SINOLINK SECURITIES(SH:600109) Zheng Quan Zhi Xing·2025-06-04 11:20Core Viewpoint - The company is facing pricing disputes with a key client (E Unit) regarding the M03 fire extinguishing system and M29 explosion suppression system, which may impact future revenue and profitability due to potential price adjustments and ongoing negotiations [1][2][3]. Group 1: Pricing Disputes and Financial Impact - The company has not reached an agreement on the pricing for the M03 and M29 systems, leading to delays in contract signing for new products scheduled for 2025 [1]. - As of the end of 2024, the company has recognized a total revenue of 53.56 million yuan from the disputed products, with an additional 2.76 million yuan recognized in 2025 [2]. - If the pricing dispute is resolved with a price reduction, the company will adjust the cumulative differences in pricing to the current period, potentially affecting revenue for that period [2][3]. Group 2: Revenue and Profitability Projections - The company anticipates that reaching an agreement with E Unit will require repayment of previously disputed amounts, which could significantly impact 2025's revenue and net profit [3]. - Various scenarios of price adjustments (ranging from -5% to -25%) have been simulated, indicating potential impacts on revenue and net profit, with the most severe scenario projecting a decrease in net profit by approximately 1.14 million yuan [4][5]. Group 3: Market Development and Risks - The company is focusing on expanding its civilian product market, leveraging military technology to develop customized solutions in various sectors, including smart parks and energy storage [5][7]. - The company has faced challenges in developing civilian products, which may not meet market expectations, leading to risks of continued low revenue and potential delisting if revenues fall below 100 million yuan [7]. Group 4: Investment Project Delays - As of April 30, 2025, the company has invested 179.94 million yuan in fundraising projects, with a progress rate of 35.38%, but has experienced delays due to macroeconomic uncertainties [7]. - The completion of three fundraising projects has been postponed to July 30, 2026, with potential for further delays or changes depending on market conditions and policies [7]. Group 5: Financial Performance and Comparisons - The company's revenue from key products has declined significantly, with a 30.48% drop in total revenue compared to the previous year, primarily due to reduced orders for the fire extinguishing and explosion suppression systems [8][12]. - A comparison with competitors shows that the company has experienced a more significant decline in gross margin, attributed to its reliance on a narrow product range compared to competitors with diversified offerings [13].