A significant increase in operating income from Sanan Optoelectronics, as well as the risk of bad debts arising from the rapid increase in accounts receivable. According to industry analysts, the company has a bad debt risk considering the downstream LED packaging plants are more dispersed and competitive.
Recently, Sanan Optoelectronics announced its first three quarters of 2012 performance report: in the first three quarters of 2012, the company achieved operating income of 2.35 billion yuan, an increase of 101%; net profit of 667 million yuan, an increase of 14%.
However, the sum of the company's bills receivable and accounts receivable increased from the beginning of the year of 450 million yuan to 1.49 billion yuan at the end of the period, an increase of nearly 1.04 billion yuan during the reporting period, with an overall increase of more than 200%. During the same period, Sanan Optoelectronics' ending bills receivable increased by nearly 591.39% from the beginning of the period, and accounts receivable increased by nearly 100.92% compared with the beginning of the period. The company explained that the significant increase in bills receivable was mainly due to the settlement of sales receipts, and the significant increase in accounts receivable was mainly caused by the sales scale.
Although Sanan Optoelectronics sold 2.35 billion yuan in the first three quarters, according to the company's cash flow statement, Sanan Optoelectronics received only 1.18 billion yuan in cash for sales of goods and services. This means that in the first three quarters of 2012, nearly half of the products were sold out and failed to recover the purchase price in time. Instead, the notes and receivables stayed on the company's financial statements.
The third quarterly report showed that the net cash flow generated by the company's operating activities in the first three quarters was -230 million yuan, compared with 636 million yuan in the same period last year. In the first three quarters of the company, the company's accounts receivable and bills receivable increased by 1.027 billion compared with the beginning of the year, and 670 million yuan was bills receivable. Zhang Shuai, an analyst at Guojin Securities' new energy industry, said in a recent report. "Considering that the downstream LED packaging plants are more dispersed and highly competitive, the company has certain bad debt risks."
According to the 2012 mid-year report, the top five accounts receivable of Sanan Optoelectronics were RMB 109 million, accounting for 16.35% of the company's total accounts receivable during the same period, indicating that the company's accounts receivable sources are more scattered.
For the LED application enterprises downstream of the company's industrial chain, they are generally faced with the disadvantages of overcapacity, fierce competition, and increased risk of deterioration of the economic environment. Since the beginning of 2012, there have been reports of the collapse of hundreds of millions of LED downstream application companies.
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