Visual China.
If you don't go public, it's over" has become a true portrayal of the hearts of many IPO companies. Xinnuo Communication, which is sprinting to the Science and Technology Innovation Board, empathizes with this anxiety.
Seven months have passed from the submission of the prospectus on June 30, 2023 to the disclosure of the response to the first round of inquiries of the Shanghai Stock Exchange on January 28, 2024. The IPO plans to raise 60.9 billion yuan, of which 1500 million yuan to supplement liquidity. Xinnuo Communications is currently facing a situation of declining performance, continuous negative cash flow and tight liquidity, and the success of the IPO determines whether the company can alleviate the urgent need. After all, in the first half of 2024 alone, Sino Communications has 14.8 billion yuan of short-term borrowings are due intensively.
The industry in which Sino Communication is located is a technology-intensive network communication industry, and R&D investment determines its core competitiveness. Under the pattern of leading manufacturers occupying 90% of the market share and small and medium-sized manufacturers carrying out differentiated competition, the R&D expense rate of Sino Communications has not risen but decreased, and it will even be lower than the company's sales expense rate in 2022. The outsourced R&D expenses that account for a large proportion in individual years also make investors discount their "science content".
According to the reply to the inquiry letter for the review of the Science and Technology Innovation Board recently disclosed by Xinnuo Communication, it is expected to achieve a main business income of 5 in 2023600 million to 5700 million yuan, and the net profit is expected to be 5,200000000 to 5,5000 million yuan, and it is expected to achieve a net profit attributable to owners of the parent company of 15 million yuan to 18 million yuan after deducting non-recurring gains and losses.
Compared with the same period in 2022, the overall performance of Sino Communications in 2023 will decline, with both revenue and net profit declining.
Main operating indicators, ** announcement.
As of the end of June 2023, the company's short-term borrowing balance was 19.9 billion yuan, with a balance of monetary funds of 7,380930,000 yuan. The company's financial expenses spiked due to a surge in short-term borrowing, which led to an increase in interest expenses. From 2020 to 2022, the company's financial expenses were 217510,000 yuan, 231$570,000 and $620180,000 yuan.
Titanium **APP noted that not counting the two loans due in December 2023, Xinnuo Communications still has 1The short-term borrowings of 4.8 billion yuan will mature intensively, and the short-term debt repayment pressure is quite high. 
Short-term borrowings, ** announcement.
Xinnuo Communication said that the company's short-term borrowing amount is large, mainly because the company's products are integrated delivery products of software and hardware, and direct materials account for more than 85% of the cost. On the one hand, with the rapid expansion of the company's business scale, the demand for raw materials continues to grow; On the other hand, from 2021 to 2022, the company was affected by the global core shortage tide, and the company increased its stocking to a certain extent, which increased the company's required working capital investment and short-term borrowings.
On the other hand, the company's accounts payable turnover days have been shortened by a greater margin, resulting in a faster cash outflow from the company's operating activities and a decrease in the net cash flow from operating activities year by year. During the reporting period, the company's net cash flow from operating activities was 2,596330,000 yuan, -5,942370,000 yuan, -12.1 billion yuan, -720880,000 yuan.
According to the prospectus, from 2020 to 2022, the number of accounts payable turnover days of Xinnuo Communications will be shortened from 259 days to 169 days, a shortening of 90 days; The company's accounts payable shortening is due to the company's main chip suppliers, some overseas coherent optical module manufacturers such as Cisco and other foreign suppliers in terms of payment terms, at the same time, due to the tight global production capacity of the semiconductor business, the delivery time of the first chain is extended, the company in order to support the expected growth of order demand in the future, the company has adopted a more active stocking strategy. Most of the above-mentioned business account periods are prepaid or monthly, and the company's purchase amount of chips and coherent optical modules purchased from such ** merchants has increased rapidly, further compressing the company's cash flow.
The SSE requires the company to explain the arrangements and implementation of the repayment of the relevant debts, as well as whether there is a debt repayment risk, and the methods and measures to deal with the liquidity risk when the total liabilities are high and the cash flow from operating activities is negative.
In order to cope with liquidity risks, the company will increase the proportion of medium and long-term loans, and is expected to obtain long-term loans of 5,000 in 2023000,000 yuan, and at the same time strengthen cooperation with financial institutions, as of June 30, 2023, the company has obtained a total of 3200 million yuan. In addition, through the initial public offering and listing in the future, the company will further consolidate its capital with the help of the capital market and further improve its ability to resist liquidity risks.
Sino Communication is a R&D-oriented high-tech enterprise that provides network communication and network security product solutions for the communication field, and its main customers are China Telecom, China Mobile, China Unicom and other telecom operators and government and enterprise customers.
As of June 2023, the amount of sales terminals for telecom operators is 21.3 billion yuan, accounting for 8991%γ
The concentration of the network communication market is too high, and the first-line manufacturers have a high market share and strong negotiation power. According to Dell'According to statistics from Oro Group, from January to June 2022, Huawei's share of China's network communication product market reached 58%, ZTE's was 32%, and other manufacturers accounted for a total of 10% of the market share.
In the field of network communications, where Huawei and ZTE have occupied 90% of the share, are the market space and development prospects of Sino Communications limited?
In Xinnuo's view, with the evolution of the trend of "network openness and decoupling" in the 5G era, operators have accelerated network transformation and reduced network construction costs, which has given many small and medium-sized manufacturers the opportunity to compete differently with traditional first-tier manufacturers.
However, the premise of differentiated competition must be the accumulation of R&D and technology, especially in the highly technology- and talent-intensive industry of network communications. According to the information disclosed in the prospectus, the core competitiveness of Xinnuo Communication is not outstanding among its peers.
From 2020 to 2022, the company's R&D expenses were 4,792790,000 yuan, 6,486$920,000 and $7,418320,000 yuan,The R&D expense ratios are:During the same period, the average R&D expense ratios of comparable companies were: 19%γIt can be seen that the R&D expense rate of Sino Communications continues to decline, and the R&D expense rate in 2021 and 2022 is lower than the industry average.
R&D expense ratio compared with peers, ** announcement.
In 2020 and 2021, when the R&D expense rate is relatively high, the company's R&D investment seems to have a certain "moisture".
The prospectus disclosed that the outsourced R&D expenses from 2020 to 2022 were 655700,000 yuan, 479400,000 yuan and 131340,000 yuan, accounting for R&D expenses. 77%γ
Regarding the reasons for the high proportion of outsourced R&D expenses, Sino Communications explained that at the beginning of the reporting period, the company's R&D team had a small number of people, and chose outsourced R&D for the sake of R&D efficiency, and emphasized that "the technology of outsourced R&D is not a key technology".
It is worth noting that Xinnuo Communication, which is sprinting to the Science and Technology Innovation Board, has a R&D expense rate that is no longer as good as the sales expense rate in 2022.
According to the disclosure, from 2020 to 2022, the company's sales expenses were 4,031030,000 yuan, 6,245$670,000 and $8,188250,000 yuan, and the sales expense rate was respectively. 12% and 1422%, the average sales expense ratio of the same industry is as follows. 81% and 1255%γ
Comparison of selling expense ratios with comparable companies, **Announcement.
Similar to peer companies, the composition of sales expenses of Xinnuo Communication is mainly based on employee compensation, accounting for more than 6%.
As for the reason why the sales expense ratio is higher than the average of its peers, Xinnuo Communication explained that the main reason is that the company has a limited size and has not yet played a scale effect; On the other hand, the company is headquartered in Shanghai, and the average salary level is higher than that in other regions. (This article was first published by Titanium **app, author |.)Ma Jun)