The operating net cash flow is poor, and it is planned to raise 900 million yuan to supplement the flow

In the first round of inquiries, the matching problem between the cash flow fluctuation and the income statement and the balance sheet of Haikang Machine was grilled by the supervision, and the company made some explanations, but it was obviously difficult to convince. The second round of inquiries of the Shenzhen Stock Exchange requires clarification of enterprises with negative cash flow from operating activities, high asset-liability ratio and the effectiveness of relevant corresponding measures.

According to the declaration materials and the response to the first round of inquiries, the net cash flow generated by the company’s operating activities in each period of the reporting period was -138 million yuan, 103 million yuan, -325 million yuan and -398 million yuan, respectively, which fluctuated greatly, and was a net outflow except 2020.

The company’s response to the first round of inquiries explained that with the expansion of production and operation scale, the purchase of raw materials and product stock increased correspondingly, accounts receivable also increased, and there was a certain time difference between upstream and downstream payments and payment settlement, resulting in negative net cash flow of operating activities.

In addition, during each reporting period, the company’s asset-liability ratio was about 70-80%. In the first round of reply, the company explained that in the period of rapid business growth, the working capital needs are large, the company has a strong independent financing ability, and can gradually improve the asset-liability ratio under the premise of ensuring stable development.

However, at the end of September 2022, the company’s credit borrowings increased from 23.02 million yuan at the end of 2021 to 550 million yuan, and long-term borrowings at the end of September 2022 increased from 19 million yuan at the end of 2021 to 350 million yuan. By the end of 2022, the situation is similar.

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The second round of inquiries requires the Shenzhen Stock Exchange to further strengthen the analysis of its own financial situation from the perspective of cash flow, explain the main measures to deal with the negative net operating cash flow, the effectiveness of implementation, the reasons for the substantial increase in end-term loans in 2022, and strengthen the pertinency of the disclosure of relevant risks.

According to the company’s disclosure, entering the first quarter of 2023, its operating cash flow situation has not significantly improved. The company said that the net negative cash flow generated by operating activities further increased compared with the same period last year, mainly due to a slight decrease in the cash received by the company from the sale of goods and the provision of services during the period, while the cash paid to and for employees and the various taxes paid increased.

It is worth mentioning that the company intends to raise 6 billion yuan in the IPO, of which more than 900 million is to be used to supplement the working capital.

Non-net profit growth slowed to 8 per cent in the first half, after rising more than tenfold in the previous two years

If the poor cash flow and debt situation is the situation that exists throughout the reporting period, the signs of deceleration in growth began to appear in the first quarter of 2023, and the half year basically continued. In the second round of inquiries, the adequacy of the disclosure of risks related to industry information and the sustainability of performance growth are key regulatory concerns.