Working capital: receivables, prepayments and cash cycle
Hong Kong IPO disclosure precedents · 547 companies, 635 items
high or rising trade receivables, long turnover days, overdue balances, subsequent settlement, impairment; large or rising prepayments; a long cash conversion cycle
Our trade and bills receivables increased from RMB88.7 million as of December 31, 2022 to RMB200.4 million as of December 31, 2023, and further increased to RMB377.2 million as of December 31, 2024, primarily due to (i) our business and revenue growths; and (ii) the concentrated purchases by our customers during the fourth quarter of a given year, which led to an increased balance of trade receivables as of each year end.
Financial Information · p. 316
Based on the above, the Directors are of the view that our trade and bills receivables overdue for over three months are recoverable.
Financial Information · p. 318
As of September 30, 2025, RMB63.8 million, RMB173.9 million, RMB245.1 million and RMB190.6 million, or approximately 72.5%, 86.8%, 65.0% and 49.0% of our trade and bills receivables as of December 31, 2022, 2023 and 2024 and June 30, 2025 had been subsequently settled.
During the Track Record Period, our long-term trade receivables, representing outstanding installment payments due from certain customer who opted for installment payment arrangements, increased from nil as of December 31, 2022 to RMB38.1 million as of December 31, 2023, primarily due to sales to certain customer who opted for installment payment arrangements.
Financial Information · p. 311
We do not expect to enter into similar installment arrangements with other customers going forward.
Our prepayments, other receivables and other assets increased significantly to RMB466.4 million as of June 30, 2025, primarily due to an increase of RMB286.6 million in prepayments as a result of the increase in the number of our R&D projects and prepaid contract manufacturing to support the anticipated growth in product sales in the second half of 2025, partially offset by a decrease in RMB19.9 million in value-added tax recoverable.
Financial Information · p. 313
Our prepayments, other receivables and other assets then decreased to RMB219.0 million as of December 31, 2024, primarily due to a decrease of RMB105.2 million in receivables from shareholders and a decrease of RMB91.1 million in prepayments, as a result of partial recategorization of our prepayments to other receivables due to supplier refund, as the relevant supplier was unable to fulfill its obligation under its supply contract with us as a result of its impaired capacity;
Financial Information · p. 313
As of October 31, 2025, RMB106.1 million, or approximately 23.0% of the current portion of our prepayments, other receivables and other assets as of June 30, 2025 had been subsequently settled.
Our trade, other receivables and prepayments increased from RMB448.9 million as of December 31, 2024 to RMB613.0 million as of June 30, 2025, primarily due to the increase in prepayments, mainly because of the increase of our prepayments to third party suppliers for raw materials in anticipation of our increased sales.
Financial Information · p. 390
Our trade receivables turnover days decreased from 133 days in 2023 to 72 days in 2024, and decreased from 221 days in the six months ended June 30, 2024 to 195 days in the six months ended June 30, 2025, primarily because we shortened the credit period granted to customers given our stronger bargaining power, together with our growing business scale.
Financial Information · p. 391
As of October 31, 2025, RMB24.3 million, or 63.1% of our trade receivables outstanding as of June 30, 2025 had been subsequently collected.
Our trade receivables turnover days increased from 63 days in 2022 to 123 days in 2023, and further to 163 days in 2024, primarily because (i) the balance of our trade receivables increased along with our revenue growth, (ii) we expanded into new verticals and have more variety in our customer base, (iii) our customer base includes an increasing number of state-owned entities (such as relevant group companies of the top three stateowned telecommunications operators in China, see “Business — Customers and Suppliers — Customers” for more details) and large institutional customers.
Financial Information · p. 311
Our trade receivables turnover days increased from 163 days in 2024 to 286 days in the six months ended June 30, 2025, primarily attributable to our business expansion strategy and changes in customer composition.
Financial Information · p. 311
Our Directors are of the view that the trade receivables of RMB253.7 million as of June 30, 2025 are recoverable, after the following steps were taken to evaluate the recoverability of our trade receivables: (i) we have already made sufficient provision for impairment of trade receivables in the amount of RMB49.6 million in the six months ended June 30, 2025 according to the expected credit loss model, (ii) we have reviewed customer contracts to ensure clear terms and conditions for payment collection, and monitored the trade receivable balances actively, and (iii) we have communicated with customers directly to closely monitor and follow up on their payment schedules for their outstanding payables, in order to identify any discrepancy timely and adopt appropriate payment collection methods accordingly.
Our prepayments, other receivables and other assets increased by 50.3% from RMB43.0 million as of December 31, 2023 to RMB64.6 million as of December 31, 2024, mainly due to an increase in prepayment for online promotion services of e-commerce livestreaming sessions.
Financial Information · p. 337
As of October 31, 2025, RMB52.0 million, or 54.2% of prepayments, other receivables and other assets as of June 30, 2025 had been settled.
