Financial Research Southern Capital Center - Financial Report Interpretation Haiyang/Author Shumian/Risk Control
Infrared thermal imaging products integrate cutting-edge technologies such as materials science, semiconductor technology, precision instrument manufacturing, etc., with high scientific and technological content. Their design and research and development require professionals and cross type scientific and technological talents in various technical fields. However, there is relatively little talent accumulation in the domestic infrared thermal imaging industry, and the industry started late. At present, some domestic enterprises producing infrared thermal imaging products are still relying on imports.
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Looking to Guoke Tiancheng Technology Co., Ltd. (hereinafter referred to as "Guoke Tiancheng"), the core component detector of its infrared products is "dependent on" outsourcing, and it does not have the ability to produce itself. At the same time, it also faces the dilemma of declining gross profit margin. On the other hand, Guoke Tiancheng has "lost blood" for four consecutive years, and the proportion of R&D investment is lower than the average of peers.
1、 The average selling price of products declined, and the raised capital was asked whether there was any risk of overcapacity
Founded on January 8, 2014, Guoke Tiancheng is mainly engaged in the R&D, production, sales and service of products in the photoelectric field such as infrared thermal imaging. In addition to photoelectric business, Guoke Tiancheng also carries out other businesses such as remote sensing data application, information system development and satellite navigation receiver development.
According to the prospectus (the last draft) signed by Guoke Tiancheng on April 9, 2023 (hereinafter referred to as the "prospectus"), from the perspective of revenue composition, Guoke Tiancheng's optoelectronic business includes infrared product business, parts business and optoelectronic development business; Other main businesses include remote sensing business, information system business and navigation business.
From 2020 to 2022, the revenue of Guoke Tiancheng Infrared products will account for 45.77%, 53.55% and 56.48% of the main business revenue respectively.
However, since 2021, the average sales prices of some major products in Guoke Tiancheng's infrared product business have declined.
The prospectus shows that from 2020 to 2022, the sales revenue of Guoke Tiancheng's refrigeration type movement, complete machine and detector will be 95.6277 million yuan, 150.4987 million yuan and 85.0876 million yuan respectively, accounting for 53.68%, 51.83% and 67% of the revenue of each phase of Guoke Tiancheng's photoelectric business.
In 2021 and 2022, the average sales price growth rate of Guoke Tiancheng 1280 refrigeration type movement will be -15.87% and -25.91% respectively; The average sales price growth rate of 640 refrigeration type movement is -15.88% and -4.24% respectively; The average sales price growth rate of 1280 refrigeration type complete machine is - 28% and 3.64% respectively; The average sales price growth rate of 640 refrigeration type complete machine was - 17.69% and - 3.1% respectively; The average sales price growth rate of uncooled movement is - 53.7% and - 3.85% respectively; The growth rates of sales of non refrigeration complete machines were -5.93% and -34.58% respectively.
In short, from 2021 to 2022, the average sales prices of most of the main products in Guoke Tiancheng Optoelectronics business have declined.
As for the decline in the average sales price of refrigeration type movement, complete machine and detector, Guoke Tiancheng said in the prospectus that it was mainly due to the cost oriented pricing strategy of its products, and since 2021, it has turned to purchase and use domestic detectors and the proportion of its use has been increasing. In addition, Guoketian has accelerated the promotion of the application scope and market share of InSb detector route in China. On the basis of cost reduction, it has appropriately lowered the sales price in combination with market competition environment, customer expansion and other factors.
In addition, Guoke Tiancheng also said that if in the future the purchase price of domestic InSb detectors will continue to decline after the increase of production capacity, or the competition in the domestic refrigeration infrared market will intensify, the sales price of its refrigeration type movement, complete machine and detectors will continue to decline.
It is worth noting that Guoke Tiancheng still plans to invest more than 100 million yuan in raising funds to improve the production capacity of infrared products.
According to the prospectus, Guoke Tiancheng plans to invest 104.7876 million yuan of raised funds in this listing to be used for "photoelectric product research and development and industrialization construction project".
The project plans to make full use of the technology independently developed by Guoke Tiancheng to carry out the research, development and production of infrared products. After the completion of the project, it is expected to form an annual production capacity of 100 medium wave cooled thermal imagers, 3500 uncooled infrared thermal imagers, and 80000 uncooled infrared core modules.
However, in the first round of inquiry, the regulator questioned whether the expansion of production capacity of Guoke Tiancheng would lead to the risk of overcapacity.
According to the Reply to the Enquiry Letter on the Review of Application Documents for Initial Public Offering and Listing on the GEM of Guoke Tiancheng Technology Co., Ltd. (hereinafter referred to as the "Reply to the Enquiry Letter") issued on April 10, 2023, in the first round of inquiry, regarding the projects invested with raised funds, the supervision requires Guoke Tiancheng to combine the market demand and price changes of the uncooled detectors The capacity and output of relevant manufacturers, market competition pattern and other factors further illustrate the necessity of building the "photoelectric product research and development and industrialization construction project", and require Guoke Tiancheng to explain whether there is overcapacity risk in the construction of the project, and fully remind the negative impact of the subsequent asset depreciation and amortization of the raised investment project on its business performance and related risks.
