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
The trade receivables turnover days increased from 3 days in 2024 to 21 days in 2025, mainly due to the increase in trade receivables in connection with overseas product sales and our provision of technical services.
Financial Information · p. 250
During the Track Record Period, we required the substantial majority of our domestic distributors to pay for our products before delivery and only granted credit terms to certain domestic and overseas distributors.
Our trade receivables increased from RMB98.5 million as of December 31, 2024 to RMB351.3 million as of December 31, 2025, and further increased to RMB624.9 million as of June 30, 2026 primarily due to our increased sales volume.
Financial Information · p. 234
Our average trade receivables turnover days increased from 23 days in 2025 to 45 days in the six months ended June 30, 2026, primarily due to the increase in our trade receivables, a significant portion of which arose from sales during the period and had not yet reached their contractual payment due dates.
Financial Information · p. 234
Overdue balances are reviewed regularly by senior management.
During the Track Record Period, our trade and bills receivables recorded a steady increase, from RMB104.8 million as of December 31, 2023 to RMB133.1 million as of December 31, 2024, to RMB168.2 million as of December 31, 2025, and further to RMB170.5 million as of March 31, 2026, which was primarily due to the continuous growth of our overseas sales, for which credit terms are typically granted, resulting in a corresponding increase in trade and bills receivables from overseas customers.
Financial Information · p. 236
Our trade and bills receivables turnover days increased from 29 days in 2023 to 31 days in 2024, to 34 days in 2025, and further to 37 days for the three months ended March 31, 2026, primarily due to the rising proportion of sales to overseas customers, to whom we generally grant credit terms.
Financial Information · p. 236
In addition, for overseas sales, we procure commercial export credit insurance to provide protection against payment default and mitigate associated credit risks.
Our trade receivables decreased from RMB2.0 million as of December 31, 2024 to RMB0.2 million as of December 31, 2025, and remained at relatively low level of RMB0.3 million as of June 30, 2026, primarily due to the subsequent settlement of outstanding receivables from certain distributors to whom we had granted temporary credit extensions in late 2024 in light of their liquidity constraints.
Financial Information · p. 249
Our trade receivables turnover days remained at a relatively low level of two days in the six months ended June 30, 2026, as we mainly require our distributors to make prepayments.
Our trade receivables increased significantly from RMB1,156.4 million as of December 31, 2024 to RMB1,661.0 million as of December 31, 2025, and further to RMB1,821.8 million as of March 31, 2026, primarily due to the increase in trade receivables within one year, which was in line with our business expansion and revenue growth.
Financial Information · p. 156
Our trade receivable turnover days increased from 61.4 days in 2025 to 68.0 days in the three months ended March 31, 2026, primarily due to the longer credit periods granted to certain customers during the period.
Financial Information · p. 157
As of June 30, 2026, RMB1,026.6 million, or 55.2%, of our trade receivables as of March 31, 2026, had been settled.
Our prepayments increased from RMB145.9 million as of December 31, 2023 to RMB372.3 million as of December 31, 2024, mainly because major media platforms tightened their commercial terms of prepayments to all agencies, including us, subsequently leading to increased prepayments.
Financial Information · p. 157
Our prepayments increased from RMB533.3 million as of December 31, 2025 to RMB1,026.4 million as of March 31, 2026, mainly due to the prepayments we made to major media platforms in connection with our IP-based brand marketing services business in the first quarter of 2026.
Our trade receivables increased to RMB143.4 million as of December 31, 2025, and further to RMB210.7 million as of June 30, 2026, in line with our business expansion and the increase in product sales.
Financial Information · p. 256
Our trade receivables turnover days increased to 61 days for the six months ended June 30, 2026, which was generally in line with our credit term.
Financial Information · p. 257
As of July 31, 2026, RMB108.8 million, or 51.1%, of our trade receivables as of June 30, 2026 had been subsequently settled.
Our cash conversion cycle, calculated as the sum of inventory turnover days and trade receivables turnover days less trade payables turnover days, was 887 days, 733 days, 271 days and 212 days in 2023, 2024, 2025 and the six months ended June 30, 2026, respectively.
