Core Viewpoint - Yanghe Co., Ltd. reported a significant decline in revenue and net profit for the first half of the year, marking its worst performance since 2009, with revenue down 35.32% to 14.796 billion yuan and net profit down 45.34% to 4.344 billion yuan [1][2] Revenue and Profit Decline - The decline in revenue accelerated in 2024, with high-end liquor revenue decreasing by 36.52% and ordinary liquor revenue decreasing by 27.24% [2] - Revenue from outside the province dropped by 42.68%, while revenue from within the province also saw a decline [2] - Production volume decreased by 51.63% and sales volume decreased by 32.35% in the first half of the year [2] - Operating cash flow net amount fell sharply from 2.043 billion yuan to 616 million yuan, with inventory reaching a high of 19.075 billion yuan and inventory turnover rate dropping to a historical low of 0.19 [2] Expense Management - The sales expense ratio increased from 11.42% to 14.52%, and management expense ratio rose from 4.32% to 6.34%, leading to a net profit decline that outpaced revenue decline [2][3] - In 2024, Yanghe's sales expense ratio was 19%, significantly higher than competitors like Wuliangye and Shanxi Fenjiu, which were around 10% [3] - The cash collection ratio has been declining since 2022, indicating slower cash recovery from sales [3] Channel and Inventory Issues - Yanghe has been actively adjusting its inventory management since 2024, including halting supply to online platforms and implementing strict inventory controls [4] - The company has faced issues with "stock pressure," where distributors are required to maintain growth despite poor sales conditions [4] - The proportion of contract liabilities to revenue has been significantly higher than industry peers, indicating potential liquidity issues [4] Leadership Changes and Future Outlook - The company is undergoing management changes, with a new chairman appointed in July 2024, raising questions about the ability to return to growth [7] - The previous chairman acknowledged that Yanghe has lagged in this development cycle, indicating a need for strategic adjustments moving forward [7]

Core Viewpoint - Yanghe Co., Ltd. reported a significant decline in revenue and net profit for the first half of the year, marking the worst performance since 2009, with revenue down 35.32% to 14.796 billion yuan and net profit down 45.34% to 4.344 billion yuan [1][2]. Revenue Decline - The decline in revenue accelerated in 2024, with high-end liquor revenue decreasing by 36.52% and ordinary liquor revenue decreasing by 27.24% [2]. - Revenue from external markets fell by 42.68%, while internal market revenue decreased by 25.79%, indicating a more severe decline in external markets [2]. - Production and sales volumes also dropped significantly, with liquor production down 51.63% and sales down 32.35% [2]. Cash Flow and Inventory Issues - Operating cash flow net amount decreased sharply from 2.043 billion yuan to 616 million yuan [2]. - Inventory reached a high of 19.075 billion yuan, with inventory turnover rate dropping to a historical low of 0.19 [2]. Rising Expense Ratios - Despite declining revenue, sales expense ratio increased from 11.42% to 14.52%, and management expense ratio rose from 4.32% to 6.34%, leading to a net profit decline that outpaced revenue decline [2][3]. - In 2024, sales expenses increased by 2.4% and management expenses by 9.09% despite a 12.83% revenue decrease [3]. Comparison with Competitors - Yanghe's sales expense ratio of 19% is significantly higher than competitors like Moutai, Luzhou Laojiao, and Shanxi Fenjiu, which are around 10% [2]. - Yanghe's net profit margin of 23% is lower than its competitors, with Moutai leading at 52% [3]. Collection Efficiency - The collection ratio has been declining since 2022, dropping from over 90% before 2018 to 68% in 2022, and has only slightly improved to 84% in the first half of this year [3]. Management Adjustments - Starting in 2024, Yanghe began proactive adjustments, including halting supply to online platforms and implementing strict quota controls on major products [4][5]. - The company faces challenges with inventory management and channel issues, as evidenced by reports of "stock pressure" from distributors [5]. Future Outlook - The new management team, led by Gu Yu, is tasked with addressing these challenges and restoring growth, with a focus on inventory reduction and improving sales efficiency [7][8].

Core Viewpoint - The IPO of Aux Electric appears to show high growth in performance, but the cash flow is deteriorating, raising concerns about the quality of growth. The significant increase in sales rebates compared to 2022 may indicate potential channel stuffing to boost performance. Additionally, the high debt level raises questions about the necessity of fundraising after a substantial pre-IPO cash dividend [1] Group 1: Company Performance - Aux Electric, established in 1994, is one of the top five air conditioning providers globally, focusing on high-quality home and central air conditioning design, research, production, sales, and service [2] - Projected revenues for Aux Electric from 2022 to 2024 are 19.528 billion, 24.832 billion, and 29.759 billion RMB, with net profits of 1.442 billion, 2.487 billion, and 2.910 billion RMB, respectively [2] - The net profit margins for the same years are 7.4%, 10.0%, and 9.8%, with a projected global market share of 7.1% in 2024 [2] Group 2: Market Position and Competition - Aux Electric was one of the first home appliance manufacturers in China to adopt e-commerce channels, establishing long-term partnerships with major platforms like JD.com and Tmall [4] - Despite past successes, Aux Electric's online market share has been declining, with its ranking dropping to seventh place in the online air conditioning market by 2024 [4][5] - The online sales revenue share for Aux Electric from 2022 to 2024 fluctuated, with a decline in direct sales mode from 5.6% to 3.5% [5] Group 3: Financial Health and Cash Flow - Aux Electric's accounts receivable increased significantly from 1.428 billion RMB in 2022 to 3.003 billion RMB in 2024, further rising to 4.765 billion RMB in Q1 2025 [10] - The company's cash flow has deteriorated, with operating cash flows reported at 4.004 billion, 4.631 billion, 2.518 billion, and 580 million RMB over the respective years [15] - The asset-liability ratio for Aux Electric is notably high, at 88.3% in 2022, compared to competitors like Midea and Gree, which are around 62.33% and 59.19% [16] Group 4: Dividend and Debt Concerns - Aux Electric's decision to issue a substantial cash dividend of 3.794 billion RMB in 2024, despite a profit of less than 3 billion RMB, raises concerns about the implications of such a move given its high debt levels [17] - The company’s sales rebates to distributors have surged, with a notable increase of 88.3% from 2022 to 2024, indicating potential pressure on sales channels [12]