LEO(002131)2022-12-03 09:48Group 1: Company Overview - The company, Lio Group Co., Ltd., has undergone significant capital operations since its listing, including acquisitions of industrial pump companies and a shift towards internet business [1] - In 2017, the company achieved operating revenue of CNY 1,057,263.07 thousand, representing a year-on-year growth of 45.06% [1] - The net profit attributable to shareholders was CNY 42,118.28 thousand, a year-on-year decrease of 25.13% [1] Group 2: Financial Performance Challenges - The decline in performance is attributed to several factors: 1. Rising raw material costs and increased depreciation from new facilities led to a decrease in gross profit margin in the manufacturing sector [2] 2. Underperformance of subsidiaries in the digital marketing sector resulted in goodwill impairment provisions [2] 3. Full provision for bad debts of CNY 40 million was made due to receivables from the LeEco system that are expected to be unrecoverable [2] Group 3: Cash Flow and Receivables - The net cash flow from operating activities was negative due to extended settlement periods for quality clients and shortened media cost payment cycles [2] - The company has a significant accounts receivable balance of over CNY 4 billion, with more than 90% of the aging under one year [3] - Measures to stabilize the cash flow include widening financing channels, enhancing receivables collection efforts, and adopting prudent sales policies [3] Group 4: Goodwill and Impairment - Goodwill primarily arises from acquisitions, with approximately CNY 1.7 billion from Wan Sheng Wei Ye and over CNY 600 million from Micro Innovation and Zhi Qu Advertising [3] - The company conducts annual impairment tests to determine if goodwill needs to be written down [3] Group 5: Business Model and Market Strategy - Wan Sheng Wei Ye's business model includes PC and mobile traffic integration, targeting small websites and APP promotion services to generate traffic revenue [3] - The company is exploring new business cooperation models to improve the gross profit margin of its digital marketing business [2]