Large oranges under the text/starry

In 1946, in order to calculate the artillery trajectory and impact point, the University of Pennsylvania’s Eckert and Molly team successfully developed the first universal computer, the electronic digital integration computer (ENIAC). This nearly 30-ton behemoth calculation program uses an external plug-in, that is, each time a new calculation is performed, the line is reconnected (as shown below). Sometimes a few minutes or ten minutes of calculations take hours or even 1, 2 days to prepare for line connection.

Staff is operating ENIAC

As computers continue to be miniaturized, people are trying to improve the efficiency of human-computer interaction. From transplanting a typewriter keyboard, equipped with a display to a mouse in the 1980s, and now the touch screen fully captures all kinds of consumer electronics… What new tricks can the next generation have?

From now on, the most widely regarded is speech technology. In the A-share market, the most radical voice technology company is the Science and Technology News (002230).

On October 24, HKUST News announced the third quarterly report of 2019. The main business data seems to be full of red:

Excerpt from “The Third Quarterly Report of the University of Science and Technology 2019”

First, high growth looks beautiful, mainly due to the low base of 2018

In the first three quarters of 2018, the most eye-catching data was an increase of 183.49% in deducting net profit, but after consulting the third quarterly report of 2018, this data did not look so beautiful:

Excerpt from “The Science and Technology News of the 2018 Third Quarterly Report”

It can be seen that the business performance of HKUST’s Xingfei experienced a round of plunge in 2018 (the net profit of non-returning mothers decreased by 25.83% compared with 2017). Therefore, even if the net profit of non-returning mothers recorded a 1.8-fold increase in the first three quarters of this year, it is still only a little more than half of the data for the same period in 2017 (122 million). Based on this alone, Xunfei’s performance will not be excellent, let alone enter the rising channel. This also explains why Xunfei’s share price jumped after the release of its performance forecast failed to extend its gains, and it fell more than three points on Friday. It is clear to investors that Xunfei’s three-season report is a rebound. Its sustainability has yet to be verified.

Second, performance is insufficient, still relying on government subsidies

Regardless of how the executives deny and explain on various occasions, it is an indisputable fact that the University of Science and Technology has relied on government subsidies since its inception.

In addition to 2017, government subsidies accounted for less than 35% of Xunfei’s net profit, and in 2018 it reached an astonishing 66.67%. In 2017, which accounted for the lowest proportion, it actually reached 31.32%.

Organize the annual financial report of the University of Science and Technology

In the first three quarters of this year, HKUST’s accumulated net non-returning net profit accounted for only 18.72% of net profit, which means that the company’s 12,000 people (data at the end of 2018) spent 9 months, resulting in 80%. More profit is from the financial.

Although the business situation in the whole year is still uncertain, the author expects that the government subsidy this year may not be less than 50% of the net profit of Xunfei, and may even exceed 70%. The specific reason is that I will further Explanation. It can be said that the establishment of the University of Science and Technology News, which was established for 20 years and listed for 11 years, has not reduced its dependence on government subsidies, but is still rising. Of course, the government’s subsidies for strategic technology companies are justified.

But, can the HKUST fly really have a clear conscience?

Third, the quality of revenue is not high, can business expansion meet expectations?

In the third quarterly report of Keda Xunfei, the author believes that the most ugly data is the operating cash flow. It is true that since corporate returns often have seasonal and cyclical characteristics, it is normal for operating cash flow to be negative in the first three quarters. In particular, companies such as Xunfei relying on government projects and government subsidies generally have a significant improvement in cash flow in the fourth quarter.

The author feels that the glare is that the growth of operating cash flow has largely underperformed the growth of profits.

For companies that rely on government projects and have large government subsidies, the operating cash flow is generally lower than their net profit because the government payment cycle is generally long and the related income companies have already recorded. However, since the government’s payment cycle is generally stable, the changes in the above two indicators generally do not cause too much deviation. Therefore, the operating cash flow of HKUST is very embarrassing.

Sure enough, accounts receivable increased by nearly 2 billion from the end of last year, an increase of 57.27%, which is the most important reason for the relative deterioration of operating cash flow. Considering that the ratio of government subsidies and government project payments will not change much, my inference is that the consumer business that Keda Xunfei has placed on high hopes may not be as colorful as its high-level statements.

Of course, due to the relatively limited information provided by the quarterly report, Orange’s view needs further verification of this year’s annual report.

four, conclusion

The clock was dialed back to 2000, and the first year of the business, Keda Xunfei ushered in the inspection of IDG Capital. At that time, the partner Lin Dongliang hoped to invest in the University of Science and Technology, and the chairman Xiong Xiaoge said: “It seems that it is very lively and does not make money.” In the end, the two sides did not talk.

There is no detailed analysis and interpretation of the specific business and subjects of HKUST. Because I think that the color of Xunfei does not need to go through too much. It can be seen from the government subsidy alone that Xiong Xiaoge’s assertion of the year still applies to today’s Xunfei. And how will its dynamic P/E ratio of 147 times be realized? It is every investor who must consider when they are flying.

Note: This article does not constitute investment advice, the stock market is risky, investment needs to be cautious, and there is no harm without buying or selling.

About the Author: Large oranges, CPA under the stars, many years experience in external audit listed companies, specializes in seeking truth from between data.