Financial Information · p. 257
We have adopted the following measures to manage and further improve our cash conversion cycle: (i) with respect to inventory management, as we transition from CDMO outsourcing to in-house manufacturing, we expect the stock-up period for drug products to be significantly shortened, and as production volumes increase, the unit production cost of APIs is expected to decline and the corresponding inventory cycle to shorten, which we expect will reduce our inventory turnover days over time; (ii) with respect to trade receivables, we actively engage with our customers to negotiate accelerated payment collection within existing credit terms; and (iii) with respect to trade payables, we seek to optimize our payment arrangements with suppliers, including streamlining milestone-based payments, reducing prepayment proportions and consolidating smaller procurement orders under unified credit terms, with a view to maintaining or extending our trade payables turnover days.
Our trade receivables are typically due within 30 days from the invoice date. We grant our largest customer a relatively longer credit period to facilitate our long-term strategic collaboration.
Financial Information · p. 236
Our trade receivables turnover days increased to 224 days in the six months ended June 30, 2026, reflecting a relatively longer trade receivable collection cycle during our early commercialization stage, which is in line with our revenue growth.
Financial Information · p. 236
As of July 31, 2026, nil of our trade receivables as of June 30, 2026 had been subsequently settled.
Our trade and bills receivables increased from RMB5.2 million as at 31 December 2023 to RMB11.5 million as at 31 December 2024, mainly due to (i) the increase in revenue generated in the fourth quarter of 2024; and (ii) delay in payment from certain customers due to their slower internal approval process.
Financial Information · p. 223
Our average trade receivable turnover days increased from 6 days in FY2023 to 10 days in FY2024, 12 days in FY2025 and 14 days in 6M2026, respectively, which was mainly due to the increase in trade receivables balance mentioned above.
Financial Information · p. 224
Among the unsettled amount of RMB18.7 million as at 31 July 2026, RMB3.4 million represented 20 government related clients, primarily due to payments being scheduled according to fiscal budget plans.
Our trade and bills receivables increased by 248.1% from RMB99.7 million as of December 31, 2024 to RMB346.8 million as of December 31, 2025, primarily due to (i) the rapid growth of our overseas revenue and our strategic shift from prepayment to granting credit terms to selected overseas offline distributors to capture market share and attract long-term collaborations; and (ii) the timing of collections from a major e-commerce platform customer in 2025.
Financial Information · p. 228
Accordingly, our Directors are of the view that the relatively prolonged cash conversion cycle did not have and is not expected to have a material adverse impact on our operations and financial position.
Financial Information · p. 229
As of July 31, 2026, RMB403.2 million, or 79.1% of our trade receivables outstanding as of June 30, 2026, had been subsequently settled.
Our trade and notes receivables increased by 22.2% from RMB226.9 million in 2023 to RMB277.3 million in 2024, increased by 31.4% from RMB277.3 million in 2024 to RMB364.3 million in 2025, and further increased by 8.3% to RMB394.7 million as of June 30, 2026 primarily due to the expansion of our business scale and the increase in sales, which resulted in higher receivables.
Financial Information · p. 226
Our trade and notes receivables turnover days decreased from 103 days in 2023 to 81 days in 2024, primarily due to the strong creditworthiness of our customers and our ongoing efforts to strengthen receivables management.
Financial Information · p. 227
As of July 31, 2026, RMB147.7 million, or approximately 35.2%, of our trade and notes receivables as of June 30, 2026 had been settled.
This increase was mainly due to higher sales in the second half of 2024, including an overdue amount from a large state-owned enterprise, where the internal payment approval process caused a delay.
Financial Information · p. 241
The increase was primarily due to higher outstanding receivables from one customer.
Financial Information · p. 232
The majority of our trade receivables are within one month, reflecting the strong payment discipline of our customers.
Our trade and bills receivables increased from RMB70.5 million as of December 31, 2023 to RMB114.9 million as of December 31, 2024, then increased to RMB126.6 million as of December 31, 2025, and further increased to RMB133.7 million as of March 31, 2026, which was generally in line with our revenue growth.
Financial Information · p. 266
Our trade receivables turnover days, which are calculated using the average balance of net trade receivables divided by total revenue for the relevant period and multiplied by the number of days in the relevant period (i.e. 365 days for a fiscal year), decreased from 99 days in 2023 to 80 days in 2024, then decreased to 67 days in 2025, and further decreased to 59 days for the three months ended March 31, 2026, primarily due to our continued efforts in trade receivables management, and the increasing revenue contribution from system integrators and overseas customers, who typically have shorter credit terms.