2、 It does not have the self production capacity of the detector or the cost disadvantage, and the gross profit rate declines and is lower than the average of peers
During the reporting period, the gross profit rate of the main business of Guoke Tiancheng also declined continuously.
According to the prospectus, comparable listed companies in the same industry of Guoke Tiancheng are Wuhan Gaode Infrared Co., Ltd. (hereinafter referred to as "Gaode Infrared"), Zhejiang Dali Technology Co., Ltd. (hereinafter referred to as "Dali Technology"), Yantai Ruichuang Weina Technology Co., Ltd. (hereinafter referred to as "Ruichuang Weina") Hubei Jiuzhiyang Infrared System Co., Ltd. (hereinafter referred to as "Jiuzhiyang"), Beijing Fujirui Photoelectric Technology Co., Ltd. (hereinafter referred to as "Fujirui") and other listed companies.
In 2020-2022, the gross profit margin of the main business and photoelectric business of Guoke Tiancheng is lower than the average of comparable listed companies in the same industry.
According to the prospectus, from 2020 to 2022, the gross profit margin of Gaode's infrared thermal imaging business will be 63.85%, 64.9% and 55.57% respectively; The gross profit margin of the main business of Ruichuang Weina is 63.13%, 58.47% and 47.26% respectively; The gross profit margin of Jiuzhiyang IR thermal imager business was 23.27%, 22.56% and 25.95% respectively; The gross profit margin of Dali Technology's infrared product business is 60.81%, 52.66% and 60.09% respectively; The gross profit margin of Fujirui's main business is 49.2%, 52.69% and 35.4% respectively.
From 2020 to 2022, the average gross profit margin of the above five comparable listed companies in the same industry will be 52.05%, 50.25% and 44.85% respectively.
From 2020 to 2022, the gross profit margin of main business of Guoke Tiancheng will be 48.9%, 44.75% and 38.05% respectively; The gross profit margin of its photoelectric business was 45.64%, 41.94% and 35.01% respectively.
In short, from 2020 to 2022, the gross profit rate of the main business and optoelectronic business of Guoke Tiancheng will show a downward trend, and both are lower than the average level of comparable listed industries in the same industry.
With regard to the decline in the gross profit margin of its main business, Guoke Tiancheng said in the prospectus that the decline in its gross profit margin of its business in 2021 and 2022 was mainly due to the decline in the proportion of revenue from optoelectronic development business and gross profit margin.
In addition, Guoke Tiancheng also said that because it does not have the ability to produce detectors, it has a certain cost disadvantage. Therefore, in the future, if the domestic market competition for refrigeration infrared products and parts intensifies, the price continues to decline, or the revenue share of non refrigeration infrared products with low gross profit rate increases, the gross profit rate of its infrared products and parts business may decline, which will lead to the risk of continuous decline in the gross profit rate of its main business.
3、 "Blood loss" for four consecutive years, accounts receivable accounting for more than 50% of revenue or credit sales
In addition to the decline of gross profit rate, the continuous "blood loss" of Guoke Tiancheng is also worthy of attention.
According to the prospectus, from 2020 to 2022, the operating revenue of Guoke Tiancheng will be 196.9952 million yuan, 327.7373 million yuan and 529.5553 million yuan respectively, with a compound growth rate of 63.96%; Net profit was 47.7266 million yuan, 74.2548 million yuan and 97.0944 million yuan respectively, with a compound growth rate of 42.63%.
In short, from 2020 to 2022, the operating revenue and net profit of Guoke Tiancheng will be growing.
However, from the perspective of operating net cash flow, Guoke Tiancheng may suffer serious "blood loss".
According to the Prospectus and Prospectus of Guoke Tiancheng signed on January 16, 2023, from 2019 to 2022, the net cash flow from Guoke Tiancheng's operating activities will be RMB -1483900, RMB -95.0721 million, RMB -118.592 million and RMB -203.4355 million respectively.
That is to say, from the perspective of net cash flow from operating activities, from 2019 to 2022, Guoke Tiancheng has suffered "blood loss" for four consecutive years, and by the end of 2022, it has suffered serious "blood loss".
In addition, the receivables of Guoke Tiancheng increased year by year during the reporting period.
According to the prospectus, at the end of 2020-2022, the notes receivable of Guoke Tiancheng will be 5.5713 million yuan, 12.8845 million yuan and 15.3453 million yuan respectively, and the accounts receivable will be 96.1682 million yuan, 153.5048 million yuan and 27.18966 million yuan respectively.
That is, at the end of 2020-2022, the total accounts receivable and notes receivable of Guoke Tiancheng are 102 million yuan, 166 million yuan and 287 million yuan respectively, accounting for 51.65%, 50.77% and 54.24% of the operating revenue in the same period.
So far, during the reporting period, Guoke Tiancheng not only has insufficient "hematopoietic" capacity or reserves, but also faces the dilemma of high credit sales.
