After the successful listing, Huatong Cable fell into the strange circle of increasing revenue and not increasing profits, compared with many peers, its performance can not satisfy investors, which also makes its stock price all the way down, the market value shrank by about 4 billion yuan.
Further analysis of Huatong Cable found that its accounts receivable and inventory are high, its operating cash flow is negative, and its monetary funds are not enough for short-term borrowing. With a full score of 10 points, how many points should be scored on its operating quality and solvency?
The increase in revenue did not increase profits, and the market value shrank by 4 billion yuan
On May 11, Huatong Cable (605196. SH) was successfully listed on the main board of the Shanghai Stock Exchange, and after recording multiple stops, the stock price of Huatong Cable began to fall for a long time. From the perspective of stock price trends, Huatong Cable's stock price fluctuated greatly, the highest value was 18.47 yuan / share, and then fell continuously, the lowest value was 9.05 yuan / share, approaching the issue price, and then there was a correction.
On October 28, Huatong Cable fell to a halt at the end of the session, closing at 10.47 yuan / share, down about 43% at a higher point, close to the waist, with a total market value of 5.3 billion yuan, a 4 billion yuan reduction from the highest market value of 9.3 billion yuan.
Behind the large fluctuations in stock prices, or closely related to their performance.
According to the understanding of the short flat fast interpretation, Huatong Cable is mainly in the wire and cable industry and the oil service industry, mainly engaged in wire and cable research and development, production and sales business, the leading products include the household line as the representative of the low-voltage power cable and the submersible pump cable as the representative of the electrical equipment cable, widely used in power transmission and distribution, mining / oil / gas and other industries.
From 2018 to 2020, the operating income achieved by Huatong Cable was 2.615 billion yuan, 2.955 billion yuan and 3.376 billion yuan, respectively; the net profit in the same period was 0.89 billion yuan, 123 million yuan and 154 million yuan, respectively.
Judging from the performance of Huatong Cable, both operating income and net profit have maintained a growth trend, but this situation has changed this year.
In the first half of this year, Huatong Cable achieved operating income of 1.880 billion yuan, an increase of 17.11% year-on-year; the net profit achieved was 0.44 billion yuan, a decrease of 0.41 billion yuan or 48.56% compared with 0.85 billion yuan in the same period last year. In addition, Huatong Cable's deducted non-net profit was 0.24 billion yuan, down 61.20% from 0.63 billion yuan in the same period last year, and among its net profit of 0.44 billion yuan, there were government subsidies of 0.17 billion yuan.
In the first three quarters of this year, Huatong Cable's operating income and net profit were 3.24 billion yuan and 0.64 billion yuan, respectively, of which revenue increased by 30.02% year-on-year, and net profit decreased by 39.43% year-on-year.
Why is Huatong Cable facing the situation of increasing revenue without increasing profits?
The reason given by Huatong Cable is mainly affected by the increase in the price of copper and aluminum raw materials, the increase in the price of sea freight, and the profit and loss of exchange.
In terms of raw materials, according to the news released by the China Nonferrous Metals Industry Association, in the first half of the year, the average price of copper in the domestic spot market was 66636 yuan / ton, up 49.2% year-on-year;
In terms of freight and exchange, in the first half of the year, Huatong Cable's freight and freight forwarding fees were 0.72 billion yuan, an increase of 0.06 billion yuan, or 6 million yuan, compared with 0.66 billion yuan in the same period last year; the exchange rate profit and loss was 0.11 billion yuan, resulting in an increase in its financial expenses. The impact of these two aspects on the performance of Huatong Cable totaled about 17 million yuan.
From the cost side, the operating cost of Huatong Cable in the first half of the year was 1.552 billion yuan, an increase of 271 million yuan over the same period last year of 1.281 billion yuan, a growth rate of 21.1%, and the growth rate of operating costs and operating income was not much different. (Note: For the convenience of comparison, the operating cost here has excluded the performance transportation cost, that is, the freight and freight forwarding fee of 71.9418 million yuan, the packaging and handling cost of 2.9717 million yuan)
Based on the above information, the explanation of the net profit waist cut given by Huatong Cable does not seem to be comprehensive enough.
Compared with peers, in the first half of the year, the operating income of Han Cable, Jinbei Electric, Dongfang Cable, Valin Cable, Hangdian Co., Ltd., Jinlongyu and other enterprises achieved different degrees of growth, respectively, 3.766 billion yuan, 5.643 billion yuan, 3.387 billion yuan, 1.02 billion yuan, 3.072 billion yuan, 1.838 billion yuan; the corresponding net profits also achieved rapid growth, respectively, 486 million yuan, 165 million yuan, 637 million yuan, 0.66 billion yuan, 0.66 billion yuan, 106 million yuan. The details are as follows:
In the case of many peer companies increasing revenue and increasing profits, why Huatong Cable does not increase profits, perhaps only Huatong Cable itself can explain it.
