Eagle Eye Warning: Hualing Cable's accounts receivable growth rate exceeds the revenue growth rate

Sina Finance Listed Company Research Institute | Financial Report Eagle-Eye Early Warning

On March 29, Hualing Cable released its 2025 annual report. The audit opinion is a standard unqualified audit opinion.

The report shows that the company’s total operating revenue for 2025 was RMB 4.507 billion, up 8.39% year over year; net profit attributable to shareholders was RMB 110 million, up 1.05% year over year; net profit after deducting non-recurring items attributable to shareholders was RMB 88.6673 million, up 4.02% year over year; and basic earnings per share were RMB 0.2 per share.

Since its listing in June 2021, the company has paid cash dividends 5 times, with cumulative cash dividends implemented totaling RMB 156 million. The announcement shows that the company plans to pay all shareholders a cash dividend of RMB 0.65 for every 10 shares (including tax).

The listed company financial report eagle-eye early warning system conducts intelligent quantitative analysis of Hualing Cable’s 2025 annual report from four major dimensions: performance quality, profitability, capital pressure and safety, and operating efficiency.

I. Performance Quality

During the reporting period, the company’s operating revenue was RMB 4.507 billion, up 8.39%; net profit was RMB 110 million, up 1.05%; and net cash flow from operating activities was RMB 419 million, up 60.13%.

From the overall performance perspective, key points to focus on are:

• The operating revenue growth rate is slowing down. During the reporting period, operating revenue was RMB 4.51 billion, up 8.39%; the prior-year period growth rate was 19.82%, which is slower than the previous year.

In light of the quality of operating assets, key points to focus on are:

• The growth rate of accounts receivable is higher than the operating revenue growth rate. During the reporting period, accounts receivable increased by 32.35% from the beginning of the period, while operating revenue increased by 8.39% year over year; the accounts receivable growth rate is higher than the operating revenue growth rate.

• The ratio of accounts receivable to operating revenue continues to rise. In the last three annual reports, the ratio of accounts receivable to operating revenue was 27.78%, 29.08%, and 35.5%, respectively, showing continuous growth.

• Inventory growth rate is higher than the growth rate of operating costs. During the reporting period, inventory increased by 44.42% from the beginning of the period, while operating costs increased by 8.71% year over year; inventory growth rate is higher than the operating cost growth rate.

• Inventory growth rate is higher than the operating revenue growth rate. During the reporting period, inventory increased by 44.42% from the beginning of the period, while operating revenue increased by 8.39% year over year; inventory growth rate is higher than the operating revenue growth rate.

II. Profitability

During the reporting period, the company’s gross margin was 11.05%, down 2.3% year over year; net margin was 2.44%, down 6.78% year over year; and return on net assets (weighted) was 5.93%, down 14.18% year over year.

In light of the company’s operating-side performance and returns, key points to focus on are:

• Gross profit margin on sales continues to decline. In the last three annual reports, the gross profit margin on sales was 12.76%, 11.32%, and 11.05%, respectively, with the downward trend continuing.

In light of the company’s asset-side performance and returns, key points to focus on are:

• Return on net assets is declining. During the reporting period, the weighted average return on net assets was 5.93%, down 14.18% year over year.

• In the past three years, the average return on net assets has been below 7%. During the reporting period, the weighted average return on net assets was 5.93%; the average weighted average return on net assets over the most recent three accounting years was below 7%.

• Return on invested capital is below 7%. During the reporting period, the company’s return on invested capital was 4.24%, and the average over the three reporting periods was below 7%.

III. Capital Pressure and Safety

During the reporting period, the company’s asset-liability ratio was 54.32%, down 16.63% year over year; the current ratio was 1.35 and the quick ratio was 1.14; total debt was RMB 2.356 billion, of which short-term debt was RMB 2.33 billion; short-term debt as a proportion of total debt was 98.92%.

From the perspective of short-term funding pressure, key points to focus on are:

• The ratio of short-term to long-term debt increases significantly. During the reporting period, short-term debt/long-term debt rose sharply to 15.6.

• The cash ratio continues to decline. In the last three annual reports, the cash ratio was 0.82, 0.63, and 0.49, respectively, showing continuous decline.

From the perspective of capital management, key points to focus on are:

• The ratio of interest income to cash and cash equivalents is less than 1.5%. During the reporting period, cash and cash equivalents were RMB 1.12 billion and short-term debt was RMB 530 million. The company’s average ratio of interest income to cash and cash equivalents was 0.876%, which is below 1.5%.

• Prepayments vary greatly. During the reporting period, prepayments were RMB 7.926 million, with a change rate of 117.6% versus the beginning of the period.

• The growth rate of prepayments is higher than the growth rate of operating costs. During the reporting period, prepayments increased by 117.6% from the beginning of the period, while operating costs increased by 8.71% year over year; the growth rate of prepayments is higher than the growth rate of operating costs.

• Accounts payable bills vary greatly. During the reporting period, accounts payable bills were RMB 1.8 billion, with a change rate of 55.31% versus the beginning of the period.

• Other payables vary greatly. During the reporting period, other payables were RMB 450 million, with a change rate of 61.19% versus the beginning of the period.

From the perspective of the coordination of funds, key points to focus on are:

• Funds are coordinated, but there are payment difficulties. During the reporting period, working capital was RMB 1.2 billion; the company’s working capital needs were RMB 1.63 billion. Working capital brought by investing and financing activities cannot fully cover the working capital needs for the company’s operating activities; the company’s cash payment capacity was -RMB 430 million.

IV. Operating Efficiency

During the reporting period, the company’s accounts receivable turnover ratio was 3.21, down 16.15% year over year; inventory turnover ratio was 6.67, down 15.56% year over year; and total asset turnover ratio was 0.81, down 15.96% year over year.

For long-term assets, key points to focus on are:

• Fixed-asset revenue output value declines year by year. In the last three annual reports, the ratio of operating revenue to original value of fixed assets was 13.55, 11.42, and 10.97, respectively, showing a continuous decline.

• Construction in progress changes significantly. During the reporting period, construction in progress was RMB 140 million, up 421.43% from the beginning of the period.

• Other non-current assets represent a relatively high proportion. During the reporting period, the ratio of other non-current assets to total assets was 15.53%.

• Other non-current assets change significantly. During the reporting period, other non-current assets were RMB 1.01 billion, up 128.04% from the beginning of the period.

• Intangible assets change significantly. During the reporting period, intangible assets were RMB 80 million, up 38.59% from the beginning of the period.

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Sina Finance Listed Company Financial Report Eagle-Eye Early Warning Introduction: Listed Company Financial Report Eagle-Eye Early Warning is an intelligent professional analysis system for listed company financial reports. The eagle-eye early warning system, through gathering a large number of authoritative financial experts such as accounting firms and listed company professionals, tracks and interprets the latest financial reports of listed companies across multiple dimensions including company performance growth, earnings quality, capital pressure and safety, and operating efficiency, and presents potentially existing financial risk points in a textual and graphical format. It provides professional, efficient, and convenient technical solutions for identifying and issuing early warnings on financial risks of listed companies for financial institutions, listed companies, regulatory authorities, and more.

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