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
We had trade receivables of RMB319.4 million, RMB303.6 million and RMB269.5 million as of December 31, 2023, 2024 and 2025, respectively, including current and non-current portions and net of loss allowance.
Financial Information · p. 243
A relatively high proportion of our trade receivables were past due, primarily because (1) we experienced prolonged payment delays from construction contractors whose source of funds mainly relies on the payments from real estate developers as discussed above, and (2) under certain of our businesses, we did not grant credit periods to customers, resulting in receivables being recognized as overdue immediately upon reaching payment milestones.
Financial Information · p. 245
Specifically, our Directors are of the view that there was no recoverability issue for trade receivables aged over one year to the extent loss allowance had not been made, as (1) we strengthened our collection efforts with the balance of trade receivables aged over one year continuing to decline during the Track Record Period, and (2) we had made sufficient loss allowance by using a provision matrix to estimate expected credit losses, which takes into account the customer’s history of making payments when due and current ability to pay, as well as information specific to the customer and pertaining to the economic environment in which the customer operates.
Our trade and bills receivables, net amounted to RMB849.9 million, RMB1,017.0 million and RMB1,097.1 million as of December 31, 2023, 2024 and 2025, respectively.
Financial Information · p. 239
Our trade receivables turnover days increased from 318.6 days in 2023 to 361.5 days in 2024, primarily due to the expansion of our customer base and an increase in the proportion of sales settled through installment payments to compete for customer orders.
Financial Information · p. 239
As of April 30, 2026, RMB469.6 million, or 42.7% of our trade and bills receivables as of December 31, 2025, had been settled.
The current portion of our trade and other receivables increased from RMB10,231.4 million as of December 31, 2023 to RMB12,824.9 million as of December 31, 2024, and further to RMB15,829.8 million as of December 31, 2025, mainly driven by (i) an increase in our trade and bills receivables resulting from the consolidation of newly acquired subsidiaries in 2025, and (ii) the continuous increase in our trade receivables in line with our revenue growth.
Financial Information · p. 254
Our trade and bills receivables turnover days subsequently increased to 91 days in 2025.
Financial Information · p. 255
As of April 30, 2026, approximately RMB15,050.6 million, or 95.1% of our trade and other receivables as of December 31, 2025, had been subsequently settled.
Our trade and bills receivables increased by 51.5% from RMB132.1 million as at December 31, 2024 to RMB200.1 million as at December 31, 2025, which was primarily due to the growth in our number of completed projects yet to be settled prior to their contractual period as at December 31, 2025.
Financial Information · p. 224
Our trade and bills receivables turnover days increased from 125.0 days in FY2023 to 173.0 days in FY2024, and then decreased to 157.1 days in FY2025.
Financial Information · p. 226
Specifically, our Directors are of the view that the risk of not being able to recover the trade receivables aged over one year is relatively low based on our evaluation of the historical credit standing, ongoing monitoring and the credit records of these customers, and that sufficient provision has been made.
During the Track Record Period, the outstanding balance due from our Customer Group F was subject to factoring arrangements (including non-recourse and recourse) with three banks and one financial institution in the PRC.
Financial Information · p. 226
The above factoring arrangements were entered into in view of (i) the lack of funding for the execution of sizable projects in the smart city sector with relatively long implementation periods and higher procurement costs; and (ii) the background and creditworthiness of Customer Group F, comprising two non-wholly owned subsidiaries of a SOE which is principally engaged in urban construction engineering, development, design, landscaping, property management, capital investment, cultural tourism and international operations in the PRC.
Financial Information · p. 227
During the Track Record Period, the balance increased from RMB5.9 million as at December 31, 2023 to RMB80.1 million as at December 31, 2024, further to RMB95.7 million as at December 31, 2025, as we undertook more projects for our Customer Group F in FY2024 and FY2025 and recognised the corresponding trade receivables at FVOCI.
As of December 31, 2023, 2024 and 2025, we had trade and bills receivables, net of impairment losses of RMB123.6 million, RMB167.7 million and RMB248.3 million, respectively, representing 15.3%, 20.5% and 32.9% of our total current assets, respectively.
Financial Information · p. 238
Our trade receivables turnover days increased from 148 days in 2023 to 178 days in 2024 and further to 200 days in 2025.
Financial Information · p. 239
As of April 30, 2026, 25.9% of our trade receivables as of December 31, 2025, or RMB68.6 million of our trade receivables had been settled.
Our Group had experienced longer trade and bills receivables turnover day as well as the continued increase in prepaid procurement costs, resulting in a potential cash flow mismatch of trade receivables turnover days and prepayments during the Track Record Period.
