XINSAI CO.,LTD(SH:600540) Zheng Quan Zhi Xing·2025-07-21 11:42Core Viewpoint - The company reported significant revenue growth in 2024 but faced substantial losses, primarily due to declining profit margins and increased costs associated with its main products, particularly cotton and cotton by-products [1][2][3]. Financial Performance - In 2024, the company achieved a revenue of 1.636 billion yuan, a year-on-year increase of 68.42%, while the operating profit reached 1.836 billion yuan, up 79.22%. However, the net profit attributable to shareholders was a loss of 243 million yuan, a staggering decline of 1,758.96% [1][2]. - The net cash flow from operating activities was -1.436 billion yuan, down 234.62% year-on-year, indicating a significant cash outflow despite revenue growth [1][2]. Product Performance - The company’s main products, including self-produced cotton and cottonseed, reported negative gross margins. For instance, self-produced cotton had a gross profit of -19.8 million yuan with a gross margin of -2.37% [1][3]. - Cottonseed sales increased significantly, with a total of 111,094.45 tons sold, but the gross profit was -35.2 million yuan, reflecting a gross margin of -15.09% [1][3]. Market Conditions - The cotton market faced oversupply in 2024, with total cotton production reaching 666.4 million tons, while consumption was only 770 million tons, leading to a supply-demand imbalance [2][3]. - The average market price for self-produced cotton decreased from 17,000 yuan/ton to 14,500 yuan/ton, a drop of 26% [9][10]. Sales Strategy - The company adopted a "fast in, fast out" sales strategy for cotton to mitigate risks associated with storage costs and declining prices. This strategy was influenced by the seasonal nature of cotton production and the need for cash flow to fund raw material purchases [2][3]. - The company expanded its cotton trading business, achieving a gross profit of 898,820 yuan with a gross margin of 3.03% in 2024, despite the overall losses in self-produced cotton [5][6]. Cost Analysis - The company faced increased costs in storage and interest expenses, with storage fees rising to 13.44 million yuan, an increase of 1.03 million yuan year-on-year [10]. - The interest expenses also increased due to a rise in interest-bearing liabilities, amounting to 61.5 million yuan, which negatively impacted net profit [10]. Customer and Sales Dynamics - The company reported significant changes in its customer base, with a focus on expanding relationships with import traders due to reduced import quotas for cotton [5][6]. - The sales volume for cotton trading increased significantly, with a total of 21,449.65 tons sold through online transactions, indicating a shift in sales strategy [6][7].