Beixinyuan'S Strange Antinomy: Financial Bug Planted By Security Management Manufacturers

This is an unknown and shocking secret.

Beixinyuan (300352. SZ), a leading enterprise in the field of terminal safety management in China, has hidden major hidden dangers in its financial report.

According to the semi annual report of 2021, beixinyuan has achieved a revenue of 339 million yuan and a net profit of 32.8475 million yuan, with a year-on-year increase of 27.99% and 6.49% respectively.

However, from the perspective of financial indicators, the profit quality of beixinyuan is worrying, and the net cash of operating activities in the same period is - 170 million yuan, which is the worst performance since listing.

"Net operating cash is an indicator to measure the actual cash profitability of an enterprise, which is significantly smaller than the net profit of the same period, or even negative. Therefore, we should pay close attention to the quality of receivables." A certified public accountant told 21st century economic reporter, "the net profit without cash support is wealth on paper."

However, in the same period, the inventory of beixinyuan reached 368 million yuan and the accounts receivable reached 1.189 billion yuan, both of which reached a record high.

"The company has been increasing the collection of accounts receivable, and the situation is progressing well. It should be disclosed in the annual report this year." Beixinyuan said on August 31 to the reporter of the 21st century economic report.

Accounts receivable surged 383.33%

The accounts receivable of beixinyuan in the first half of the year is 3.51 times of its revenue, and the potential risk coefficient is increasing.

In fact, beixinyuan has been affected by the increasing accounts receivable.

In this year's semi annual report, beixinyuan made a credit impairment loss of 47.8223 million yuan.

According to beixinyuan, the credit impairment loss this time will reduce the net profit of the company's semi annual consolidated statements and the owner's equity by 40.649 million yuan respectively.

"Accounts receivable are withdrawn according to the accounting standards, and it is not necessarily that they can not be collected." The above-mentioned beixinyuan related people told the reporter of the 21st century economic report.

However, in the semi annual report of 2021, beixinyuan also wrote off the uncollectible accounts receivable of RMB 4.0744 million. According to beixinyuan, the related bad debt provision has been made for the accounts receivable written off in previous years.

The accounts receivable of beixinyuan are growing so fast that it is amazing.

According to the regular report, in 2013, the accounts receivable of beixinyuan reached 246 million yuan, reaching 1.189 billion yuan in the first half of this year, with a growth rate of 383.33%.

However, compared with 2013, in the first half of this year, the revenue of beixinyuan was 339 million yuan, and the revenue scale only increased by 48.68%. The growth rate of operating income and the growth rate of accounts receivable obviously did not match.

A more intuitive comparison is that beixinyuan achieved a net profit of 67.7912 million yuan in 2013 with a revenue of 228 million yuan, but only 32.8475 million yuan of net profit was achieved in the first half of this year.

However, the profit level of beixinyuan reached a peak of 91.452 million yuan in 2017, and decreased slightly in 2018, but then there was a high platform diving.

In 2019 and 2020, beixinyuan will achieve a net profit of 22.3842 million yuan and 25.7397 million yuan respectively, which not only creates the lowest depression since its listing in 2012, but also has a profit only equivalent to that in 2009 before listing.

Obviously, beixinyuan's profitability and quality of operating income are obviously deteriorating.

What's strange is that although beixinyuan's operation fell into a low ebb in 2019 and 2020, the profit level of the first three quarters was quite considerable, and all of the three quarters showed continuous growth year on year. But in the fourth quarter, the scale of its net profit fell sharply.

In 2019, the net profit of beixinyuan decreased from 61196800 yuan in the previous three quarters to 22384200 yuan in the whole year; In 2020, the net profit of beixinyuan will decrease from 71.0864 million yuan in the previous three quarters to 25.7397 million yuan in the whole year.

"The annual performance is lower than the first three quarters, which is probably the result of the company's self-regulation." According to the above-mentioned certified public accountants, "generally speaking, the first quarter report, the half year report and the third quarter report of a listed company do not need to be audited by an accounting firm. Only the annual report needs to be audited and audit opinions are issued."

Selling expenses erode profits

Beixinyuan's "regression" of net profit in 2019 and 2020 is closely related to accounts receivable.

According to the company's announcement, in 2019, beixinyuan made a provision for bad debts of accounts receivable of 126 million yuan and wrote off accounts receivable of 27.0921 million yuan; In 2020, the credit impairment loss will be 99.2894 million yuan, and the uncollectible accounts receivable will be written off by 7.6507 million yuan.

"The company is not a one-hand delivery and one-hand payment sales mode. It is a customized project. It needs to pay back in batches according to the progress of the project. The reflected accounts receivable will be larger, which is the characteristics of the industry." The above-mentioned beixinyuan related people explained this to the reporter of the 21st century economic report.

However, in addition to the heavy burden of accounts receivable, the extremely high sales expenses of beixinyuan are also surprising, and directly erode the profits.