Financial Information · p. 266
As of July 31, 2026, RMB102.7 million, or 65.5% of our gross trade and bills receivables outstanding as of March 31, 2026 had been subsequently settled.
Our trade receivables decreased from RMB165.3 million as of December 31, 2024 to RMB84.7 million as of December 31, 2025, primarily due to the decease of trade receivables resulting from our receipt of RMB80.0 million milestone payment from Betta in 2025 and the increase in loss allowance for trade receivables resulting from the longer aging of such trade receivables.
Financial Information · p. 248
As of July 31, 2026, RMB5.5 million, or 6.3% of our trade receivables as of June 30, 2026 had been subsequently settled.
Financial Information · p. 248
Our provision for impairment losses increased from RMB8.9 million in 2024 to RMB12.6 million in 2025 primarily driven by the increased impairment losses on the trade receivables from RMB8.9 million in 2024 to RMB12.6 million in 2025, mainly due to the longer aging of trade receivables from Betta.
Our trade and bills receivables increased by 91.4% from RMB605.4 million as of December 31, 2024 to RMB1,158.7 million as of December 31, 2025, and increased by 34.8% from RMB1,158.7 million as of December 31, 2025 to RMB1,561.5 million as of June 30, 2026, primarily in line with the revenue growth.
Financial Information · p. 240
We implemented flexible arrangements in respect of 56 customers that had overdue trade receivable as of December 31, 2024, with the total overdue balance amounting to RMB92.4 million.
Financial Information · p. 241
Therefore, our Directors are of the view that the provisions have been approximately formulated and adequately recognized.
Our trade receivables increased from RMB6.1 million as of December 31, 2024 to RMB23.7 million as of December 31, 2025, which were affected by the fluctuation of revenue recognized due to the payment schedule stipulated in the relevant agreements.
Financial Information · p. 251
As of July 31, 2026, RMB1.1 million, or 8.9%, of our trade receivables as of June 30, 2026 had been subsequently settled.
Financial Information · p. 251
Notwithstanding the above, our Directors are of the view that there is no material recoverability issue or heightened credit risk associated with these balances.
Our trade and bills receivables turnover days were 182 days, 179 days, 201 days and 373 days in 2023, 2024, 2025 and the six months ended June 30, 2026.
Financial Information · p. 249
The increase from 179 days in 2024 to 201 days in 2025 was primarily due to certain of our customers from the financial services sector temporarily prolonged their internal approval procedures and resulted in longer contract-to-cash cycles.
Financial Information · p. 249
Frost & Sullivan further confirmed that our average payment cycle from invoice issuance to collection for customers in the financial services sector is in line with industry practice, and the overall period from acceptance to final collection falls within a reasonable industry range and is generally favourable as compared with the industry average.
During the Track Record Period, our trade receivables increased from RMB1,237.9 million as of December 31, 2023 to RMB1,843.4 million as of December 31, 2024, primarily due to higher sales in the fourth quarter of 2024 and the credit terms granted to certain customers.
Financial Information · p. 249
Our trade and notes receivables turnover days were 124.6 days, 134.2 days, 133.7 days and 116.4 days in 2023, 2024, 2025, and for the six months ended June 30, 2026, respectively.
Financial Information · p. 250
Taking into account contract assets, our trade and notes receivables turnover days would have been 136.1 days, 148.6 days, 149.7 days and 133.4 days in 2023, 2024, 2025 and for the six months ended June 30, 2026, respectively.
Our trade, bills and other receivables further increased to RMB271.4 million as of December 31, 2025, primarily due to the increase in trade receivables from the sales growth of all of our business units, driven by our continuous market expansion, including the acquisition of Zhejiang AITEK.
Financial Information · p. 212
We adopted more proactive collection efforts against customer payments, which reduced overdue balances and enabled shorter credit terms for certain customers purchasing PV conductive pastes.
Financial Information · p. 212
Our trade and bills receivables turnover days decreased from 134 days for the year ended December 31, 2025 to 120 days for the six months ended June 30, 2026, as we adopted more proactive collection efforts against customer payments, which enabled shorter credit terms for certain customers purchasing PV conductive pastes.