Recently, Beijing Yongxin Zhicheng Technology Co., Ltd. (hereinafter referred to as “Yongxin Zhicheng”) updated the prospectus (the draft of the meeting). Red Star capital Bureau noted that in the updated prospectus, Yongxin Zhicheng strengthened the risk orientation, deleted the less targeted statements, and supplemented and improved a number of contents according to the implementation letter of the opinions of the audit center of Shanghai Stock Exchange.
On June 30, 2021, Yongxin Zhicheng submitted the application for listing on the science and innovation board. The company plans to issue 11.7078 million new shares and raise 848 million yuan. According to this calculation, the issue price per share is 72.41 yuan. It is noteworthy that in 2020, the turnover of Yongxin Zhicheng suddenly increased significantly, and finally met the requirement of “the compound growth rate of operating revenue in the last three years is greater than or equal to 20% or the amount of operating revenue in the last year is greater than or equal to 300 million yuan” in the listing requirements of science and innovation board. However, it brought about sharp growth in costs, decline in gross profit margin and higher accounts receivable.
In the updated prospectus, Yongxin Zhicheng frankly admitted that the company’s online shooting range related business belongs to an emerging field, the market scale is relatively small, and there is uncertainty in the subsequent business development; Compared with traditional network security companies, the company has fewer types of products and smaller scale; In 2020, the income of the “network security science and Technology Museum” project is sporadic, and there are persistent risks in the business of the science and Technology Museum; The issuer’s customers are mainly government departments, and the amount of accounts receivable is high and the collection is slow.
the revenue increased greatly in 2020, and the scientific innovation attribute of stepping on the line
Yongxin Zhicheng is a network security enterprise focusing on scientific and technological innovation. Its core business is network shooting range products. The so-called network shooting range is a technology or product based on parallel simulation technology to simulate and reproduce the network architecture, system equipment, business process operation status and operation environment in the real cyberspace, so as to more effectively realize the learning, research, inspection, competition, exercise and other behaviors related to network security, So as to improve the network security confrontation level of personnel and institutions.
In the updated prospectus, Yongxin Zhicheng pointed out that the network shooting range belongs to the emerging segment of the network security industry. The market scale is about 800 million yuan in 2020 and 1 billion yuan in 2021, accounting for about 1.1% of the overall network security market, and the market scale is relatively small. The company’s performance is highly dependent on the online shooting range. If the demand of the above customers decreases in the future, it will have an adverse impact on the company’s business operation, and the future expansion of the company’s online shooting range business is uncertain.
According to the prospectus, in recent years, Yongxin Zhicheng has experienced great fluctuations in both revenue and net profit.
From 2018 to 2020 and the first half of 2021 (report period), Yongxin Zhicheng’s revenue was 181 million yuan, 163 million yuan, 292 million yuan and 81.3608 million yuan respectively, and its net profit was 3.3191 million yuan, 1.6263 million yuan, 42.2958 million yuan and – 20.3394 million yuan respectively. In 2019, the company’s revenue decreased by 9.65% year-on-year and its net profit decreased by 51% year-on-year; in 2020, the company’s revenue increased by 79.14% year-on-year, and its net profit soared by more than 30 times year-on-year!
with the amazing revenue growth in 2020, the compound growth rate of Yongxin Zhicheng from 2018 to 2020 reached 27.11%, and the scientific and innovative attribute index of “the compound growth rate of operating revenue in the last three years is greater than or equal to 20%” of stampede scientific and innovative board.
In fact, in addition to the reporting period, Yongxin Zhicheng’s performance fluctuated greatly in the rest of the period.
According to public information, Yongxin Zhicheng was listed on the new third board on May 23, 2016, but less than two years later, the company terminated its listing on December 13, 2017. From 2013 to 2016, Yongxin Zhicheng achieved operating revenue of 16.1646 million yuan, 23.1058 million yuan, 64.3528 million yuan and 112 million yuan respectively, and net profit of -125900 yuan, 2.0563 million yuan, 10.5476 million yuan and 14.4094 million yuan respectively.
It can be seen that although the revenue of Yongxin Zhicheng in 2015 and 2016 was much lower than that in 2018 and 2019, its net profit was much higher than that in 2018 and 2019.
the project of network security science and Technology Museum has contributed hundreds of millions, but it is sporadic
According to the prospectus, Zhengzhou high Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) Investment Group Co., Ltd. is the largest customer of Yongxin Zhicheng in 2020, with an annual revenue of 113 million yuan, accounting for 38.64%. The company mainly undertook the construction project of the customer’s network security science and Technology Museum; After deducting the project, the company’s revenue, total profit and net profit will decline in varying degrees in 2020, with the ranges of – 38.64%, – 105.96% and – 106.80% respectively, and the overall profit will turn into loss.
In the updated prospectus, Yongxin Zhicheng disclosed that the cybersecurity science and Technology Museum is the core venue of the National Cybersecurity publicity week in 2020 and the permanent venue of the “strong net cup” National Cybersecurity challenge. The revenue, cost and gross profit of the company’s “cybersecurity science and Technology Museum” project in 2020 were 113 million yuan, 61.5468 million yuan and 51.1541 million yuan respectively, accounting for the company’s operating revenue The proportion of operating cost and gross profit is 38.64%, 48.40% and 31.10% respectively, accounting for a relatively high proportion. There are 164 exhibitions in the cyber security science and Technology Museum, 12 of which are directly used in the series products of the cyber shooting range, with a total revenue of 59.2362 million yuan, which is included in the core technology revenue, accounting for 52.56% of the total project revenue.