According to the annual report, in 2019, the sales expenses of beixinyuan were 143 million yuan, a year-on-year increase of 35.42%, accounting for 19.74% of the revenue, of which the business entertainment expenses reached 10.8125 million yuan.

In view of this, the annual audit accountant believes that the substantial increase in sales expenses of beixinyuan in 2019 compared with that of the previous year is mainly due to the increase in the company's technical service fee, consulting fee, advertising and publicity fee, and employee compensation.

However, in 2020, while the revenue of beixinyuan decreased by 11.24% year-on-year, the sales expenses did not drop but increased, exceeding 151 million yuan, accounting for 23.56% of the revenue, including 8.884 million yuan of business entertainment expenses.

However, the business entertainment expenses of beixinyuan in 2020 are lower than those in 2019, while the urban transportation expenses increase from 5.007 million yuan in 2019 to 8.1516 million yuan in 2020.

"The sales expenses are comparable to those of pharmaceutical enterprises, indicating that the business promotion mode of beixinyuan is similar to that of pharmaceutical enterprises, and there may also be unspeakable expenses in the sales expenses." In the opinion of the certified public accountant.

According to the statement in the 2021 semi annual report, beixinyuan is a leading solution provider in the field of network and information security in China. Its users involve tens of thousands of units in government, military, military, finance, energy and other important industries. Its marketing and service network covers nearly 30 provinces and cities.

In the first half of 2021, the year-on-year increase of 29.82% reached 80155400 yuan, accounting for 23.64% of revenue, including business entertainment expenses of 4.465 million yuan.

However, beixinyuan, which has high sales costs, mainly relies on distributors for its software product income.

Beixinyuan's previous reply to the Shenzhen Stock Exchange's inquiry notice shows that its software product sales are divided into direct sales and distribution modes, with the distribution revenue accounting for 72.17% and direct sales accounting for 27.83%; 75.92% of the accounts receivable were distributed for more than one year, while 24.08% were for direct sales.

The number of new distributors of beixinyuan software products is 53 in 2019 and 104 in the first half of 2020.

"There are no statistics on the number of dealers and new additions, but the cooperation is relatively stable." The source said.

Frequent change of annual review institutions

Beixinyuan, which has high receivables and high inventory, has a market value of more than 10 billion yuan after a large-scale increase on August 30 and 31.

However, prior to that, Lin Hao, the actual controller, chairman and general manager of beixinyuan, conducted a large-scale intensive reduction from June 2016 to the end of 2020. According to statistics, the accumulated cash out amount was as high as 1.8 billion yuan.

Before the reduction, Lin Hao's shareholding ratio was 48.29%, only 20.8% by the end of 2020.

However, Lin Hao's plan on October 20, 2020 is to reduce 80.6102 million shares with no more than 5.56% of the total share capital. Due to the continuous decline of beixinyuan's share price during the period, it decided to terminate the reduction plan in advance on March 9, 2021. At this time, its stock reduction plan accounting for about 2.8% was not implemented.

In addition to Lin Hao, directors and senior executives of beixinyuan, such as Hu Jianbin, Yang Wei and Gao Xi, have also reduced their holdings to varying degrees.

However, what makes the market more worried than the reduction of cash is that beixinyuan has frequently replaced the annual review institutions.

In 2019, the audit institution of beixinyuan will be changed from Ruihua to Grant Thornton; On March 20, this year, near the disclosure of the annual report, beixinyuan changed its annual review agency to ZTE financial Guanghua, with a one-year Employment term.

The reason given by beixinyuan is that due to the busy business of Grant Thornton, it is expected that it can not complete the audit work within the agreed time, and claims that there is no significant difference between the audit work arrangement and Grant Thornton, and there are no controversial issues such as limited audit scope and different opinions on accounting treatment of major events.

"It is up to the management to decide whether to renew or replace the annual review institution this year." The above-mentioned beixinyuan related people told the reporter of the 21st century economic report.

The resignation time of directors and secretaries of beixinyuan is in the key period of annual report audit preparation.

In January 2019, Li Xu, deputy general manager and Secretary of the board of directors of beixinyuan, resigned. In February 2021, Xu Wenfeng, deputy general manager and Secretary of the board, also left beixinyuan.

Coincidentally, two CFOs of beixinyuan also left their posts. Yan Huitian and Deng Huaming resigned in May 2014 and June 2020 respectively.

Since beixinyuan was listed, the net cash of operating activities that has never been "normalized" has even changed from - 19311300 yuan at the end of last year to - 170 million yuan in the first half of this year, and its asset liability ratio is also increasing year by year, from 7.16% in 2016 to 30.56% in the first half of 2021.

As a result, beixinyuan's total liabilities in the first half of this year reached 976 million yuan, including 938 million yuan of current liabilities, which, together with the rising inventory and accounts receivable, constitute three major doubts.