Financial Information · p. 231
Our Directors are of the view that the above cash flow mismatch should not indicate material liquidity pressure of our Group, in view of the following: (i) the continuous uses of our factored arrangements and bank loans during the Track Record Period which are considered as our liquidity management policy to strengthen the liquidity position of our Group as detailed under paragraph headed “Borrowings” in this section; and (ii) our Group prepaid to certain suppliers for software procurement, which is a common practice in our industry to secure the timely supply of software components for our project implementation, according to the Industry Report.
Our prepayments to suppliers increased significantly by 195.8% from RMB4.8 million as of December 31, 2023 to RMB14.2 million as of December 31, 2024 and further by 88.7% to RMB26.8 million as of December 31, 2025, primarily due to prepayments for the purchase of computing resources.
Financial Information · p. 241
As of April 30, 2026, RMB13.5 million, or 23.8% of our prepayments, deposits and other receivables as of December 31, 2025, had been settled or utilized.
Our trade and bills receivables increased from RMB1,137.4 million as of December 31, 2023 to RMB1,288.0 million as of December 31, 2024, and further to RMB1,522.4 million as of December 31, 2025, primarily due to our continuous business growth.
Financial Information · p. 159
Our impairment loss on trade and other receivables and contract assets increased from RMB66.6 million in 2024 to RMB106.6 million in 2025, primarily due to increases in expected credit loss provisions recognized against trade receivables and contract assets in line with our business growth.
Financial Information · p. 152
As of April 30, 2026, 64.4% of our trade and bills receivables as of December 31, 2025, or RMB980.0 million, were settled.
The increase was primarily due to the growing contribution of large enterprise customers to our customer base, to whom we generally grant relatively longer credit periods in light of their stronger credit profiles to secure project acquisition.
Financial Information · p. 189
As of April 30, 2026, RMB64.0 million, or 36.3% of the outstanding balance of our trade and bills receivables as of December 31, 2025 had been settled.
Financial Information · p. 189
We seek to maintain strict control over our outstanding receivables, and have designated credit control personnel to control credit risk. Overdue balances are reviewed regularly by our management.
Our trade receivables turnover days decreased from 167 days for the year ended December 31, 2023 to 111 days for the year December 31, 2024, and further decreased to 90 days for the year ended December 31, 2025.
Financial Information · p. 201
As of December 31, 2023, 2024 and 2025, our credit loss allowance for trade receivables amounted to RMB2.7 million, RMB4.3 million and RMB9.3 million, respectively, representing approximately 4.2%, 10.8% and 15.9% of our trade receivables as of the respective dates.
Financial Information · p. 200
Our trade receivables and note receivables increased to RMB49.5 million as of December 31, 2025, primarily due to the revenue growth in 2025, as payments of certain major customers were not yet due under their contracts as at the end of 2025.
Our trade and bill receivables increased by 67.6% from RMB102.1 million as of December 31, 2023 to RMB171.2 million as of December 31, 2024, primarily due to intensified industry competition since 2023, which resulted in greater bargaining power for clients and a slower collection pace of our receivables.
Financial Information · p. 218
We plan to strengthen the management of our trade receivables and optimize our cash conversion cycle.
Financial Information · p. 219
As of April 30, 2026, RMB60.4 million, or approximately 46.5%, of our trade and bill receivables as of December 31, 2025 had been subsequently settled.
Such increases were primarily attributable to the increased sales to customers in the NEV sector, who typically have longer payment terms compared to our customers in other segments.
Financial Information · p. 221
Our average trade and bills receivables turnover days were 152 days, 164 days and 169 days, respectively, for the year ended December 31, 2023 and 2024 and the year ended December 31, 2025.
Financial Information · p. 221
Our reversal of impairment losses or impairment losses on financial assets, net changed from reversal of impairment losses of RMB81.4 million for the year ended December 31, 2023 to impairment losses of RMB33.5 million for the year ended December 31, 2024, primarily because of increases in trade receivables and individual impairment provisions made for our customers.
We had trade and notes receivables of RMB53.7 million, RMB109.0 million and RMB169.6 million as of December 31, 2023, 2024 and 2025, respectively.
Financial Information · p. 232
Our trade receivables turnover days increased during the Track Record Period, primarily due to the rapid growth in sales of robots.
Financial Information · p. 232
Among the outstanding balance of trade receivables as of December 31, 2025, the total amount of trade receivables overdue for more than six months amounted to RMB30.1 million due from 136 customers.