Our trade and bills receivables increased to RMB522.0 million as of December 31, 2024 from RMB451.7 million as of December 31, 2023, primarily because a significant number of projects commenced in the second half or the fourth quarter of 2024, resulting in some trade and bills receivables remaining outstanding as of the end of the year.
Financial Information · p. 422
We recorded a provision of RMB7.9 million for the six months ended June 30, 2025, compared to a reversal of RMB5.5 million for the same period in 2024, primarily attributable to a significant increase in balance of contract assets leading to an increase of provision of impairment loss.
Financial Information · p. 390
As of the Latest Practicable Date, RMB215.8 million or 42.4% of our gross trade and bills receivables as of June 30, 2025 were subsequently settled.
The increase was primarily due to a significant growth in the sales to our key customers, such as Amazon and a key distributor in Japan, which was driven by strong sales of our sensor and camera products as well as the successful launch of new products in our lock robots category.
Financial Information · p. 428
For the years ended December 31, 2022, 2023 and 2024 and the six months ended June 30, 2025, the aggregate amount of the trade receivables transferred under the Arrangement and the bank loans received associated with the factored trade receivables amounted to RMB118.8 million, RMB146.9 million, RMB183.5 million and RMB73.3 million, respectively.
Financial Information · p. 430
As of October 31, 2025, RMB133.6 million, or 99.7%, of our trade receivables as of June 30, 2025 had been subsequently settled.
In addition, during the Track Record Period, we recorded relatively long trade and bill receivables turnover days, amounting to 141 days, 135 days, 234 days, 606 days and 650 days as of December 31, 2022, 2023, 2024 and June 30, 2024 and 2025, respectively.
Summary · p. 10
We had relatively long turnover days for the six months ended June 30, 2025, as we typically recorded lower revenues for the first six months of the years, reflecting the typical project acceptance cycle of our customers, where inspections and final acceptance of products and solutions predominantly occur in the fourth quarter.
Financial Information · p. 323
As of October 31, 2025, RMB26.9 million, or 16.1% of our trade and other receivables as of June 30, 2025 had been settled.
As of December 31, 2022, 2023 and 2024 and June 30, 2025, trade receivables were RMB176.4 million, RMB303.1 million, RMB474.4 million, and RMB474.8 million, respectively.
Financial Information · p. 417
As of December 31, 2022, 2023 and 2024 and June 30, 2025, our trade receivables that were outstanding for more than one year based on invoice date (the “long-aging trade receivables”) amounted to RMB14.7 million, RMB70.2 million, RMB99.3 million, and RMB116.6 million, respectively, accounting for 8.3%, 23.2%, 20.9% and 24.6% of our trade receivables balances as of the respective dates;
Financial Information · p. 419
As of October 31, 2025, RMB115.5 million, or approximately 21.2% of our gross trade receivables as of June 30, 2025 had been subsequently settled.
Our accounts receivables increased by 84.4% from RMB69.8 million as of December 31, 2022 to RMB128.7 million as of December 31, 2023.
Financial Information · p. 274
Moreover, a customer was late in payment of insurance brokerage fees and technical service fees to us toward the end of 2023 as a result of the customer’s IT system malfunction, which led to the spike in accounts receivables as of December 31, 2023.
Financial Information · p. 274
Our accounts receivables turnover days increased from 57.3 days in 2022 to 73.9 days in 2023, primarily due to the increased ending balance in 2023 because of the delayed payment of one of our major customer caused by its IT system malfunction in 2023.
Such an increase was primarily attributable to an increase in prepayments to the Directory Unity for the settlement of fees in respect of the construction of the performance stage’s integrated equipment and devices, and the directorial content creativity in connection with Moonlight over Mount Wuyi.
Financial Information · p. 350
Our average trade receivables turnover days remained stable at 13.8 days, 10.3 days, 10.7 days and 14.4 days for the years ended 31 December 2022, 2023, 2024, and for the six months ended 30 June 2025, respectively.
Financial Information · p. 351
Based on the aforesaid, save for our expected credit loss for trade and other receivables, our Directors are of the view that there is no imminent recoverability issue due to the settlement of our trade and other receivables.
Our trade receivables increased from RMB188.5 million as of December 31, 2022 to RMB246.9 million as of December 31, 2023, further to RMB285.8 million as of December 31, 2024, primarily in line with the changes in receivables due from public medical insurance programs.
Financial Information · p. 398
Turnover days increased to 51 days in 2024, mainly due to the deferral of public medical insurance payments at the end of 2024, which were still within the reimbursement pattern and subsequently received in 2025.
Financial Information · p. 400
As of October 31, 2025, RMB277.2 million or 89.9% of our trade receivables outstanding as of June 30, 2025, was subsequently settled.
