Product Grace Technology: Inventory 3 years growth of nearly 20 times times customer concentration is too high

The concept of security under the background of strong investor concern, but also a military, security software company product Grace Technology on May 15, 2014 disclosed its prospectus (draft). However, compared with peers, the quality of the operation of the technology is low, inventory turnover and accounts receivable turnover rate with the same industry listed companies are ranked the lowest. A security industry analyst believes that, from the company's operating income scale, the quality of the technology in the industry belongs to the medium scale. In addition, due to the company's customers and the high concentration of suppliers, the company may have a certain operating risk. Reporters on the above issues call the company, but as of the press, still did not receive the relevant reply. Customer concentration is too high, the top five customers to do 77% of the revenue of the goods en technology was founded in 2002, headquartered in Beijing, its main business for the army and public security and other fields of management information software research and development, sales and technical services solutions. The company's IPO in Shenzhen is not more than 12.16 million shares, after the issuance of total equity not exceeding 48.62 million shares. The sponsor organization is CITIC Securities Co., Ltd. It is understood that the fund-raising is mainly used for military management information Software Center construction, technology Research and Innovation Center construction and supplementary liquidity, three project investment amount is 229.0957 million yuan, 33.652 million yuan, 30 million yuan. The controlling shareholder of Liu Zheng Technology is the property of commodities, the actual control is artificial, and it controls the company by indirectly holding 99.29% of the stock and holding the company's 23.33% shares directly. In addition, more than 5% of the shareholders also include Shenfeng Xiang, Shanghai Jin Ai, Wang Hai, Eugensen. Shanghai Jin AI for institutional investors, it is worth noting that its actual control of people Yang Saiyun, but also the company's shareholders Yang Guisheng sister, there is a certain correlation. Shanghai Jin Ai was founded in May 2010, happened to be a year before the company listed, after the establishment of the November to invest in the product of the technology. According to the company's prospectus (draft), the main products of the product include the integrated platform for the management informatization in the fields of troops and public security, the general business system, the military core management business system and the intelligent business system, and the digital barracks solution based on the above software, Intelligent camp management and control solutions and port integrated management and control solutions. Public information shows that the company's customers are mainly armed police force, the military-related national research institutes and military or security equipment manufacturers and system integrators. The reporter noted that the company's customer concentration is showing an upward trend of year, the top five customers accounted for the proportion of operating income from 2011 of 74.36% to 2013 77.53%. Take 2013 years as an example, the company's top five customers are the Chinese people's Armed police force, Jiangsu Province Public Security Frontier Corps, Jilin Province Public Security Frontier Corps, Beijing Zhongtai Tongda Technology Development Co., Ltd., the Chinese People's Armed police Force Henan Corps Command Information Office, the first customer accounted for the same period of income exceeded nearly 30%. "This is less in the industrySee, the high concentration of customers may result in a more concentrated risk, if the customer performance decline, it will affect the stability of the company's income. Industry insiders say. Low operational efficiency, operating cycle up to 329.94 days according to reporter observation, the company nearly three years of revenue from the major fluctuations in the source. In 2011, 88.18% of the revenue came from the revenues of military or security equipment manufacturers and system integrators, and in 2013 years revenue from the customer fell to 23.93%. The armed police force's income accounted for by leaps and bounds, from 2011 's 2.05% rises to 76.07%, the visible product boon technology military customer's proportion is getting higher. In contrast, the company's accounts receivable level abnormally high. From the disclosure of the balance sheet of the products, the company 2011-2013, the net accounts receivable is 62.1774 million yuan, 78.9987 million yuan, 63.9754 million yuan, accounting for the total assets at the end of the period of 43.94%, 39.72%, 25.7% respectively. From the accounting ratio, accounts receivable accounted for a relatively high. It is noteworthy that in each period of the reporting period, the top five accounts receivable accounted for a large proportion, respectively, 91.18%,65.36%,75.14%, there is a concentration of risk. In addition, the quality of science and technology accounts receivable turnover rate is also relatively higher than peers. Take 2013 years as an example, the company with long its software (002279. SZ), digital political communication (300075. SZ), Huayu Software (300271. SZ), Far-light software (002063. SZ) and other listed companies, the company's accounts receivable turnover rate of 1.58, and the above four listed companies, the average turnover is 3.53, even with the lowest number of the turnover of 2.26, there is a certain gap. In this respect, the quality of technology in its published prospectus (draft), mainly because customers belong to the military-level security (public security) related industries, by the budget management system, the fourth quarter delivery and acceptance of more, therefore, accounts receivable will be relatively large. The quality of technology in the inventory of turnover efficiency is also worrying. The company's 2011 net inventory was 963,800 yuan, and to 2013, the number surged to 16.782 million yuan, an increase of nearly 20 times times year-on-year. This means that the company has a large stockpile of goods not sold in the warehouse. followed by a sharp decline in inventory turnover, from 13.39 down to only single-digit 3.51, horizontal contrast, the company's inventory turnover lags far behind the four listed companies in the same industry average level, only slightly higher than Huayu software, ranked fourth. The surge in inventories in 2013 was mainly due to an increase in inventories of goods and production costs. In the prospectus (draft), the company's interpretation of this year to undertake the "Intelligent Camp Integrated Control System", "Port Border Inspection Service integrated command System" large-scale solution project, 2014 will continue to implement, these solutions include software products and hardware, so the company purchased part of the hardware.And the production cost of inventory is mainly composed of the "Harbor Border Inspection Service integrated command System" software development expenditure amortization balance of 6.6947 million yuan. In addition, the company began in 2012, for some units, such as the implementation of phased payment settlement, at the signing date of the contract to pay 30%-40%, the next year to pay 20%-30%, the remaining 30%-40% in the third years paid off. As a result of the company's implementation of the payment policy, the amount of long-term receivables has increased substantially to 53.128 million yuan by the end of 2013. In order to analyze the actual operating efficiency of the technology, reporter according to the company's inventory turnover days and Accounts receivable turnover days based on the calculation of the 2013-year product Grace technology business cycle of 329.94 days, indicating that the company from the acquisition of inventory to recover cash need to close to one year time, the speed of capital turnover is slow. The press will be similar to the two companies such as technology, Dahua software and Hai Kang Granville as compared to the two companies 2013 business cycle of 202.18 days and 153.2 days, are lower than the business cycle of the product.