Mingyue Lens IPO series reports
Mingyue Lens Co., Ltd. (hereinafter referred to as "Mingyue Lens") from Danyang is preparing to enter the A-share market. The company recently disclosed its prospectus and plans to raise 568 million yuan, mainly for the expansion of resin lenses and technological upgrades.
The reporter of Mingjing Finance Studio of the Public Securities News observed that the customer operating stability of Mingyue Lens and the risks of accounts receivable cannot be ignored. Qichacha shows that Mingyue Lens had as many as 16 legal disputes with clients during the reporting period in which the court made a judgment. Judging from the judgment, these customers owe Mingyue Lens a total of more than 2.52 million yuan in payment, including many cases that cannot be enforced. Correspondingly, Mingyue Lens accounts receivable are at a high level and are still growing, and accounts receivable bring bad debt-related losses to the company in 2018 and 2019, which is close to 70% of the net profit in 2018 and 30% of the net profit in 2019.
Many debt disputes
Reflects the hidden concerns of customer business stability
Mingyue lenses come from Danyang, which has the "hometown of Chinese glasses", and are a manufacturer of comprehensive glasses lenses. The prospectus shows that from 2017 to 2019, Mingyue Lens' performance grew steadily, with operating income of RMB 426 million, RMB 509 million and RMB 553 million, respectively, and net profit attributable to shareholders of RMB 16.8553 million, RMB 32.8466 million and RMB 69.8460 million, respectively.
Mingyue lens sales adopt three models, namely direct sales, distribution, and agency sales, among which direct sales are the main sales model. The prospectus shows that among the 448 million yuan lens revenue in 2019, the direct sales model revenue accounted for more than 60%.
For offline direct sales, Mingyue Lens Prospectus stated: "The company directly sells lens products and a small number of frame products to terminal glasses stores, glasses chain companies, e-commerce enterprise customers, etc. The terminal glasses stores and other customers then cut the lenses according to the consumer's diopter conditions and requirements, assemble them on the frames purchased by the consumer and sell them to the consumers. Terminal glasses stores, glasses chain companies, e-commerce customers, etc. have signed annual cooperation agreements with the company and place purchase orders to the company according to their actual needs."
At the same time, Mingyue Lens said: "The number of terminal glasses stores that cooperate with issuers is large and widely distributed in the region. The issuer has established a good partnership with these terminal glasses store customers."
needs to see that Mingyue Lens's customer concentration is relatively low. The prospectus shows that the revenue proportion of the top five customers from 2017 to 2019 was lower than 15% in two years and about 18% in one year. There are two distribution model customers among the top five customers in 2018 and 2019, which shows that Mingyue Lens's large number of direct sales customers are not strong.
It is worth noting that Qichacha shows that, from the court's judgment date, from March 2018 to June 2020, 15 customers had 16 legal disputes involving contract transactions and Mingyue Lens, all because Mingyue Lens customers were overdue due to the payment for the goods, and although Mingyue Lens won all the lawsuit, there were many cases where the arrears could not be enforced.
reporter sorted out these legal documents and found that Mingyue Lens directly signed contracts for product sales or supply with customers, but did not pay the entire payment to Mingyue Lens as agreed upon after expiration. The amount of debts arrears to Mingyue Lens ranged from RMB 10,000 to RMB 640,000, totaling more than RMB 2.52 million, of which 8 customers had owed more than RMB 100,000.
For example, the court's judgment dated December 26, 2019 (Case No. (2019) Su 1181 Minchu No. 11271) shows that Chongqing Mingyuda Trading Co., Ltd. (hereinafter referred to as "Mingyuda") signed a "Product Sales Contract" with Mingyue Lens, agreeing to purchase lenses from Mingyue Lens, but as of July 31, 2019, Mingyue Lens still owed 428,600 yuan in goods. After that, the two parties had business transactions, and Mingyuda also paid part of the payment, but as of the time of trial, there was still 405,000 yuan in owed.
In addition, Panzhihua New Vision Glasses Co., Ltd. and Mingyue Lens also had two legal disputes. The verdicts in the two cases showed that after signing the contract on January 1, 2018 to June 30, 2019, a total of 55,300 yuan owed Mingyue Lens.
In addition, Qichacha shows that three companies, including Shanghai Kesheng Industrial Co., Ltd., Chongqing Zhuoyue Glasses Co., Ltd., and Chongqing Aiyan Ai Glasses Co., Ltd., also owed Mingyue Glasses more than 100,000 yuan in payment, while the two companies that owed more than 200,000 yuan were Shenzhen AiShi Vision Optics Co., Ltd. (see picture 1) and Jincheng Shulan Glasses Co., Ltd.; Lanzhou Keda Glasses Optics Co., Ltd. owed as much as 597,600 yuan, and the ones that owed the most was Jilin HuaShi Glasses Co., Ltd., up to 641,100 yuan.
Picture 1
It is worth noting that although Mingyue Lens won the legal disputes against the above-mentioned customers, it does not mean that the debt will be recovered, because Qichacha also showed that the court later made a final ruling on many of the above-mentioned cases.
