Different from the high-profile of Yangzi and Huang Shengyi, Juli rigging is very low-key in operation in recent years. By the end of July 24, the companys share price was 3.26 yuan per share, corresponding to a market value of only 3.1 billion yuan, at a historical low.
Funds on account become a mystery
The main business of Juli rigging is R & D, design, production and sales of rigging and related products. The company has the largest rigging production base in China. The companys products include synthetic fiber sling, steel wire rope, chain sling, etc. In 2019, the companys operating revenue was 1.966 billion yuan, with a year-on-year growth of 16.66%; the net profit attributable to the company was 18 million yuan, with a year-on-year growth of 2.30%.
On the surface, Juli rigging business in recent years is relatively stable. In the past five years, except for the loss of 17.16 million yuan in 2017, the profit in other years has basically remained around 20 million yuan.
But in fact, there is a dangerous fact behind the steady profit of Juli rigging. The annual profit-making companys financial expenses are extremely high, but the interest income is almost zero. This shows that the authenticity of the companys cash book is at least questionable.
It is worth mentioning that Juli rigging book lying a lot of cash, but did not choose to buy financial products to maintain and increase value. According to the financial report in 2019, the trading financial assets of the company are 0. Juli rigging such generous behavior, in the listed company is not common.
In 2019, the monetary capital of the company is 487 million yuan, and there is a large amount of cash on the book of Juli rigging. In the same period, the financial expenses are 61.6 million yuan, of which the interest expense is as high as 44.86 million yuan, which is 246.08% of the net profit of the same period. In other words, the companys interest expense in one year is far greater than the net profit attributable to two years. In the first quarter of 2020, the company added another 20 million yuan of short-term loans, while the companys account cash reached 482 million yuan in the same period.
In May this year, the head of internal audit of Juli rigging has resigned from the company after completing the audit of the companys annual report in 2019 and the first quarter report in 2020. Prior to this, in November 2019, the company changed its audit institution in 2019, changing the original audit institution Ruihua accounting firm into linac accounting firm. Within half a year, the internal and external audit positions of the company have been replaced, and the audit difficulty of Juli rigging can be imagined.
Balance technique to prevent wearing a cap
In order to avoid being hooded due to two consecutive years of losses, Juli rigging also made great efforts in financial data.
Juli rigging inventory falling price preparation appears more casual. From 2016 to 2018, the companys inventory showed an increase trend, from 586 million yuan in 2016, an increase of 46.08% to 856 million yuan in 2018. What is puzzling is that the companys inventory falling price reserves decreased from 4.32 million yuan to 2.2 million yuan in the same period. However, in 2019, the companys inventory decreased by 11.21% to 760 million yuan. Accordingly, the inventory falling price reserves, which should have fallen with the inventory, rose to 5.46 million yuan.
Behind Julis random inventory falling price reserves, the provision is insufficient. According to the accounting standards, the enterprise shall calculate the inventory falling price reserves according to the lower of the cost and net realizable value, and the difference between the two shall be included in the inventory falling price reserves. Among them, the net realizable value refers to the amount after the estimated selling price of the inventory minus the estimated cost to be incurred at the time of completion, the estimated selling expenses and relevant taxes and fees. The production mode of Juli rigging is order production, and customers orders are mostly irregular non-standard products. Once the products are overstocked or returned, its liquidity is very low, so there is a great risk of inventory impairment. Guisheng (600992. SH), which is similar to the companys main business, has 28.17% of inventory falling price reserves in 2019, while Juli rigging only accounts for 0.72%.
In addition, the inventory turnover rate of Juli rigging in 2019 is only 1.92 times, which is larger than 5.04 times of Guisheng company. The slower the inventory turnover rate is, the higher the impairment risk is, and it is reasonable to accrue a higher proportion of inventory. From this point of view, the provision of Juli rigging is obviously more unreasonable.
The unreasonable provision of Juli rigging is probably related to its performance pressure. In 2017, the companys net profit loss was 17.16 million yuan. Once the accrual ratio increased by 2.5 percentage points in 2018, the company would be capped by two consecutive years of losses. Therefore, in the case of significant increase in inventory in 2018, the inventory falling price reserves remained unchanged. In the following 2019, when the companys inventory declined, its inventory falling price reserves went against the trend to rise.
The proportion of inventory falling price reserves can only be concealed for a while. In the future, as the inventory continues to remain high, the inventory crisis of Juli rigging will break out sooner or later.
In order to prevent wearing a cap, Juli rigging also used the balancing technique in the account of bad debt loss. In 2018, under the condition of operating receivables of RMB 801 million, the company only accrued RMB 650000 of bad debt loss, accounting for only 0.08%; after accounting profit in 2018, it is convenient to increase the bad debt loss to 14.06 million yuan in 2019.
Behind the balance of bad debt losses, Juli also made a rebalance of accounts receivable. The companys operating receivables and changes in revenue show a state of departure. Generally speaking, operating receivables will increase with the growth of revenue, and the two show a positive relationship. In recent years, the main business development of Juli rigging is relatively stable, and there is no big change. However, in 2018, the companys revenue increased by 19.01% year-on-year, while its operating income decreased by 9.15% year-on-year; in 2019, the growth rate of operating revenue of the company returned to normal.
Im afraid that all kinds of financial doubts about Julis rigging have long been seen by discerning people. According to the latest financial report of the company, except Huijin, which entered in 2015, almost all of the top ten shareholders are related parties or individuals who are actual controllers, and there is no institutional figure.