Yuan Cheng Holding(SZ:002692) Xin Lang Cai Jing·2025-09-04 12:57Core Viewpoint - The company has provided detailed responses to the Shenzhen Stock Exchange's inquiry regarding its stock issuance, addressing issues related to its sales promotion consultant model, gross profit margin, operating cash flow, and recognition of financial investments [1]. Sales Promotion Consultant Model - The company paid sales service fees to consultants amounting to 146.84 million, 127.91 million, and 152.01 million yuan during the reporting period. These consultants are primarily responsible for market channel development, assisting in contract signing, and payment collection [2]. - The reliance on local sales consultants is due to the widespread application of the cable industry and the need for experienced local representatives. This model has been historically established in the industry, and the company plans to expand its sales team starting at the end of 2023 [2]. - The sales promotion consultant model is considered reasonable and aligns with industry practices, with the company's service fees as a percentage of revenue being comparable to peers despite some variations [2]. Stability and Sustainability of Main Business Profitability - The company's gross profit margins during the reporting period were 10.93%, 10.92%, and 10.29%, showing a downward trend [3]. - The cable industry faces intense competition and price fluctuations in raw materials, with an overall gross margin of approximately 10%-12%. The company's gross margin is slightly below the average but comparable to some peers [3]. - The company focuses on specialty cables, which significantly influence its gross margin. Despite a stable product structure, the gross margins of major products have declined [3]. - The market for wire and cable manufacturing exceeds one trillion yuan, with emerging industries creating new demand. The company is expected to maintain stable and sustainable profitability due to its strong customer base, brand influence, and increased R&D investment [3]. Operating Cash Flow Situation - The net cash flow from operating activities for the company was 30.64 million, 76.43 million, and -59.59 million yuan during the reporting period, with the recent negative cash flow attributed to business expansion and an increase in operating receivables [4]. - The company has shown an upward trend in accounts receivable turnover and inventory turnover, indicating improved inventory management. The risk of deteriorating cash flow is considered low due to strong customer credit and collection capabilities [4]. - The recognition of financial investments is compliant with regulations, with the company's investment in Electric Science Chengding being classified as a financial investment with a book value of zero as of June 2025 [4].