Core Viewpoint - The lawsuit filed by Beiningmei against its former partner, Keluobao, for trademark infringement and unfair competition raises concerns about the company's financial health and potential manipulation of performance metrics through legal actions [1][4]. Group 1: Lawsuit Background - The conflict between Beiningmei and Keluobao began in 2021 when Beiningmei authorized Keluobao to operate the "Xiao Bei Tai" brand of specialized medical infant formula, with a revenue-sharing model [2]. - Initial cooperation was smooth, but tensions arose as Beiningmei accused Keluobao of unauthorized product expansion and trademark registration, while Keluobao claimed Beiningmei cut off supply and owed partnership fees [2][3]. Group 2: Financial Performance - Beiningmei reported a 43% year-on-year increase in net profit, but revenue declined by 4.37%, indicating a disparity between profit growth and sales performance [4][5]. - The increase in net profit was primarily due to a rise in gross margin to 45.3%, attributed to lower raw material costs rather than sales growth [8]. - Sales expenses increased significantly, leading to concerns about the sustainability of profit margins, as the company relies heavily on promotional spending to maintain market share [9]. Group 3: Strategic Challenges - Beiningmei's strategic shift towards a "family health" platform has yet to yield significant revenue, with the infant formula business still accounting for 89.2% of total revenue [10]. - The company faces challenges in entering the adult nutrition market, which is already dominated by competitors [10]. Group 4: Cash Flow and Debt Issues - The company's operating cash flow dropped by 59.9%, raising alarms about its cash generation capabilities amid rising inventory levels [11]. - Beiningmei's accounts receivable are high, with a significant portion being overdue, indicating weak bargaining power in its distribution channels [18]. - The company maintains a high level of short-term debt relative to its cash reserves, leading to concerns about liquidity and financial stability [19].