Yongxin Zhicheng frankly admits that up to now, the company has not undertaken any super large-scale similar projects. In 2021, the unaudited income of similar projects of the company’s science and Technology Museum was RMB 11.8966 million, accounting for 3.72%, of which the extended income of the “network security science and Technology Museum” project was RMB 8.4818 million, accounting for 71.30%. Therefore, the income of the “network security science and Technology Museum” project in 2020 is sporadic, There are persistent risks in the business of science and technology museums. and the company mainly carries out business in the form of project system. If the company fails to undertake such projects or a considerable number and amount of projects in the future, it will have an adverse impact on the company’s operating performance.
sales expenses up and R & D expenses down
After undertaking unprecedented large-scale projects, in 2020, Yongxin Zhicheng’s comprehensive gross profit margin decreased from 66.69% of the previous year to 56.40%, significantly lower than the industry average of 65.37% in that year.
Yongxin Zhicheng said that this is because the “network wide science and Technology Museum Project” involves more software and hardware integration businesses, which are purchased by the company.
Under the operating cost of the prospectus, the proportion of outsourcing software service expenditure in the total operating cost in 2020 also increased from 37.70% of the previous year to 60.29%, and the cost growth rate was 134.10%, which was much higher than the revenue growth rate, becoming the main reason for the decline of gross profit margin.
However, it can not be ignored that the sales expenses of Yongxin Zhicheng have been increasing in recent years, but the R & D expenses have shown a downward trend, and the gap between the two has gradually widened.
According to the prospectus, during the reporting period, the sales expenses of Yongxin Zhicheng were 49.3136 million yuan, 49.8913 million yuan, 54.9212 million yuan and 31.1610 million yuan respectively, and the proportion of sales expenses in operating revenue was 27.32%, 30.59%, 18.83% and 38.30% respectively, accounting for a relatively high and rapid growth rate. At the end of each reporting period, the number of sales personnel of the company was 127, 128, 144 and 152 respectively, accounting for 32.81%, 41.42%, 41.98% and 38.58% respectively.
Under the item of sales expenses, in 2020, business entertainment expenses became the second largest expenditure of the company, accounting for 20.95% of the total sales expenses from 13.08% in 2019, in addition to 54.25% of the salary expenses of sales personnel.
At the same time, the amount and proportion of R & D expenses of company showed a downward trend from 2018 to 2020. during the reporting period, the company’s R & D expenses were 43.47 million yuan, 35.4459 million yuan, 38.4785 million yuan and 25.6074 million yuan respectively, and the proportion of R & D expenses in operating revenue was 24.08%, 21.73%, 13.19% and 31.47% respectively.
long collection period of accounts receivable
It is worth noting that the accounts receivable of Yongxin Zhicheng have been high during the reporting period. At the end of each reporting period, the net accounts receivable of the company were 95.3613 million yuan, 97.5811 million yuan, 82.7191 million yuan and 71.0333 million yuan respectively, accounting for 53.41%, 40.29%, 15.71% and 15.75% of current assets respectively, accounting for 52.83%, 59.83%, 28.36% and 87.31% of current operating income respectively.
As of January 5, 2022, the proportion of accounts receivable balance collection at the end of each reporting period of the company was 82.93%, 76.91%, 71.81% and 51.48% respectively, and the collection of accounts receivable was slow. Yongxin Zhicheng said that if the payment capacity of customers in the downstream industry changes, the budget is tightened and the approval process is extended in the future, the balance of accounts receivable of the company will continue to increase, which may strain the working capital of the company, and there is a risk of bad debts in accounts receivable, which will have an adverse impact on the operating performance of the company.
Yongxin Zhicheng believes that the high proportion of accounts receivable is mainly due to the fact that the company’s customers are mainly government departments and enterprises directly under the government. The payment of such customers is affected by the financial budget and financial approval cycle of the local government, and the payment cycle is long. in addition, the business has seasonal characteristics, and the relatively large proportion of revenue in the fourth quarter of each year is also the reason for the large amount of accounts receivable.
Due to the seasonal characteristics of the network security industry, Yongxin Zhicheng’s operating revenue is concentrated in the fourth quarter, but its embodiment is more distinctive than that of the same industry. Taking 2020 as an example, the revenue of Yongxin Zhicheng in the first three quarters accounted for 4.58%, 15.18% and 13.77% of the annual revenue respectively, significantly lower than 8.31%, 17.91% and 22.87% in the same industry, while 66.48% of the operating revenue of Yongxin Zhicheng was concentrated in the fourth quarter.
This also leads to a further increase in the difficulty of collecting accounts receivable. According to the prospectus, the accounts receivable ratio of Yongxin Zhicheng in 2019 and 2020 is 55.61% and 57.54% respectively. More than 40% of the accounts receivable are over one year. The collection ratio in the reporting period also decreased from 71.82% to 61.57%, and further decreased to 47.43%. The collection difficulty climbed.
