Tuyere financial reporter Zhao Chong
Recently, the 2023 annual report released by Sunfly Technology shows that the company's net profit attributable to the parent company last year was 1.696 billion yuan, compared with the loss of 981 million yuan in 2022, the performance in 2023 will continue to decline.
Behind the continued decline in performance, the volatility of its major customer Country Garden has had a serious impact on Sunfly Technology's profits, highlighting the company's significant dependence on a single customer and the risk that receivables may not be fully paid.
The fluctuation of major customer Country Garden caused profits to be cut in half
During the reporting period, the company achieved operating income of 2.002 billion yuan, a decrease of 6.72% over the same period of last year, operating profit of -1.620 billion yuan, a decrease of 66.66% over the same period of last year, and net profit attributable to shareholders of listed companies of -1.696 billion yuan, a decrease of 72.82% over the same period of last year. Based on the principle of prudence, the company has made credit impairment losses and asset impairment provisions for accounts receivable, notes receivable, other receivables, contract assets, inventory, goodwill and other assets totaling 1.739 billion yuan, which has a significant impact on the company's net profit.
Sunfly Technology mentioned in the financial report that the operation of real estate companies in 2023 is generally still not optimistic, and at the same time, residents' investment and consumption confidence are insufficient, and the process of urbanization construction is slowing down, suppressing the long-term demand of the real estate industry, so the real estate industry is not prosperous enough and the liquidity risk is high, which may adversely affect the company's electrical equipment, LED lighting and smart city business.
The reporter noted that from the perspective of business scope, Sunfly Technology belongs to the power transmission and distribution and control equipment manufacturing industry, and its main customers belong to the real estate industry, and the real estate giant Country Garden is the main customer of Sunfly Technology.
Sunfly Technology said in its financial report that during the reporting period, the company's sales revenue from Country Garden Real Estate Group Co., Ltd., the largest customer, accounted for 59.92%, accounting for a relatively high proportion, and the fluctuation of Country Garden Group's operating performance had a greater impact on the company's performance.
At the same time, Sunfly highlighted that Country Garden Group's sales performance is still under pressure due to weaker market expectations and weak demand. If Country Garden Group is unable to effectively resolve liquidity risks, its operating scale and profitability will continue to decline in the future, which will lead to a decline in the company's demand for the purchase of electrical equipment and other products, which may adversely affect the stability of the company's operating results and the sustainable development of its business.
Receivables may not be paid in full
It is worth noting that in addition to dragging down the performance of Sunfly Technology, Country Garden has also caused pressure on accounts receivable to listed companies.
From the perspective of asset quality, as a downstream real estate enterprise, accounts receivable has always been the main factor affecting Sunfly Technology. Generally speaking, high accounts receivable means that after the company sells goods or provides services, customers have not paid the corresponding amount, which may lead to insufficient cash flow of the enterprise in the short term, and if the performance of accounts receivable far exceeds the net profit, it means that the enterprise may have hidden dangers such as bad debt risk.
According to the data as of the end of 2023, Sunfly Technology's accounts receivable was 1.118 billion yuan, accounting for 34.21% of total assets, an increase of 8 percentage points compared with the end of 2022. According to the data as of the end of 2022, Sunfly Technology's accounts receivable was 1.501 billion yuan, accounting for 26.21% of total assets.
On August 24, 2023, Sunfly Technology said on the interactive platform that based on Country Garden's public disclosure, if Country Garden's phased liquidity pressure continues, the company's receivables may not be able to be paid in full, which may lead to risks such as bad debt losses in accounts receivable, declining profits and business contraction.
The reporter noted that Sunfly Technology's cash flow is facing greater pressure, with the net cash flow generated by operating activities in 2023 being -4.2453 million yuan, a year-on-year decrease of 124.69%, and 171 million yuan in 2022, a year-on-year decrease of 73.89%.
In the 2023 financial report, Sunfly Technology said that due to the liquidity pressure of the company's important customers, it will have a greater impact on the company's cash flow. If a large amount of receivables cannot be fully recovered on time and the state continues for a long time, the company will face greater cash liquidity risk. If the liquidity problem cannot be effectively resolved, the company will not be able to pay the supplier smoothly, and will face the risk of being sued by the supplier and other subsequent risks.
It is worth noting that Sunfly Technology also mentioned that because the company's main customers are in the real estate industry, affected by the downturn in the real estate industry, some real estate companies have problems with capital liquidity, the phenomenon of public debt default continues to increase, the risk of overdue default expands, and the company has the risk of receivables recovery.
From the perspective of historical evolution, Sunfly Technology was originally Luyitong, a Yantai listed company mainly engaged in electrical equipment manufacturing business. In January 2018, Luyitong spent 2 billion yuan to acquire Sunfly Holdings, which is closely related to Country Garden in terms of equity history. Subsequently, the listed company Lu Yitong changed its name to Sunfly Technology, which is mainly engaged in complete sets of electrical equipment.
In response to the risk that the company's receivables may not be paid in full and the decline in profits, the reporter called Sunfly Technology many times, but as of press time, the other party has not responded.