Throughout the Track Record Period, our trade and bills receivables continued to increase from RMB44.0 million as of December 31, 2023 to RMB55.0 million as of December 31, 2024, and significantly to RMB273.6 million as of December 31, 2025, which was primarily driven by the overall growth in our cognitive intelligence business.
Financial Information · p. 167
Average turnover days of our trade and bills receivables decreased from 238 days for 2023 to 152 days for 2024, and further to 140 days for 2025, primarily due to our enhanced collection management efforts along with our revenue growth.
Financial Information · p. 168
To manage credit risks, we assess our customers’ credit quality carefully and regularly, closely monitor the recoverability status of trade receivables and credit profiles of customers and take appropriate proactive follow-up actions to ensure the customers’ payments are made as scheduled.
Our trade receivables turnover days decreased from 103.7 days in 2023 to 92.1 days in 2024, primarily because we expanded into content licensing services for videos since April 2023, which have relatively shorter settlement period.
Financial Information · p. 177
During the Track Record Period, a majority of our trade and bills receivables, being 79.4%, 84.7% and 87.6% as of December 31, 2023, 2024 and 2025, respectively, were aged within one year.
Financial Information · p. 177
As of April 30, 2026, RMB88.5 million, or 46.0% of our trade receivables as of December 31, 2025, had been settled.
The higher balances at the end of 2024 and 2025 were primarily attributable to our higher business volumes.
Financial Information · p. 198
Our other receivables and prepayments increased by 58.0% from RMB437.4 million as of December 31, 2023 to RMB691.0 million as of December 31, 2024.
Financial Information · p. 200
As of April 30, 2026, RMB93.2 million, or 18.8%, of our other receivables as of December 31, 2025 were settled, and RMB152.5 million, or 49.8%, of our prepayments as of December 31, 2025 were utilized.
Our prepayments and other receivables increased from RMB17.1 million as of December 31, 2024 to RMB27.2 million as of December 31, 2025, primarily due to (i) an increase in prepayments to third parties from RMB9.5 million as of December 31, 2024 to RMB11.3 million as of December 31, 2025 as we purchased more materials and services as a result of the continuous advancement of clinical development of our drug candidates, (ii) an increase of RMB3.4 million in value-added tax recoverable arising from intensified R&D activities, and (iii) an increase in deferred issue cost from nil as of December 31, 2024 to RMB4.9 million as of December 31, 2025 reflecting deferred listing expense in relation to the Global Offering.
Financial Information · p. 272
As of May 1, 2026, RMB5.5 million, or 20.2% of our prepayments and other receivables as of December 31, 2025 had been subsequently settled.
Our average trade and notes receivables turnover days increased from 204.4 days in 2023 to 223.6 days in 2024, primarily due to (i) longer customer acceptance cycles resulting from our product iterations and upgrades in line with our business growth, as updated products typically require more thorough customer testing and validation prior to payment; and (ii) prolonged customer payment cycles, as intensified market competition for battery separator industry has strengthened the bargaining power of leading downstream customers, resulting of granting of extended credit terms to key customers.
Financial Information · p. 248
Our allowance for impairment increased from RMB43.2 million as at 31 December 2023 to RMB103.5 million as at 31 December 2024, primarily due to (i) our full provision for trade receivables of RMB50.0 million in 2024 relating to one customers experienced deterioration of operating conditions, and (ii) an increase in use of commercial acceptance bills with higher credit risk by our customers.
Financial Information · p. 247
We believe there is no recoverability issue for our trade receivables based on the following: (i) we have made sufficient provision for trade receivables; (ii) our evaluation of the good reputation and historical credit standing of our customers; (iii) our purchase of trade receivable insurance based on our assessment of recovery condition; and (iv) our measures to ensure the recovery of overdue receivables.
Our trade and notes receivables increased significantly from RMB115.5 million as of December 31, 2023 to RMB171.5 million as of December 31, 2024, primarily due to (i) higher sales of our products and solutions with most contracts adopting installment payment terms and (ii) longer payment cycles of certain customers.
Financial Information · p. 232
Our trade receivables over 12 months increased from RMB5.7 million as of December 31, 2023 to RMB28.6 million as of December 31, 2024.
Financial Information · p. 232
Our turnover days of trade receivables decreased from 216 days in 2023 to 199 days in 2024, and further to 166 days in 2025, primarily due to our enhanced receivables collection management, including the settlement of certain large receivables from Trunk Port projects delivered in 2024, and a shift in revenue mix toward Trunk Pilot projects with shorter payment cycles in 2025.