Zhenhong Co., Ltd. has significant fluctuations in operating cash flow, and there are discrepancies between procurement amounts and the sales of large special materials.

On February 13, Zhenhong Heavy Industries (Jiangsu) Co., Ltd. (Zhenhong Co., Ltd.) successfully listed on the Beijing Stock Exchange, with Guotai Haitong Securities serving as the sponsor.

Zhenhong Co., Ltd. focuses on the research and development, production, and sales of forging wind turbine main shafts and other large metal forgings. Its products are widely used in wind power, chemical industry, machinery, shipping, nuclear power, and other fields. Customers include Envision Energy, Yunda Holdings, Mingyang Smart, China Shipbuilding Group, Sany Heavy Energy, and others.

With continuous performance growth, the main revenue source is wind power forging parts. From 2022 to 2025, Zhenhong Co., Ltd. achieved operating revenues of 827 million yuan, 1.025 billion yuan, 1.136 billion yuan, and 1.327 billion yuan, respectively, with net profits attributable to the parent of 63 million yuan, 81 million yuan, 104 million yuan, and 146 million yuan, maintaining double-digit growth over the past three years.

According to quick analysis, the main business income mainly comes from forgings, with 2024 revenue and proportion at 912 million yuan and 89.62%, respectively. Among these, wind power forgings and chemical forgings account for 612 million yuan and 202 million yuan, representing 60.15% and 19.86%, respectively, indicating that the development of the wind power industry directly impacts performance.

Accounts receivable are increasing, and operating cash flow is highly volatile. On the other hand, as performance grows, Zhenhong Co., Ltd.'s accounts receivable have also risen, reaching 242.31 million yuan, 310.92 million yuan, 311.22 million yuan, and 499.29 million yuan during the reporting periods, accounting for 29.29%, 30.33%, 27.39%, and 39.42% of current operating income, respectively. The accounts receivable turnover rate has declined from 3.69 times to 1.56 times.

Meanwhile, the provision for bad debts on accounts receivable has continued to increase, reaching 16.3 million yuan, 20.3 million yuan, 20.1 million yuan, and 27.37 million yuan.

It should be noted that the company’s operating cash flow is quite volatile. In 2022 and 2023, net outflows were 130.155 million yuan and 52.9717 million yuan, respectively, while in 2024, there was a net inflow of 123.9083 million yuan. From January to June 2025, net outflow was 34.5204 million yuan.

There are discrepancies between procurement amounts and sales to major suppliers. From 2022 to 2024, Zhenhong Co., Ltd.'s purchases from its largest supplier, Guangda Special Materials, were 167.5307 million yuan, 163.0536 million yuan, and 156.7896 million yuan, respectively, with the purchases mainly for steel.

From 2022 to 2024, Guangda Special Materials’ sales to its top five customers ranged from 99.8176 million yuan to 914.1342 million yuan, 94.1419 million yuan to 1.10576 billion yuan, and 97.3864 million yuan to 1.07359 billion yuan, respectively. This indicates that Zhenhong Co., Ltd. is among the top five customers for Guangda.

It is worth noting that the procurement and sales figures for these two companies do not match. The sales from Guangda to its fourth-largest customer are close to the data disclosed by Zhenhong Co., Ltd., with 2022 sales of 163.9224 million yuan, 162.7422 million yuan, and 161.0134 million yuan, with differences of 3.6083 million yuan, 0.3114 million yuan, and 4.2238 million yuan, respectively. The reasons for these discrepancies need to be addressed by the company and are of concern to the Beijing Stock Exchange.

The two major suppliers have only a small number of insured employees. During the reporting period, Wuxi Zhaoda Energy Co., Ltd. (Zhaoda Energy) has been among Zhenhong Co., Ltd.'s top five suppliers, with procurement amounts of 44.6609 million yuan, 52.8348 million yuan, 57.1332 million yuan, and 30.8131 million yuan, mainly for natural gas.

Qichacha shows that Zhaoda Energy was established in May 2020 with a registered capital of 10 million yuan. Over the past three years, the number of insured employees has been 4, 4, and 3. The company is owned by Lian Da Energy Technology (Jiangsu) Co., Ltd., but neither this company nor the major shareholder, Lian Da Industrial Investment (Jiangsu) Co., Ltd., has had any insured employees in the past three years.

Similarly, Shanxi Longxing Hongye Forging Co., Ltd. (Longxing Hongye), a supplier of purchased parts, entered the top five suppliers in 2024, with procurement amounts and proportions of 38 million yuan and 4.41%. This company was established in November 2015 with a registered capital of 5 million yuan. In 2021 and 2022, the number of insured employees was 27, but in the following two years, it decreased to 3 and 4.

According to the prospectus, Zhenhong Co., Ltd. adopts a qualified supplier management model for major raw material suppliers. The procurement, quality, and system departments are responsible for evaluating the qualifications of new suppliers, and after approval procedures, they are included in the qualified supplier list. So, how did Zhaoda Energy and Longxing Hongye, with only a small number of insured employees, become part of the supplier system?