The receivables of the acquisition target are too high

According to the audit report issued by Hyde Control, in 2021, Xingzhida’s operating income and net profit to the mother were 1.734 billion yuan and -18.03 million yuan, respectively, and accounts receivable accounted for 55.12% of total assets at the end of the year. In 2022, Xingzhida’s operating income and net profit to the mother reached 2.326 billion yuan and 116 million yuan, while the proportion of accounts receivable in total assets also increased to 60.76%, and the total accounts receivable also increased from 569 million yuan at the end of 2021 to 994 million yuan. As of May 31, 2023, the total assets of Xingzhida were 1.667 billion yuan, of which the current assets were 1.537 billion yuan and the accounts receivable amount was 1.024 billion yuan, accounting for 61.41% of the total assets.

Also on May 31 of this year, Haider controlled total assets of 3.504 billion yuan, of which receivables were 807 million yuan, and accounts receivable accounted for 23.03% of total assets. The two “complementary” enterprises in the industry, technology, products, etc., have a huge difference in the proportion of accounts receivable.

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In the transaction report, Haide Control selected four listed companies, such as Zhongyeda, Yingtang Zhikong, Liyuan Information and Runxin Technology, as the comparable companies of Xingzhida. According to the results of the Securities Daily reporter, by the end of 2022, the receivables of the above four listed companies accounted for the highest proportion of 36.53% of total assets, and the lowest was only 16.67%, which was far lower than the 61.41% of Xingzhi Da.

“Listed companies need to reduce risks, risk control will be stricter, and the proportion of accounts receivable will be relatively low.” In order to increase revenue, non-listed companies may easily lead to a substantial increase in accounts receivable in order to get more orders, and the subsequent need to guard against the risk of bad debts.” A senior venture capital industry practitioner introduced to the Securities Daily reporter that the technical content and gross profit of industrial system integrators are relatively low, and the core competitiveness is not too strong, and it is not a popular target in the market.

“Different industries are different, and it is difficult to say how much accounts receivable is appropriate. Generally speaking, the receivables that can be recovered in the near future should be able to maintain the cash flow expenditure in the near future. However, accounts receivable as a percentage of total assets is more than 60 percent, which is very high indeed.” A listed company financial practitioners told “Securities Daily” reporter said.