Our trade and notes receivables increased from RMB137.4 million as of December 31, 2024 to RMB417.9 million as of June 30, 2025, primarily due to (i) an increase in sales of autonomous mining products and solutions, mainly reflecting the concentrated revenue recognition from three large-scale autonomous mining truck projects involving Customers M, N and O in the second quarter of 2025, with trade receivables amounting to RMB151.0 million, RMB85.4 million, and RMB40.1 million, respectively, and (ii) the 24-month credit term and monthly installment payment arrangement with Customer M and Customer P.
Financial Information · p. 428
(vii) our trade receivables over one year increased from RMB34.3 million as of December 31, 2024 to RMB64.8 million as of June 30, 2025, primarily because Customer L, as an SOE customer, has a long payment cycle as required by their internal financial management and payment approval processes;
Financial Information · p. 431
nevertheless, as a prudent measure, we have made provision of impairment of RMB9.2 million, representing 32.4% of the outstanding trade receivables from Customer L as of June 30, 2025.
Our trade and bills receivables increased from RMB41.6 million as of December 31, 2022 to RMB165.8 million as of December 31, 2023, then increased to RMB520.5 million as of December 31, 2024, and further increased to RMB952.3 million.
Financial Information · p. 380
As of the Latest Practicable Date, RMB327.5 million, or 38.1%, of our trade receivables as of June 30, 2025 had been settled.
Financial Information · p. 382
Based on the aforesaid, our Directors believe that we have no material recoverability issue for our trade receivables and we have made sufficient loss allowance provisions for trade receivables to mitigate the uncertainties associated with the outstanding amount and continue to make sufficient provisions to account for any potential write-offs and contingent factors.
Our trade receivables and retention money receivables increased by 53.5% from RMB153.0 million as of December 31, 2022 to RMB234.9 million as of December 31, 2023, and further increased by 61.6% to RMB379.6 million as of December 31, 2024.
Financial Information · p. 277
Our trade receivables and retention money receivables turnover days increased from 116.8 days in 2024 to 282.5 days in the six months ended June 30, 2025, primarily because our customers generally settle payments in the second half of a year in line with industry norm.
Financial Information · p. 279
Our provision for impairment for trade receivables and retention money receivables amounted to RMB12.3 million, RMB20.3 million, RMB34.1 million and RMB55.0 million, as of December 31, 2022, 2023, 2024 and June 30, 2025, respectively.
Our balance of trade and other receivables increased from RMB389.7 million as of December 31, 2022 to RMB470.2 million as of December 31, 2023 and further increased to RMB647.0 million as of December 31, 2024, primarily due to (i) our business expansion and (ii) we granted more flexible credit periods to a few major customers on a case by case basis, based on our comprehensive assessment.
Financial Information · p. 292
Our trade receivables and bills receivables turnover days increased from 34 days in 2022 to 53 days in 2023, and further to 57 days in 2024, primarily due to an increased proportion of revenue generated from direct sales customers, to whom we generally granted longer credit terms.
Financial Information · p. 293
During the Track Record Period, we did not experience any significant losses associated with our trade receivables and the increase in our trade receivables did not have any material adverse impact on our liquidity or cash flows.
Such extended repayment terms were typically granted to franchisees in recognition of their exceptional performance in our unified performance evaluation system.
Financial Information · p. 353
As of September 30, 2025, RMB7.0 million, or 100.0% of our trade receivables due from franchisees as of June 30, 2025 had been settled subsequently.
The significant increase in our loss allowance as of December 31, 2023 and December 31, 2024 was primarily attributable to delay in payments by certain downstream customers due to their worsened operational performance.
Financial Information · p. 407
Our trade and bills receivables turnover days increased from 87 days in 2023 to 199 days in 2024, primarily attributable to an increase in trade receivable balance caused by the delayed payments from certain downstream customers due to their worsened operational performance, as well as a decrease in revenue.
Financial Information · p. 410
During the six months ended June 30, 2025, we had recovered RMB20.7 million from Customer F and RMB110,000 from another customer.
Our trade and bills receivables increased by 59.0% from RMB26.6 million as of December 31, 2022, to RMB42.3 million as of December 31, 2023, and further increased by 25.3% from RMB42.3 million as of December 31, 2023 to RMB53.0 million as of December 31, 2024, partially attributable to our business expansion in the relevant periods.
Financial Information · p. 358
Our trade and bills receivables turnover days increased from 51 days for the year ended December 31, 2022 to 61 days for the year ended December 31, 2023, further increased from 61 days for the year ended December 31, 2023 to 65 days for the year ended December 31, 2024, mainly because an increasing proportion of our receivables due from our customers comprised of bills receivables to be settled by banks, which typically have maturity period of 180 days, and the risk of non-recovery is relatively low.
Financial Information · p. 358
As of September 30, 2025, RMB7.2 million, or 89.2% of our trade receivables as of May 31, 2025, had been settled subsequent to May 31, 2025.