What is the final copy of the case? That is, after the court exhausted the property investigation measures and corresponding compulsory enforcement measures, and did not find any property available for execution by the person subject to execution, or only part of the property is discovered and the execution is completed, all or part of the debts of the applicant cannot be realized. Lawyer at Yingke Law Firm said that from the past actual operation, due to the limited ability of the applicant to inquire about the property of the person subject to execution, the possibility of resuming execution after the final execution of the case is very low.
Moreover, judging from the content of the final ruling of the court, among the 15 customers mentioned above, the court made a final ruling on 7 companies - 5 of which are property that has no execution, and only 2 companies can execute the part; in terms of the amount, the total debt of the seven companies is close to 1 million yuan, and only less than 330,000 yuan was executed.
For example, the four large debt-owed investors, Jilin Huashi Glasses Co., Ltd., Chongqing Aiyan Ai Glasses Co., Ltd., Jincheng Shulan Glasses Co., Ltd. and Shanghai Kesheng Industrial Co., Ltd. (see Figure 2), found that the court found that there was no property available for execution, and the relevant person in charge of three of them were even unknown.
Figure 2
Bad debt reserves and bad debt losses
Total has exceeded 21 million
The above legal disputes have exposed that Mingyue Lens customers may have business stability risks, the prospectus also shows that Mingyue Lens accounts receivable are high. As of the end of 2017, the end of 2018 and the end of 2019, the net accounts receivable of Mingyue Lens were RMB 102.0435 million, RMB 103.7583 million and RMB 120.305 million, respectively, accounting for 33.01%, 32.92% and 29.17% of current assets in the same period, respectively, and the amount was on an upward trend, far exceeding the net profit in the same period.
Mingyue Lens The above net accounts receivable have been removed from bad debt reserves. The bad debt reserves for accounts receivable from 2017 to 2019 were set aside 6.5804 million yuan, 13.7695 million yuan and 17.2362 million yuan respectively (see Figure 3), which means that the bad debt reserves reduce the company's assets. In addition, the bad debt losses of Mingyue Lens accounts receivable during the same period were 1.9381 million yuan, 7.2816 million yuan and 3.9722 million yuan respectively, showing a significant growth trend overall and directly swallowing up profits.
Figure 3: Mingyue Lens Prospectus Provisions for Bad Debts and Bad Debt Loss Screenshot
That is to say, because of the related negative impact of bad debts on the company by bad debts of accounts receivable on the company, it soared in 2018 and was still at a high level in 2019, with an average of more than 21 million yuan in two years, close to 70% of the net profit attributable to the parent in 2018, which is also equivalent to more than 30% in 2019.
Moreover, Mingyue Lens' bad debt reserves account for much higher proportion of accounts receivable than Yishilu, a well-known company in the same industry. According to Yishilu's 2019 annual report, at the end of 2017, the end of 2018 and the end of 2019, the proportion of bad debt reserves to accounts receivable balance was 7.27%, 3.22% and 3.44%, respectively, while the proportion of bad debt reserves to accounts receivable balance in the same period was 6.06%, 11.72% and 12.53%, respectively. In this regard, the explanation of Mingyue Lens Prospectus is: "In the reporting period, the proportion of bad debt reserves in the company's accounts receivable is higher than that in Yishilu. The main reason is that Yishilu is an internationally renowned brand, with relatively high customer quality and fast collection speed, so its bad debt reserves are reserved at a low rate." What is a bit contradictory to the Mingyue Lens Prospectus is that the prospectus for bad debts is small: "During the reporting period, the proportion of the company's accounts receivable age within one year was higher than 85%, indicating that the company's accounts receivable age structure is reasonable, the asset quality is good, and the possibility of bad debts is small. The company's accounts receivable age for more than one year is mainly the final payment for the sales of receivable lenses.At the end of 2019, the balance of accounts receivable with an account age of more than two years was 7.8851 million yuan, accounting for 5.73%, an increase of 3.5014 million yuan year-on-year, mainly due to the long-term failure of some lens products customers to recover. The company has made full provision for bad debts for customers whose receivables were terminated and litigation involved. "
In fact, from the age of the accounts receivable balance of Mingyue Lens, although most of them are within one year, accounts receivable for more than two years in 2018 and 2019 have increased significantly. For example, the total accounts receivable for 2-4 years at the end of 2019 was 7.8851 million yuan, an increase of about 80% from 4.3837 million yuan at the end of 2018, while it was less than 300,000 yuan at the end of 2017. That is to say, during the reporting period, Mingyue Lens' accounts receivable increased by more than 20 times in 2-4 years.
In a sense, this is in line with Mingyue Lens and many cases where customers' debts caused by debts, and there are many cases of debts that are difficult to get back. The risk of recovery of accounts receivable and losses of Shemingyue Lens swallowing up net profit.
Regarding the high accounts receivable, the total amount of bad debt losses and bad debt reserves generated in 2018 and 2019 is equivalent to the net profit. Especially in cases where there are disputes between payments and even difficulty in getting back the debt, how do you view it? As well as the control of customer choice and risk, especially whether the operating stability of direct sales customers is considered, and the reasons for the obvious growth trend of accounts receivable deposited for more than two years and whether the growth trend will continue. The "VOC Securities News" previously sent a news interview letter to Mingyue Lens and called the company many times, but it was still unable to connect. As of press time, the company did not reply. Reporter Erdong
