Core Viewpoint - The company, Xi'an Taijin New Energy Technology Co., Ltd. (hereinafter referred to as "Taijin New Energy"), is experiencing rapid growth in the high-end electrolysis equipment sector, with a compound annual growth rate (CAGR) of nearly 50% in revenue, but faces significant financial and operational challenges, including deteriorating cash flow and historical governance issues [1][2][4]. Financial Performance - Revenue increased from approximately 1.005 billion yuan in 2022 to 2.194 billion yuan in 2024, with a CAGR of 47.78%. Net profit attributable to shareholders rose from 98 million yuan to 195 million yuan during the same period [2]. - The company's asset-liability ratio remained high, recorded at 91.35% in 2022, 92.04% in 2023, and 84.86% in 2024. Contract liabilities, primarily customer prepayments, accounted for a significant portion of this debt, with balances of 1.570 billion yuan, 2.383 billion yuan, and 1.465 billion yuan at year-end [4][5]. - Research and development (R&D) expenses increased steadily from 37.55 million yuan in 2022 to 71.84 million yuan in 2024, but the R&D expense ratio fluctuated due to rapid revenue growth, recorded at 3.74%, 2.91%, and 3.27% respectively [4][11]. Cash Flow and Operational Risks - The company's operating cash flow showed extreme volatility, with net inflows of 236 million yuan and 210 million yuan in 2022 and 2023, respectively, turning into a net outflow of 470 million yuan in 2024, indicating a significant cash flow crisis [4][15]. - The reliance on customer prepayments for operational funding creates a risk of cash flow pressure during downturns in demand, as evidenced by a reduction in contract liabilities by approximately 919 million yuan from 2023 to 2024, leading to a drastic cash flow decline [9][18]. Governance and Financial Management - The decision to distribute a large cash dividend of 60 million yuan, representing 61% of the 2022 net profit, raised concerns about the company's capital allocation and governance, especially given its high leverage and reliance on prepayments [21][24]. - The company admitted to engaging in "turn-loan" practices, which involved obtaining loans through third parties to circumvent banking restrictions, highlighting significant governance and compliance issues [26][27]. Conclusion - Taijin New Energy is positioned as a leading player in the high-end equipment sector with strong growth potential, but it faces critical challenges related to cash flow stability and governance practices. The reliance on customer prepayments for funding and the recent governance issues underscore the need for careful evaluation by potential investors [30][32].