Can the "giant thunder" in Huawei's industrial chain turn over? Analysis of Financial Report of Shenzhen Eurofilm Technology Co., Ltd.

This May was not peaceful, the international situation changed and Huawei was strangled. However, the domineering Hayes stood up and sent a letter to all employees, claiming that Huawei's spare tire was ready for this day.

Not only Hisilicon, but also Huawei's domestic suppliers, such as Shenzhen Oumo Technology Co., Ltd., have already prepared.

Not long ago, at the CBG supplier quality conference held on Huawei 20 19, Shenzhen O-Film Tech Co., Ltd. (lt) became the only winner of the "Quality Excellence Award" in the field of biometrics, and also won the "Quality Excellence Award" in the field of cameras and the "Quality Improvement Award" in the field of touch control.

According to official website news of Shenzhen O-Film Tech Co., lt, Huawei released its annual flagship machine P30 series products in Paris on March 26th, using the modules of Shenzhen O-Film Tech Co., LT. According to the evaluation agency DxOMark, the comprehensive camera/camera score of this machine is 1 12, which is the best camera phone in history. P30 series is equipped with off-screen fingerprint products, which improves the unlocking speed by 30%. Thanks to the camera and off-screen fingerprint, P30 has strong performance and excellent user experience, and it is one of the most anticipated mobile phones.

However, the performance of Shenzhen Eurofilm Technology Co., Ltd. has changed greatly in 20 18. From expected profit to loss, the reason for the loss is also surprising. It turned out that the cost carry-forward was wrong and the inventory depreciation reserve was omitted.

First of all, the pot of financial software

When the lt annual report of Shenzhen Eurofilm Technology Co., Ltd. was released, Xingkongjun made an analysis for the first time. From the perspective of making provision for inventory depreciation in the annual report and quarterly report, he believes that the company is indeed caused by software and management problems, rather than malicious "bathing".

According to the announcement of the company on 20 10, the company used UFIDA software at that time. But in fact, according to the company's reply, in the past ten years of operation, due to mergers and acquisitions and other reasons, the company actually used multiple systems, and the integration process was very long. As the core business of the company-camera module was acquired by Sony South China Factory in 20 16, the workload of system docking is relatively large.

On May 8th, the company's reply confirmed two conjectures of Xingkongjun about software and management:

1. The structural configuration of the cost accounting system can't adapt to the rapid growth of sales, which has become a bottleneck restricting the development of enterprises. However, due to the adjustment of organizational structure, the company continued to upgrade its system on 20 18, which led to the failure to find the differences in cost accounting systems in time.

2. Due to the shortage of personnel and personnel changes, financial personnel are not sensitive to abnormal data, and there is no effective audit, and there is insufficient communication between financial personnel and business personnel, which leads to the cost accounting system unable to provide sufficient support for production cost carry-forward, resulting in inaccurate carry-forward of some inventory costs.

Second, clear the risk mines in the stock.

According to the company's annual report, there are two main points about inventory.

1) Shenzhen Oumo Technology Co., Ltd., lt Company failed to fully identify the signs of impairment of inventory in the performance forecast, and there was a serious deviation in the estimation of the net realizable value of inventory, which failed to fully accrue asset impairment losses;

2) The cost accounting system of Shenzhen Eurofilm Technology Co., Ltd. is constantly upgrading, resulting in inaccurate carry-over of some production costs.

From the perspective of inventory composition, there are three major components, namely raw materials, goods in stock and products in process.

Compared with the impairment provision accrued by the company in the annual report, it is found that the inventory goods have the highest proportion, reaching 1.38%, indicating that this is the most risky component of the company's inventory.

Judging from the financial report data of the company over the years, even if the data of 20 18 is revised, the inventory amount has almost skyrocketed. Shenzhen Eurofilm Technology Co., Ltd. is engaged in a very fast industry iteration. Once the technology is upgraded, the overstock indicates that the expired products are worthless.

So, is it normal for the company to have such a high inventory?

As an investor, you don't need to go to the company's warehouse to take stock, but you can measure the necessity of inventory through a magical financial indicator: inventory turnover days.

This indicator represents the number of days that the company has experienced from obtaining inventory to consumption and sales. For companies whose business scope and marketing model have not changed much, this indicator should not change much.

If the company fiddles with the inventory in order to adjust the profit, the company's inventory turnover days will change greatly.

Since 20 17, the inventory turnover days of Shenzhen Eurofilm Technology Co., Ltd. have increased slightly, but the change range is small, so it can be considered that the revised inventory of the annual report is reasonable.

