IPO Observation: Hongye Ji submits registration, but with concerns: Overdue receivables surge by nearly 80%, performance drops, and "Risks" are flagged as over 1 billion yuan

After the "meeting", almost four months later, Shenzhen Hongye Ji Rock Technology Co., Ltd. (hereinafter referred to as Hongye Ji) has submitted its registration. However, behind Hongye Ji's submission of registration, there are many hidden risks.

Performance wise, the company's revenue and profitability have both dropped significantly in the first three quarters of this year. Meanwhile, Hongye Ji has "flagged" China Evergrande Group, with a bad debt reserve exceeding 1 billion yuan as of June 30, 2023; and has also repeatedly violated environmental regulations and been punished accordingly.

Moreover, Hongye Ji's overdue receivables have surged by nearly 80%, with many well-known companies involved. According to the prospectus submitted by Hongye Ji, the company's revenue and profitability both dropped in the first three quarters of this year.

In addition, Hongye Ji has predicted that its operating income will be between 111 billion yuan and 125 billion yuan for the whole year, with a growth rate of -9.71% to 1.68%, while its net profit attributable to shareholders is expected to be between 7.4 billion yuan and 8.6 billion yuan, with a growth rate of -4.77% to 10.67%. The company has also predicted that its comprehensive income will be between 7.3 billion yuan and 8.5 billion yuan, with a growth rate of -4.16% to 11.59%

It is worth noting that the bad debt reserve reported by Hongye Ji in its prospectus was mainly due to China Evergrande Group's overdue receivables. As of June 30, 2023, China Evergrande Group had overdue receivables totaling approximately 11.43 billion yuan, with an average recovery rate of around 35%.

Furthermore, it is worth noting that Hongye Ji's other clients, including China Construction, JD.com, and Vanke, have also experienced overdue receivables. As of June 30, 2023, the total amount of overdue receivables reported by Hongye Ji was approximately 56.34 billion yuan, accounting for around 75.73% of its total accounts receivable.

According to Hongye Ji's prospectus, the company's main business is providing high-quality, efficient, and safe geological foundation engineering services. The company has repeatedly violated environmental regulations and been punished accordingly.