Weishi electronics suffers from many financial problems of dependence

category:Finance
 Weishi electronics suffers from many financial problems of dependence


High risk of relying on key customers

According to the prospectus, from 2016 to the first half of 2019, Weishi electronics achieved operating revenue of 1.245 billion yuan, 1.475 billion yuan, 1.558 billion yuan and 564 million yuan respectively, of which the growth rate of revenue in 2017 and 2018 was 18.48% and 5.62% respectively. Its not hard to see that its revenue growth in 2018 plummeted. In terms of profit, it is like riding a roller coaster. In 2017, its net profit attributable to the parent company was 52141500 yuan, with a growth rate of - 57.4%. In 2018, its net profit attributable to the parent company increased by 166.14% to 139 million yuan. Obviously, during the reporting period, Weishi electronics performance fluctuated significantly.

Weishi electronics is mainly engaged in the R & D, production and sales of backlight display module, liquid crystal display module and other products. The products are mainly used in automobile, mobile phone, tablet computer, digital camera, small game machine, industrial control display and other fields. Among them, backlight display module is the core product of Weishi electronics, which accounts for more than 75% of the total revenue in the reporting period, reaching 81.19% in the first half of 2019. Among the 1.008 billion yuan to be raised this time, 835 million yuan is also used for the back light source expansion and decoration panel new construction project. It can be seen that the company will focus on the development of backlight display module in the future. Although there are other products produced by Weishi electronics, the revenue share of these products is not high. Therefore, there is a worry that the products of Weishi electronics are relatively single.

In addition, the companys backlight display module gross profit margin has also declined in recent years. In 2016, the gross profit margin of such products was still 25.08%, while in 2018, it was only 20.31%, which further increased the risk faced by its single product. As the market competition intensifies, if the gross profit rate of Weishi electronics further drops, but it is unable to launch new products, its performance will be adversely affected at that time.

In addition, in terms of operation, we also need to pay attention to our over reliance on the top five customers.

In the first half of 2016-2019, the sales revenue of the top five customers of Weishi Electronics was 1.009 billion yuan, 1.253 billion yuan, 1.274 billion yuan and 486 million yuan respectively, accounting for 81.05%, 84.94%, 81.77% and 86.15% of the current operating revenue, which was obviously high. For a company that has already passed the initial stage of development, once the downstream major customers have adverse changes, the high concentration of sales may push Weishi electronics into a dilemma. And that seems to be happening right now.

Weishi electronic said in the prospectus that at present, its second largest customer, the Japanese display group, has made huge losses for several consecutive years, and its financial situation has also deteriorated significantly. This customer is also the second largest customer of Weishi electronics accounts receivable. If the financial support of the Japanese display group is not implemented, it may have a negative impact on the sales of Weishi electronic products and the recovery of accounts receivable.

Questionable revenue data

In addition to the above problems, according to the red weekly reporters accounting, the cross checking relationship between Weishis operating revenue, cash flow and operating creditors rights seems to be abnormal.

According to the prospectus, in the first half of 2019, Weishi electronics achieved a total revenue of 564 million yuan, including 180 million yuan of overseas revenue, which does not need to consider value-added tax. The remaining part of the value-added tax decreased from 16% to 13% from April 1, 2019. After the monthly average accounting of income, including value-added tax, it can be estimated that the current tax included business income is about 620 million yuan. In theory, the realization of the companys operating revenue is either cash collection or settlement by credit sale or bill. Therefore, the amount of revenue including tax should theoretically be equal to the amount of cash inflow in the current year and the amount of change in operating creditors rights such as accounts receivable and bills receivable. What about Weishi electronic?

In the first half of 2019, Weishi electronics cash from sales of goods and provision of services was RMB 614 million, plus the decrease of RMB 249600 in advance receipts in this period, which was RMB 5 million less than the revenue including tax. This means that the current sales have not received all cash, and some of the payments should also be reflected in the increase of operating claims, and the scale of the two is roughly the same.

However, opening the balance sheet, we found that in the first half of 2019, the receivables of Weishi electronic did not increase, but decreased. In the current period, Weishi electronics notes receivable, receivables and bad debt reserves totaled RMB 232 million, a decrease of RMB 59.556 million compared with the end of 2018. With such an increase and a decrease, there is a gap of about 65 million yuan between the amount that should be increased in theory.

That is to say, in the first half of 2019, Weishi electronics had about 65 million yuan of tax revenue without the support of cash flow and operating debt data.

Further calculation of the data in 2018 shows that there are also huge differences between its revenue and relevant financial data.

