Jianghua Microelectronics (603078.SS) In-Depth Financial Analysis Report: Cash Flow and Financial Risk Assessment

Based on the latest obtained financial data, a key fact needs to be clarified first:

.

Core Indicator	2024	2023	YoY Change
Operating Revenue	1.099 billion yuan	1.030 billion yuan	+6.73%
Net Profit	99 million yuan	105 million yuan	-6.30%
Operating Cash Flow	106 million yuan	146 million yuan	-27.01%
Accounts Receivable	432 million yuan	389 million yuan	+11.13%
Inventory	87 million yuan	76 million yuan	+15.63%

As can be seen,

, rather than “skyrocketed” [0].

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Changes in working capital in 2024 resulted in a cash outflow of approximately

, mainly consisting of the following:

• Increase in Accounts Receivable
  : -105 million yuan (cash occupied by customers)
• Increase in Inventory
  : -23 million yuan (funds tied up in inventory)
• Increase in Accounts Payable
  : +42 million yuan (occupying suppliers’ funds)

The growth rate of accounts receivable (11.13%) is significantly higher than the revenue growth rate (6.73%), reaching

, which is the main reason for the divergence between cash flow and profit [0].

Quality Indicator	2024	2023	Change
Operating Cash Flow / Net Profit	107.7%	138.3%	-30.6pp
Operating Cash Flow / Operating Revenue	9.67%	14.14%	-4.47pp

Revenue quality indicators have deteriorated significantly, indicating that the “quality” of profits has declined [0].

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• System assessment categorizes it as
  “conservative” accounting treatment
  [0]
• The high depreciation/capital expenditure ratio indicates that the company did not inflate profits by reducing provisions
• Instead, this treatment may result in the current profit being understated

• Despite the decline in cash flow, it
  remains positive
  (106 million yuan)
• No negative cash flow has occurred (only negative in 2020-2021 historically)
• Negative free cash flow is mainly due to increased capital expenditures (capacity expansion period)

• Current Ratio:
  4.81
  (very healthy)
• Quick Ratio:
  4.15
  (very healthy)
• Asset-Liability Ratio:
  28.0%
  (low)
• Net Debt/EBITDA:
  0.23
  (very low)
• Interest Coverage Ratio:
  50.2x
  (very strong) [0]

Although no direct evidence of financial window-dressing has been found, the following anomalies deserve close attention:

Warning Sign	Specific Performance	Risk Level
Excessively Fast Growth in Accounts Receivable	Growth rate is 1.7 times that of revenue	Medium
Excessively Fast Growth in Inventory	Growth rate is 2.3 times that of revenue	Medium
Decline in Cash Flow Quality	Operating Cash Flow/Net Profit ratio decreased by 30pp	Low
Extended Collection Period	Accounts receivable turnover days increased	Medium

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Jianghua Microelectronics’ main business is the R&D, production, and sales of wet electronic chemicals, mainly serving high-end manufacturing customers such as semiconductors and display panels.

:

1. Strong Discourse Power of Downstream Customers
   : Customers in the semiconductor and panel industries usually have longer payment cycles and strong bargaining power
2. Capacity Expansion Period
   : The company expanded its production capacity in 2024, and inventory increased due to stock preparation for new customers
3. Industry Cycle Factors
   : The semiconductor industry was in a recovery period in 2024, and customers may have adjusted their procurement rhythms

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, based on the following main grounds:

1. ✅ Conservative accounting treatment reduces window-dressing risks
2. ✅ Cash flow remains positive despite the decline
3. ✅ Robust debt structure with no debt repayment pressure
4. ✅ No obvious anomalies in revenue recognition policies

However, the following signals require continuous attention:

1. Accounts Receivable Quality
   : Monitor the risk of customer bad debts
2. Inventory Impairment Risk
   : Monitor inventory turnover rate and impairment provisions
3. Cash Flow Recovery
   : Whether the downward trend can be reversed in 2025
4. Capital Expenditure Efficiency
   : Whether capacity expansion can be converted into revenue growth

• Monitor cash flow in quarterly performance pre-announcements
• Monitor accounts receivable aging analysis and bad debt provision in annual reports
• Monitor changes in inventory turnover rate and stock age
• Monitor changes in sales proportion of the top five customers

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: The chart above shows Jianghua Microelectronics’ financial trends from 2017 to 2024, including the comparison of operating revenue and net profit, changes in operating cash flow, the ratio of cash flow to net profit, and the growth rate comparison of various indicators.

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[0] Gilin AI Financial Database - Jianghua Microelectronics (603078.SS) Real-Time Quotes, Company Profile, Financial Analysis and Historical Financial Data (as of December 31, 2024)