Accounts receivable + inventory reached 2.457 billion yuan
What is the operating quality of Huatong Cable, which does not increase revenue and profit?
In the first half of the year, the net cash flow (cash flow) generated by Huatong Cable's operating activities was -432 million yuan, down 594.95% year-on-year; the cumulative cash flow in the first three quarters was -725 million yuan, down 719.24% year-on-year, further deteriorating from the interim report.
In the report, Huatong Cable gave the reason for the sharp decrease in cash flow due to the increase in raw material prices and the increase in the occupation of procurement/production inventory funds in the current period; the reason given in the third quarter report was the increase in inventory and accounts receivable.
According to the understanding of short flat fast interpretation, in the past three years, the accounts receivable of Huatong Cable have been relatively stable, maintaining more than 800 million yuan, 816 million yuan, 873 million yuan and 831 million yuan respectively. As of September 30, Huatong Cable's accounts receivable were 1.553 billion yuan, an increase of 722 million yuan from 831 million yuan at the beginning of the year, with a growth rate of 86.88%, and the growth rate of accounts receivable was much higher than the 30% growth rate of operating income in the same period.
From 2018 to 2020, Huatong Cable's bad debt provision was 0.83 billion yuan, 0.86 billion yuan and 126 million yuan, respectively, and the bad debt provision in the first half of this year (the book balance of accounts receivable was 1.303 billion yuan) was 125 million yuan. Now, will the increase in accounts receivable again make Huatong Cable's bad debt preparation increase again? Wait for the 2021 annual report to see the difference.
Accounts receivable are high, so what is the inventory situation of Huatong Cable?
In the past three years, the inventory of Huatong Cable was 510 million yuan, 586 million yuan and 717 million yuan respectively, a cumulative increase of 40.59%; in the first three quarters of this year, the inventory of Huatong Cable was 904 million yuan, an increase of 187 million yuan from 717 million yuan at the beginning of the year, with a growth rate of 26.08%.
Like accounts receivable, high inventory will produce price decline or impairment, and the amount of inventory price decline reserves in the past three years is 7.1878 million yuan, 9.7677 million yuan and 21.295 million yuan, respectively.
In the first three quarters of this year, the total value of Huatong Cable's accounts receivable and inventory reached 2.457 billion yuan, accounting for 77.98% of current assets and 60.98% of total assets. Although accounts receivable and inventory can be realized, it is still not as safe as holding cash in hand.
In this way, the operating quality of Huatong Cable needs to be improved.
In the first half of the year, Huatong Cable's monetary funds were 371 million yuan, and as of September 30, its monetary funds further fell to 286 million yuan. In the report, the decrease in Huatong Cable's monetary funds was mainly due to the reduction of bank deposits, from 275 million yuan at the beginning of the year to 79 million yuan to 196 million yuan in the middle report.
As of September 30, Huatong Cable's short-term borrowings were 1.111 billion yuan, an increase of 520 million yuan from 591 million yuan at the beginning of the year, with a growth rate of 88.17%. Monetary funds in the same period can not cover short-term borrowing, Huatong Cable's solvency in the next year is a problem worth paying attention to.
It should be pointed out that the actual net amount of funds raised by Huatong Cable's issuance of shares is 328 million yuan (50 million yuan for supplementary working capital), and on June 11, 100 million yuan was used to temporarily supplement working capital, and the period of use is until December 31, 2021.
According to the interpretation of Short Ping Kuai, the actual controllers of Huatong Cable are Zhang Wenyong, Zhang Wendong, Zhang Shujun and Zhang Baolong, and the four people hold 16.81%, 14.60%, 2.28% and 1.22% of the shares of Huatong Cable, respectively, with a total of 34.91% of the shares.
On July 14, Zhang Shujun pledged 8,200,000 shares he held, accounting for 71.10% of his shareholding, and on October 22, Zhang Baolong pledged 4,000,000 shares he held, accounting for 64.52% of his shareholding. The total pledged shares of the two actual controllers accounted for 2.41% of the total share capital of Huatong Cable.
In essence, share pledge is a kind of rights pledge, which is a more common financing means in the capital market, and the above-mentioned actual controller of Huatong Cable chose to pledge the shares shortly after listing, and the purposes are all personal loans. Whether there are other actual controllers to pledge shares in the future is also a key point worth paying attention to.
In the future, the interpretation of short flat fast will continue to pay attention.