Eagle Eye Warning: If the ratio of net cash flow from operating activities to net profit for Ruichen is less than 1

Sina Finance Listed Company Research Institute | Financial Report Hawk-Eye Alert

On March 24, Yuwuchen released its 2025 annual report.

The report shows that the company’s total operating revenue for 2025 was RMB 3.432 billion, up 94.35% year over year; net profit attributable to shareholders was RMB 194 million, up 84.03% year over year; profit after deducting non-recurring items attributable to shareholders was RMB 189 million, up 78.43% year over year; and basic earnings per share were RMB 0.63/share.

Since listing in September 2020, the company has issued cash dividends 6 times, with cumulative implemented cash dividends of RMB 245 million.

The listed company financial report hawk-eye early warning system conducts intelligent quantitative analysis of Yuwuchen’s 2025 annual report from four major dimensions: performance quality, profitability, capital pressure and safety, and operating efficiency.

I. Performance Quality

In the reporting period, the company’s operating revenue was RMB 3.432 billion, up 94.35% year over year; net profit was RMB 194 million, up 84.03% year over year; and net cash flow from operating activities was RMB 152 million, down 54.51% year over year.

Based on the matching of revenue, cost, and period expenses, it is necessary to pay key attention to:

• The difference between changes in operating income and operating cost is large. In the reporting period, operating income changed by +94.35% year over year, while operating cost changed by +40.96% year over year, resulting in a relatively large divergence between revenue and cost changes.

• The change in selling expenses differs greatly from the change in operating revenue. In the reporting period, operating revenue changed by +94.35% year over year, while selling expenses changed by +213.3% year over year; the divergence between selling expenses and operating revenue changes is significant.

Based on the quality of operating assets, it is necessary to pay key attention to:

• Inventory growth rate is higher than the operating cost growth rate. In the reporting period, inventory increased by 104.59% compared with the beginning of the period; operating cost grew by 40.96% year over year; inventory growth rate is higher than the operating cost growth rate.

• Inventory growth rate is higher than the operating revenue growth rate. In the reporting period, inventory increased by 104.59% compared with the beginning of the period; operating revenue increased by 94.35% year over year; inventory growth rate is higher than the operating revenue growth rate.

Based on cash flow quality, it is necessary to pay key attention to:

• Operating revenue and net cash flow from operating activities move in opposite directions. In the reporting period, operating revenue increased by 94.35% year over year, while net cash flow from operating activities decreased by 54.51% year over year; operating revenue and net cash flow from operating activities show a divergence.

• The ratio of net cash flow from operating activities to net profit is below 1. In the reporting period, the ratio of net cash flow from operating activities to net profit was 0.781, below 1, indicating relatively weak earnings quality.

II. Profitability

In the reporting period, the company’s gross margin was 59.8%, up 34.16% year over year; the net profit margin was 5.66%, down 5.31% year over year; and return on net assets (weighted) was 21%, up 118.3%.

Based on the company’s operating performance, it is necessary to pay key attention to:

• Selling gross margin rises significantly. In the reporting period, the selling gross margin was 59.8%, up substantially by 34.16% year over year.

• Selling gross margin increases, while selling net profit margin declines. In the reporting period, selling gross margin increased from 44.57% in the same period last year to 59.8%, while selling net profit margin decreased from 5.98% in the same period last year to 5.66%.

III. Capital Pressure and Safety

In the reporting period, the company’s asset-liability ratio was 67.07%, up 132.86% year over year; the current ratio was 1.64, and the quick ratio was 1.23; total debt was RMB 1.025 billion, including short-term debt of RMB 710 million, and short-term debt as a percentage of total debt was 69.28%.

From the overall view of the financial position, it is necessary to pay key attention to:

• The asset-liability ratio continues to grow. In the past three annual reports, the asset-liability ratio was 18.47%, 28.8%, and 67.07% respectively, showing an upward trend.

• The current ratio continues to decline. In the past three annual reports, the current ratio was 4.27, 2.92, and 1.64 respectively, indicating weakening short-term solvency.

From short-term capital pressure, it is necessary to pay key attention to:

• The cash ratio continues to decline. In the past three annual reports, the cash ratio was 3.53, 2.11, and 0.77 respectively, with a continuous decline.

From long-term capital pressure, it is necessary to pay key attention to:

• The ratio of total debt / net assets continues to rise. In the past three annual reports, the ratio of total debt / net assets was 16.01%, 28.76%, and 147.09% respectively, showing a continuous increase.

• Short-term debt can be covered by broad money funds, but long-term debt cannot be covered. In the reporting period, the ratio of broad money funds / total debt was 0.86, with broad money funds below total debt.

• The cash coverage ratio of total debt is gradually shrinking. In the past three annual reports, the ratio of broad money funds / total debt was 2.09, 1.94, and 0.86 respectively, continuing to decline.

From the perspective of capital management, it is necessary to pay key attention to:

• The ratio of cash and cash equivalents / total assets continues to increase, and the ratio of total debt / total liabilities also continues to increase. In the past three annual reports, the ratio of cash and cash equivalents / total assets was 25.67%, 39.15%, and 39.33% respectively; the ratio of total debt / total liabilities was 70.64%, 71.09%, and 72.23% respectively. Both show an upward trend; be alert to a high level in both deposits and loans.

• Prepaid accounts vary significantly. In the reporting period, prepaid accounts were RMB 230 million, with a period-beginning change rate of 128.4%.

• The growth rate of prepaid accounts is higher than the growth rate of operating cost. In the reporting period, prepaid accounts grew by 128.4% compared with the beginning of the period; operating cost increased by 40.96% year over year, and the growth rate of prepaid accounts is higher than the growth rate of operating cost.

• Other payables change significantly. In the reporting period, other payables were RMB 40 million, with a period-beginning change rate of 41%.

IV. Operating Efficiency

In the reporting period, the company’s accounts receivable turnover was 19.27, up 101.16% year over year; inventory turnover was 4.01, up 11.6% year over year; and total asset turnover was 1.84, up 50.74% year over year.

For long-term assets, it is necessary to pay key attention to:

• Other non-current assets change significantly. In the reporting period, other non-current assets were RMB 785,000, up 52.33% from the beginning of the period.

From the perspective of the three-fee metrics, it is necessary to pay key attention to:

• Selling expenses growth rate exceeds 20%. In the reporting period, selling expenses were RMB 1.65 billion, up 213.3% year over year.

• The ratio of selling expenses / operating revenue continues to grow. In the past three annual reports, the ratio of selling expenses / operating revenue was 27.82%, 29.78%, and 48.01% respectively, continuing to increase.

Click on Yuwuchen’s Hawk-Eye Alert to view the latest alert details and a visual preview of the financial report.

Introduction to Sina Finance listed company financial report Hawk-Eye Alert: The listed company financial report Hawk-Eye Alert is an intelligent professional analysis system for listed company financial reports. The Hawk-Eye Alert aggregates a large number of authoritative financial experts from accounting firms and listed companies, and tracks and interprets the latest financial reports of listed companies from multiple dimensions including company performance growth, earnings quality, capital pressure and safety, and operating efficiency, providing visual and textual prompts of potential financial risk points. It provides professional, efficient, and convenient technical solutions for financial institutions, listed companies, regulatory departments, and others to identify and issue alerts for financial risks of listed companies.

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Responsible editor: Xiao Lang Express