Core Viewpoint - Sichuan Kexin Electromechanical Co., Ltd. expects a significant decline in net profit for the first half of 2025, with estimates between 50 million to 55 million yuan, representing a decrease of 43.29% to 48.44% compared to the same period last year [1][2]. Financial Performance - The company anticipates a decrease in operating revenue of approximately 12.3 million yuan, or about 17%, compared to the previous year [2]. - The net profit attributable to shareholders is projected to drop significantly, with a forecasted range of 46.26 million to 51.26 million yuan, reflecting a decline of 44.93% to 50.30% year-on-year [1][2]. - The first quarter of 2025 showed total revenue of 328 million yuan, an increase of 18.96% year-on-year, but the net profit for the second quarter is expected to fall sharply to between 1.72 million and 6.72 million yuan, indicating a quarter-on-quarter decline of 86% to 96% [3]. Operational Challenges - The decline in revenue is attributed to reduced output due to external technical input delays affecting production schedules, despite having good order volumes [2]. - Changes in product structure, with more complex and larger equipment being delivered, have increased manufacturing time and costs, contributing to the overall decline in gross profit by approximately 4 million yuan [2]. - The company faces increased risks related to accounts receivable, particularly in the photovoltaic and BDO project equipment sectors, due to slower project construction and operation by clients [2]. Business Segments - Kexin Electromechanical is a key player in the high-end process equipment manufacturing sector, with a revenue share of 99.03% from this segment as of the 2024 annual report [2]. - The issues with accounts receivable in the renewable energy business segment highlight the volatility risks emerging in this area [2].

Performance Forecast - The company expects a net profit attributable to shareholders of approximately 50 million to 55 million yuan, representing a year-on-year decline of 43.29% to 48.44% compared to 96.9774 million yuan in the same period last year [1] - The net profit after deducting non-recurring gains and losses is estimated to be around 46.26 million to 51.26 million yuan, a decrease of 44.93% to 50.30% from 93.0878 million yuan in the previous year [1] Reasons for Performance Change - The primary reason for the decline in performance is a reduction in output, which is attributed to external technical input delays affecting production scheduling despite good order conditions [1] - Changes in the product structure delivered to customers, with an increase in larger equipment and tower devices, have led to longer manufacturing times and increased workload, contributing to a decrease in gross profit by approximately 40 million yuan [2] - Slower collection of payments and longer aging of accounts receivable have increased risks, resulting in a higher provision for credit impairment compared to the same period last year [2]

Core Viewpoint - The company, Wanxiang Qianchao, is under scrutiny due to a warning letter from the Zhejiang Regulatory Bureau regarding its accounting practices, particularly concerning prepaid equipment and construction projects, raising concerns about potential long-term unfulfilled equipment orders and their impact on financial statements [1][2][3] Group 1: Prepaid Equipment Concerns - The company received a shareholder inquiry regarding the large balance of prepaid equipment as of the end of 2023, with some equipment reportedly manufactured by the end of 2018 but not yet delivered [1] - The inquiry questions whether there are long-standing unfulfilled equipment orders causing the prepaid amounts to remain on the books, and if the company has pursued repayment for overdue equipment [1][2] Group 2: Construction Projects and Audit Issues - The warning letter highlighted inadequate audit procedures related to construction projects, specifically mentioning that some equipment has been on the books for an extended period without verification of acceptance, which could indicate they are already in use [2][3] - The company clarified that the delayed acceptance of three production lines was due to the equipment not meeting contractual technical specifications, with acceptance expected to be completed by early 2025 [3]