Analysis of Inventory Impairment Provision and Inventory Overstock Risks for QuantumCTek

Based on the data I collected and the analysis conducted, the following is a detailed report on the inventory impairment provision and inventory overstock risks of QuantumCTek:

Based on publicly disclosed financial data, the inventory impairment provision status of QuantumCTek is as follows [1][2]:

• The inventory impairment provision ratio of QuantumCTek shows a
  continuous upward trend
  , increasing from 3.31% in 2022 to 4.46% in 2024
• The provision ratio in 2024 is
  78.4% higher
  than the industry average, significantly higher than peers
• The inventory balance has increased from RMB 136 million in 2022 to RMB 206 million in 2024, representing a
  51.5% growth
  [1][2]

Compared with the average level of the scientific instrument industry [1][3]:

• The inventory turnover days reach as long as 260 days, meaning it takes an average of nearly 9 months to sell inventory
• Compared with the industry average turnover cycle of 180 days, QuantumCTek’s inventory turnover efficiency is
  significantly lower
• The high proportion of inventory in current assets reflects a high degree of the company’s funds being occupied by inventory

1. Mismatch between Inventory Growth Rate and Revenue Growth Rate
   • From 2022 to 2024, inventory grew by 36%, while revenue grew by 231% over the same period
   • However, based on 2024 data, the inventory growth rate (approximately 22%) has outpaced the revenue growth rate (around 25%), showing a
     trend of inventory overstock
     [1][2]

2. Continuous Impairment Provision Higher Than Industry Average
   • The company’s active provision of a high proportion of inventory impairment may reflect a
     prudent attitude
     towards inventory quality
   • However, it may also be a
     signal of problems with inventory quality or liquidity
     [1]

3. Low Inventory Turnover Efficiency
   • The 260-day turnover period far exceeds the industry average of 180 days
   • Indicating weak ability to convert inventory into cash, with
     slow-moving inventory risks
     [3]

4. Specificity of the Quantum Instrument Industry
   • Scientific instrument products have characteristics such as high customization and rapid technological iteration
   • Inventory overstock may lead to
     technological obsolescence
     of products, further increasing impairment risks [3]

• Maintained rapid revenue growth (2024 revenue reached RMB 500 million, with a year-on-year growth of 25%)
• Maintained a high gross profit margin (47.5%), with competitive products
• Inventory turnover efficiency is gradually improving (decreasing from 365 days in 2022 to 260 days in 2024)

• The inventory impairment provision ratio continues to rise, requiring attention to actual inventory quality
• Inventory turnover efficiency is still significantly lower than the industry average
• The quantum instrument industry has rapid technological iteration, with risks of inventory obsolescence

It is recommended to continuously pay attention to the changing trends of the following indicators:

1. Marginal changes in inventory turnover days
2. Whether the inventory impairment provision ratio continues to rise
3. Matching relationship between inventory growth rate and revenue growth rate
4. Specific composition and age distribution of finished goods inventory

[1] Financial Report Notes of QuantumCTek (Hefei) Co., Ltd.

[2] Yicai Global - IPO Weekly: 2 New Applications Accepted, QuantumCTek’s Annual R&D Investment Ratio Declines

[3] 36Kr - QuantumCTek Sprinting for STAR Market Listing: H1 Revenue Reached RMB 170 Million, Net Loss of RMB 75.78 Million, Hillhouse Capital is a Shareholder