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Eastcome peace three quarters report hidden worry accounts receivable and inventory surge

November 09, 2018 04:08
Author: Zhao Lin

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After seven consecutive years of growth,EastcompeaceIt has ushered in a decline in performance. In 2017, the company's performance fell by 53.83% year-on-year. In the first half of 2018, the company's performance fell again by 9.29%. Although relying on the profit of the second quarter of 9,784,200 yuan, the company's net profit in the first three quarters increased by 4.19% year-on-year, but the company's operating income still inevitably fell by 4.32%.

The "Securities Daily" reporter noted that in the context of the year-on-year decline in operating income, the company's accounts receivable and inventory are growing. According to the data of the third quarterly report, as of the end of September, the company's accounts receivable amounted to 280 million yuan, an increase of 103.21% from the end of the previous year; inventory also surged from 367 million yuan at the beginning of the period to 467 million yuan.

The "Securities Daily" reporter interviewed Eastcompe peace on the above issues. The company's certificate Dai Linwei told reporters: "We don't accept telephone interviews." Since then, the reporter has repeatedly called the company to contact the on-site interview, but the phone has never been answered.

According to the third quarterly report of Eastcom and Peace 2018, from July to September, the company achieved operating income of 263 million yuan, a year-on-year decrease of 1.46%; net profit attributable to shareholders of listed companies was 9.4786 million yuan, an increase of 56.04%. From January to September, the company achieved operating income of 809 million yuan, a year-on-year decrease of 4.32%; net profit attributable to shareholders of listed companies was 30.86 million yuan, an increase of 4.19%. However, the net profit after the depreciation in the first three quarters still fell by 7.71% year-on-year.

The main business of Eastcom Peace, which was listed in 2004, is communication,bankAnd social security products in the three major application areas of social security. In 2009, after the company's second decline after listing, it quickly returned to the track of steady growth. From 2010 to 2016, the company's annual performance has grown steadily, especially in 2014, with a growth rate of more than 30%.

However, since the second quarter of 2017, the company's performance has turned down. In 2017, the company's operating income and net profit fell 20.51% and 53.83%, respectively. Until the first half of 2018, the company's performance has not improved.

Although Eastcome Peace recovered its decline in performance through third-quarter performance growth, the company's accounts receivable and inventory increased significantly.

According to the company's previously disclosed report, at the end of 2017, the company's accounts receivable amounted to 138 million yuan, reaching 277 million yuan in the first half of 2018, and continued to increase to 280 million yuan in the third quarter, an increase of 103.21%. The company said, “mainly because of the fierce competition in the smart card industry, the domestic customers have a long settlement period.” At the same time, due to the increase in accounts receivable and the corresponding increase in bad debts, the company accrued an asset impairment of 13.89 million yuan. loss.

In addition, the company's inventory has also risen. As of the end of the third quarter, the company's inventory was 467 million yuan, up from the initial period of 367 million yuan, an increase of 100 million yuan, an increase of 27.25%; accounting for 27.9% of the company's total assets. Although the specific composition of the inventory was not disclosed in the third quarterly report, it is estimated that the inventory commodity in the semi-annual report accounted for 68% of the inventory, and the current inventory of goods should still account for a large proportion.

For Dongxin Keping, while its operating income declined while inventory and accounts receivable surged, some people who specialize in financial research told reporters that “the operating income has declined, while accounts receivable and inventories have increased substantially. This is not the sales of the company’s products. Smooth performance."

In addition, the reporter also noted that Eastcom Peace has implemented an internationalization strategy in recent years. The company stated that “the management capabilities of overseas subsidiaries and the international market layout concept have been further enhanced, and the company is moving towards the leading smart card companies in the world.” But in reality The operation of its overseas subsidiaries is not very optimistic. In the first half of this year, the company's four overseas subsidiaries all suffered losses, and the overseas subsidiaries also experienced losses in 2017.

The road to internationalization of Eastcom peace began as early as more than a decade ago. In 2016, the four overseas subsidiaries achieved a total net profit of RMB 22,829,500. However, in 2017, the Bangladesh and Singapore subsidiaries of the four companies incurred losses of RMB 586,400 and RMB 2,194,800 respectively. In the first half of 2018, all four subsidiaries lost money, and the total amount of losses was 5,157,800 yuan.

In fact, due to the slowdown in global economic growth and exchange rate fluctuations, overseas markets and businesses are more difficult to develop and risks are increasing. Although Eastcompeace has improved its communication card shipments, the downturn in its subsidiaries’ performance is reflected. The internationalization process was frustrated. Some insiders said that "the core competitiveness of Eastcompeace is insufficient, and the governance structure has always been criticized by the market. The listing has not shown much growth for many years, and it is difficult to achieve immediate results in international expansion under such conditions. It seems that we still have to continue to pay tuition fees."

(Article source: Securities Daily)

                (Editor: DF407)

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