of 2023, Juhua shares are the fourth unit of other receivables of Zhongjuxin, with a book balance of 400,000 yuan, and "unsettled items such as receivables and payables to related parties" shows that at the end of 2023, the book balance of other receivables of Zhongjuxin to Juhua shares is 404,000 yuan. There is a discrepancy between the balance of other receivables disclosed in the two places.
According to the annual report of Zhongjuxin, at the end of 2022, the company's accounts payable balance to Juhua Group and its subsidiaries totaled 26.7656 million yuan. The audit report of Juhua Group shows that at the end of 2022, the total balance of accounts receivable of Juhua Group to Zhongjuxin and its subsidiaries is only 2.9198 million yuan. The difference in the current balance disclosed by the two parties reached 23.8458 million yuan.
In addition, Hao Yiyang has served as a director of Zhongjuxin since December 2017 and vice chairman of Zhongjuxin since August 2022, and Hao Yiyang will no longer serve as a director of Zhongjuxin after being deliberated and approved by the third extraordinary general meeting of shareholders in November 2023. At the same time, Hao Yiyang has served as the director of Shanghai Silicon Industry (688126. SH) director, who resigned in October 2023 due to personal reasons. Therefore, Zhongjuxin and Shanghai Silicon Industry are related to each other.
According to the annual report of Zhongjuxin, in 2022 and 2023, the company's related sales to Shanghai Xinsheng Semiconductor Technology Co., Ltd. and Shanghai Xinao Technology Co., Ltd., subsidiaries of Shanghai Silicon Industry, will be 16.1343 million yuan and 19.986 million yuan respectively. Correspondingly, if the above transaction is true, Shanghai Silicon Industry should disclose the related party transaction of purchasing commodities from Zhongjuxin, but for some reason, there is no related party transaction with Zhongju Core in the annual report of Shanghai Silicon Industry.