4、 The purchase proportion of the top five suppliers climbed to 80%, and the core component detector "depends on" outsourcing
In addition to the "hematopoietic" ability being questioned, Guoke Tiancheng may rely on its single supplier.
According to the prospectus, the detector is one of the core components of Guoke Tiancheng infrared thermal imager. However, Guoke Tiancheng does not have the ability to produce detectors by itself, and all the detectors needed for its production and sales are obtained through outsourcing. Since 2020, domestic InSb detectors purchased by Guoke Tiancheng have been basically produced by Z0001, and are mainly purchased from Z0002 and Z0003, two agents of Z0001.
According to the prospectus, from 2020 to 2022, the total purchase amount of Guoke Tiancheng from its top five suppliers will be 93.6182 million yuan, 173.0591 million yuan and 430.2692 million yuan, accounting for 73.02%, 73.75% and 80.34% respectively.
Among them, Z0002 and Z0003 are under the same control and are the largest suppliers of Guoke Tiancheng in the reporting period. Their purchase amount is disclosed in the prospectus.
From 2020 to 2022, Guoke Tiancheng will purchase 33.92%, 46.6% and 65.68% of the largest supply respectively.
In addition, from 2020 to 2022, Guoke Tiancheng will purchase 16336300 yuan, 84184500 yuan and 325131900 yuan of InSb detectors produced by Z0001, respectively, accounting for 25.87%, 88.23% and 99.87% of the total InSb detectors purchased in the same period.
That is to say, Guoke Tiancheng has a high proportion of InSb detectors produced by the first supplier or relies on them.
It is worth noting that according to the prospectus, Guoke Tiancheng and Z0001 signed the Strategic Cooperation Agreement to carry out comprehensive strategic cooperation in the refrigeration infrared market and promote mutual development. The Strategic Cooperation Agreement signed between Guoke Tiancheng and Z0001 in June 2021 agreed that Guoke Tiancheng has the preemptive right to purchase the cold detectors produced by Z0001 from June 2021 to June 2026.
According to the Reply to the Second Round of Examination and Inquiry on the Application Documents for Initial Public Offering and Listing on the GEM of Guoke Tiancheng Technology Co., Ltd. (hereinafter referred to as the "Second Round of Inquiry and Reply"), in the second round of inquiry, the regulator required Guoke Tiancheng to state that it signed the Strategic Cooperation Agreement with Z0001 in June 2021 regarding its purchase quantity, price Whether there is an agreement on the purpose, etc., and whether the preemptive right and relevant purchase restrictions will have a significant adverse impact on Guoke Tiancheng's ability to purchase relevant raw materials from other detector manufacturers, as well as its production, operation and sustainable operation.
In addition, Guoke Tiancheng admitted in the prospectus that its core component detectors rely on outsourcing. If the cooperation relationship between the company and the detector supplier has adverse changes, or the relevant supplier has insufficient supply capacity, sales price increases and other circumstances, it will have a certain adverse impact on the company's production and operation plan or operating costs.
5、 R&D investment has increased year by year, but its proportion in revenue has declined and is lower than the average level of peers
The infrared thermal imaging products have high technology content, and the manufacturing enterprises may need to continuously invest in research and development. However, the proportion of R&D investment of Guoke Tiancheng is lower than the average of comparable listed companies in the same industry.
The prospectus shows that from 2020 to 2022, the R&D investment of Guoke Tiancheng will be 1437600 yuan, 20647300 yuan and 29111000 yuan, respectively, accounting for 7.3%, 6.3% and 5.5% of the operating revenue in the same period.
Looking at its peers, according to the 2020-2022 annual reports of comparable listed companies in the same industry of Guoke Tiancheng, the R&D investment of Gaode Infrared will account for 10.19%, 10.6% and 18.04% respectively in 2020-2022; R&D investment of Ruichuangwina accounted for 14.62%, 23.47% and 20.27% respectively; The R&D investment of Jiuzhiyang accounted for 10.12%, 10.58% and 10.21% respectively; The R&D investment of Dali Technology accounted for 11.3%, 21.8% and 47.29% respectively; The R&D investment of Fujirui accounted for 10.12%, 12.09% and 43.68% respectively.
Among them, according to the annual report of Dali Technology and Fujirui in 2022, the proportion of R&D investment of Dali Technology and Fujirui will increase significantly in 2022 compared with 2021, which is mainly caused by the obvious decrease of their revenue scale in 2022 compared with 2021, so their total R&D investment will account for a large proportion of operating revenue.
According to the calculation of the South Capital Center of the Financial Research Institute, from 2020 to 2022, the average R&D investment of comparable listed companies in the same industry of Guoke Tiancheng will be 11.27%, 15.71% and 27.9% respectively; After excluding the abnormally high R&D investment proportion data of Dali Technology and Fujirui in 2022, the average R&D investment proportion of comparable companies is 11.27%, 15.71% and 16.17% respectively.
That is to say, in 2020-2022, the proportion of research and development investment of Guoke Tiancheng is lower than the average value of comparable listed companies in the same industry, and shows a downward trend year by year.
Under the above problems, can the shock listing of Guoke Tiancheng break the situation?