According to the prospectus, in 2018, Weishi electronics total operating revenue was 1.558 billion yuan, including 510 million yuan of overseas revenue. In addition to that part of the revenue that does not need to be calculated for value-added tax, the rest of the value-added tax rate was reduced from 17% to 16% from May 1, 2018. According to the monthly average calculation of income, the calculation of tax rate shows that Weishi electronics revenue including tax in 2018 is about 1.729 billion yuan u3002

In the current period, Weishi electronics cash received from selling goods and providing services is 1.563 billion yuan, plus the decrease of 1.3856 million yuan in the current advance receipts, which is less than 165 million yuan compared with the revenue including tax. According to the financial cross check relationship, theoretically, its operational claims should also increase in an equal scale. Opening the balance sheet, it is found that at the end of 2018, the notes receivable and accounts receivable (including bad debt reserves) of Weishi electronic were 2.0377 million yuan and 289 million yuan respectively. Compared with the end of 2017, the total increase of the two is only 11.967 million yuan, which is 153 million yuan less than the 165 million yuan that should be increased in theory.

In addition, according to the accounting of the reporter of red weekly, there is also a cross check gap of 172 million yuan between the companys operating revenue and cash flow and operating claims in 2017. For two consecutive years and the latest period, there are huge differences in the revenue data of Weishi electronics. Why? Of course, it may also be caused by Weishi electronics endorsement purchase of the notes, but it does not disclose the existence of this item in the prospectus, so it needs to be reasonably explained by the company.

Abnormal purchase data

In addition to the doubts in the revenue data, there are also cross checking anomalies between the purchase data of Weishi electronics and the relevant cash flow and operating liabilities.

According to the prospectus, in 2017, Weishi electronics purchased 508 million yuan from the top five suppliers, accounting for 56.68% of the total purchase amount, from which it can be calculated that the total purchase amount of the current period is 896 million yuan. According to the 17% value-added tax rate of the current year, it can be calculated that the tax included purchase amount of the current year is about 1.048 billion yuan. Theoretically, the purchase amount of this part should be reflected in the outflow of relevant cash flow and the increase and decrease of operating debt.

In the consolidated cash flow statement, in 2017, when Weishi electronic cash paid for purchasing goods and receiving services was 979 million yuan, less the increase of 3.3873 million yuan in the current prepayment, the net cash flow related to purchasing in the current period was about 976 million yuan, which was less than the tax included purchasing in the current period by more than 72 million yuan. According to the financial cross checking relationship, the operating liabilities in the current period shall have an increase of the same scale.

In the financial statements, at the end of 2017, Weishi electronics notes payable was 3.8761 million yuan, and accounts payable was 247 million yuan. The total amount of the two items increased by about 21 million yuan compared with the end of 2016. The difference between this result and the theoretical increase was 51 million yuan. That is to say, in the current period, Weishi electronics has about 51 million yuan of tax inclusive procurement without the support of cash flow and operating liabilities.

What about 2018? In that year, the purchase amount of Weishi electronics to the top five suppliers was 476 million yuan, accounting for 50.31% of the total purchase amount, so it can be calculated that the total purchase amount in that year was 946 million yuan. Considering that the value-added tax rate has decreased from 17% to 16% since May 1, 2018, it can be estimated that the tax included procurement in the current year is about 1.1 billion yuan.

Further, in the consolidated cash flow statement of Weishi electronics, in 2018, the cash paid for purchasing goods and accepting labor services was 1.058 billion yuan, plus the decrease of 3.6117 million yuan in the current prepayment, the amount of cash flow related to purchasing in the current period is about 1.061 billion yuan, which is about 39 million yuan less than that of tax included purchasing, which means the operation of Weishi electronics in this period Sexual debt should increase on the same scale, but whats the real situation? In fact, the operating debt of Weishi electronics did not increase, but decreased. According to the prospectus, in 2018, Weishi electronics notes payable was RMB 2065800 and accounts payable was RMB 234 million, with a total decrease of more than 15 million compared with the end of 2017. With such an increase and a decrease, there is a gap of more than 54 million yuan compared with the theoretical amount. The reporter of red weekly calculated the cross check relationship of the companys purchase data in the first half of 2019 in the same way, and found that the cross check difference was quite small. Therefore, if the purchase data of Weishi electronics in the first half of 2019 was relatively normal, the cross check difference between 2017 and 2018 would need further explanation from the company. Source: Yang Qian, editor in charge of stock market red weekly

Further, in the consolidated cash flow statement of Weishi electronics, in 2018, the cash paid for purchasing goods and accepting labor services was 1.058 billion yuan, plus the decrease of 3.6117 million yuan in the current prepayment, the amount of cash flow related to purchasing in the current period is about 1.061 billion yuan, which is about 39 million yuan less than that of tax included purchasing, which means the operation of Weishi electronics in this period Sexual debt should increase on the same scale, but whats the real situation?

In fact, the operating debt of Weishi electronics did not increase, but decreased. According to the prospectus, in 2018, Weishi electronics notes payable was RMB 2065800 and accounts payable was RMB 234 million, with a total decrease of more than 15 million compared with the end of 2017. With such an increase and a decrease, there is a gap of more than 54 million yuan compared with the theoretical amount.

The reporter of red weekly calculated the cross check relationship of the companys purchase data in the first half of 2019 in the same way, and found that the cross check difference was quite small. Therefore, if the purchase data of Weishi electronics in the first half of 2019 was relatively normal, the cross check difference between 2017 and 2018 would need further explanation from the company.