On August 22, Caixin reported (Reporter Liu Jian) that China's water conservancy industry is at a peak of development. Against the background of a comprehensive acceleration of water conservancy construction, Dayu Irrigation Group (300021.SZ) won multiple projects in the first half of the year. However, while the company's revenue growth, expenses have significantly increased during this period, and the non-recurring net profit has recorded a loss for the first time in nearly three years.

Yesterday evening, Dayu Irrigation Group released its financial report for the first half of 2024. During the reporting period, the company achieved total operating income of 1.216 billion yuan, an increase of 9.31% year-on-year; net profit attributable to shareholders of listed companies was 18.86 million yuan, a decrease of 22.98% year-on-year; net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses was -16.55 million yuan.

Water conservancy construction continues to accelerate. In the first half of this year, the national investment in water conservancy construction was 569.02 billion yuan. Dayu Irrigation Group won multiple projects in the form of consortiums, including the franchise project of the Pingle Irrigation Area in Jiangxi Province, a major national water conservancy project, and the general contracting of the construction of supporting facilities and water-saving transformation projects in Yinghe Ertan Reservoir Area in Yicheng City.

Caixin reporters noticed that while orders increased and revenue rose, the company's expenses also showed a significant increase, becoming the main factor dragging down the company's performance. During the reporting period, the company's sales expenses amounted to 83.61 million yuan, an increase of 25.90% compared to the same period last year; management expenses amounted to 0.132 billion yuan, an increase of 21.12% compared to the same period last year; financial expenses amounted to 53.37 million yuan, an increase of 39.74% compared to the same period last year. The total expenses amounted to 0.269 billion yuan, while the company's cost of goods sold in the first half of the year was only 0.936 billion yuan.

At the same time as the sharp increase in expenses, the gross margin of the company's main operating businesses in agriculture and technology, sales and services in agriculture and technology, design services in agriculture and technology, informatization in agriculture and technology, and project operation services have all declined by 0.61, 3.77, 3.11, and 5.84 percentage points respectively.

In addition, although the company's operating cash flow in the first half of the year increased compared to the same period last year, it is still negative. The company's operating cash flow during the reporting period was -70.94 million yuan, and its investment cash flow was -0.212 billion yuan.

It should be noted that while the operating cash flow is negative, the company's short-term borrowings at the end of the reporting period were 0.997 billion yuan, and the total accounts payable and notes payable were as high as 2.476 billion yuan, while the balance of monetary funds was only 1.058 billion yuan.

In addition, as of the end of the reporting period, the company's accounts receivable also amounted to 2.487 billion yuan. The company stated in the financial report, 'As the company signs new orders and the scale of contracted projects gradually increases, the project construction and collection cycle may be extended accordingly. There is a certain cycle from order signing to output confirmation, and from output confirmation to collection. In the future, as the company's operating scale further expands, if there is a situation where a large amount of accounts receivable cannot be collected, it will have a significant adverse impact on the company's business performance.'

Public information shows that Dayu Water Group mainly engages in technology research and project practice in the digital water conservancy industry, with digitalization of water conservancy projects as its core. It provides services covering the entire field of agricultural water use from water source to farmland in rural areas, through project planning and design, product manufacturing, construction delivery, operation and maintenance, and overall smart improvement.