Financial Services Association, May 20 (Reporter Huang Lu) Due to drastic changes in asset depreciation, Shanhe Intelligence (002097.SZ) received an inquiry letter for the 2023 annual report issued by the Shenzhen Stock Exchange this morning. It opened in the afternoon and went straight to a standstill.

In response, a relevant company source told the Financial Federation reporter that this is a routine inquiry, and many companies (annual reports) are questioned every year. This is mainly a supplementary explanation of accounting processing, and the company will respond as soon as possible. According to the requirements, the accounting firm is also required to express a clear opinion on the issues involved in the inquiry. There will be certain uncontrollable factors during this time.

According to the inquiry letter, the concerns of the Shenzhen Stock Exchange mainly revolved around six issues, including Shanhe Smart's 2023 operating performance, asset impairment, foreign assets, and solvency.

Let's look at the company's operating performance first. The company achieved operating income of 7.229 billion yuan in 2023, a year-on-year decrease of 1%; of this, overseas revenue accounted for 56.8%, and net profit for the year was 35.5834 million yuan, but net profit after deduction was -141 million yuan. Its net cash flow from operating activities was $520 million, up 66.73% year over year.

According to the above financial data, the company had problems with inconsistent trends in revenue, profit, and cash flow generated from operating activities during the reporting period. In response, the Shenzhen Stock Exchange requested an explanation of the reason and rationality.

Let's take another look at changes in the impairment of the company's assets. According to the annual report, the company calculated credit impairment reserves of about 258 million yuan and asset impairment reserves of 72.8439 million yuan in 2023; compared with the previous year, the company calculated credit impairment preparations and asset impairment preparations of about 1.04 billion yuan and 140 million yuan respectively.

The company's book balance of accounts receivable at the end of 2023 was 7.688 billion yuan, and the bad debt preparation ratio was 22.53%. In the current period, the company had reserves of 105 million yuan to recover or transfer back bad debts. The company reported an inventory book balance of 3.401 billion yuan at the end of the period, accounting for a decrease in inventory price of 222 million yuan. In the current period, an inventory price reduction of 62.934 million yuan was calculated, and 27.8019 million yuan was transferred back or resold.

In response, the exchange requested the company to explain the reason and rationality of the sharp change in asset impairment in 2023 compared to the previous year, and whether there was a situation where financial “big bath” was carried out through large asset impairment preparations and/or credit impairment preparations at the end of the year to adjust profits over time.

Furthermore, Shanhe Intelligence's debt ratio is high, and whether the company is at risk of debt payment is also the focus of the exchange inquiry. The 2023 annual report shows that the company's balance ratio at the end of the period was 77.21%, and the current ratio was 1.49. By the end of 2023, the company had short-term loans and non-current liabilities maturing within one year of $3,640 billion, and long-term loans of $6.267 billion. The amount of the company's interest-bearing debt was significantly higher than the size of unrestricted monetary capital.

The revenue of Shanhe Intelligence is mainly sales of construction machinery products. The main products include excavation machinery, pile construction machinery, aerial machinery, lifting machinery, mining equipment and oil and gas pipeline equipment. In 2023, its revenue from construction machinery products was 6.08 billion yuan, accounting for 84.10%, a decrease of 5.84% compared with 6.46 billion yuan in 2022. In the first quarter of this year, the company's revenue and net profit both declined, with year-on-year decreases of 6.87% and 31.49%, respectively. Net profit after deduction was a loss of 27.5 million yuan.