The company's products, from production to sales, have a stable cycle of about 80 days.

What if the inventory increases rapidly? Mainly because the company's income is growing too fast.

Because the homogenization of mobile phones is becoming more and more serious, consumers' demand for mobile phone camera ability is getting higher and higher, and mobile phone manufacturers are investing more and more in camera function. Going to extremes, Huawei even launched a series comparable to telescopes, which triggered many topics.

Almost all domestic brands have made a fuss about camera shooting, and the traditional mobile phone giant Apple Samsung dare not neglect it.

Shenzhen Eurofilm Technology Co., Ltd., lt's revenue is also growing at a high speed, and it is normal to increase inventory in order to stock up.

As long as the company's inventory turnover days have not changed greatly, it shows that the company's production and sales rate is still within the normal range, and there will be no big risks.

Three. Impairment losses of assets other than inventories

In addition to the inventory depreciation loss of 65.438+0.56 billion, the company also incurred bad debt loss, impairment loss of available-for-sale financial assets, impairment loss of fixed assets and impairment loss of goodwill.

Compared with previous years, these amounts are relatively normal, but it should be noted that the company's bad debt losses have been high for several consecutive years. 453 million in 20 17 and 205 million in 20 18.

Explain that some customers of the company have poor credit and cannot repay on time. This is also related to the general environment of the mobile phone industry in the last two years, and some relatively small-scale mobile phone manufacturers are under great pressure to survive.

Fourth, poor internal control management and high financial cost.

1, internal control management is not in place.

The inventory problem shows that the company lacks effective internal control measures and it is irresponsible to blame the information system. Even if the company makes a manual inventory list every month, it can be found that the ending inventory unit price of some commodities is unreasonable.

In fact, this is also a common problem of many large group enterprises, including the famous Fortune 500 enterprises. After the scale reaches a certain level, fixed assets, inventory and other asset items cannot be managed by manual inventory, but only by the system. In the long run, over-reliance on information systems leads to the lack of manual supervision. Even some large companies lay off employees through financial enjoyment and IT enjoyment, thus achieving efficient information management. However, once the information system has a fatal failure, there is not even a mature plan to deal with it.

2. Financial costs

According to the company's 20 18 annual report, both long-term loans and short-term loans are increasing substantially. The result is that the interest expense of 20 18 is as high as 552 million. Considering that the company's highest net profit over the years is more than 800 million, the company's capital use cost burden is quite heavy.

Fifth, the income composition is gradually optimized.

Excluding the impact of inventory impairment, what is the core business of the company?

The company's 20 18 annual report shows that among all the company's product projects, the camera module grows rapidly, the touch screen grows slightly, and the sensor shrinks.

This is also related to the market environment. The company's sensors are mainly early fingerprint sensors, and now they have been eliminated in high-end mobile phones. Although we have tried to transform cars and homes, the market has not yet exploded. However, under the guidance of domestic mobile phones such as Huawei, OV, Xiaomi, etc., the off-screen fingerprint technology came to the forefront and soon entered an explosive period. As an off-screen fingerprint supplier of mobile phones such as VIVO and Samsung, the company's sensor business has new vitality.

The market demand for touch screens and cameras, especially dual cameras, is getting stronger and stronger, so the company's camera module will continue to grow at a high speed.

From the perspective of gross profit margin, since 20 15, the gross profit margin of the company's camera module has not changed significantly, that is to say, the company's core profitability has not changed. With the surge in sales, the company still has a lot of room to release profits.

Importance of intransitive verb net operating cash flow

As we all know, Amazon has been losing money for more than ten years, and JD.COM has also lost money for more than ten years. What makes investors unswervingly invest money and burn money? What made them finally turn a profit?

It is cash flow, net operating cash flow. This indicator is a key indicator to measure the company's "real" cash profitability.

Since the listing of JD.COM, the net operating cash flow has been positive in most years, which means that the cash receipts and payments in the company's main business have a balance after the income and expenses break even.

Therefore, when judging whether an enterprise has investment value, the core index is not net profit, but net operating cash flow.

What about Shenzhen Eurofilm Technology Co., Ltd.?

In 20 18, the company's net operating cash flow was 645 million.

In other words, although the company lost money, it was only a "floating loss" on the books. There is not much problem with the company's operation, but it is actually making money.

If there is a balance in the bank account, the company has the hope of turning over.

In the case of obvious increase in the demand of major customers, steady growth of income, basically unchanged gross profit margin and considerable cash flow, it is equivalent to reserving future profit space for the company and making a large amount of impairment.

So, is the company undervalued?