Gotion High-Tech Co., Ltd. reported a staggering 1434% year-on-year increase in net profit attributable to shareholders, reaching 2.167 billion yuan in the third quarter, largely due to significant changes in the fair value of its early holdings in Chery Automobile following its IPO in Hong Kong.
On Friday, Gotion released its Q3 financial report, highlighting key points:
- Q3 revenue totaled 10.114 billion yuan, marking a 20.68% year-on-year increase; total revenue for the first three quarters reached 29.508 billion yuan, up 17.21% year-on-year. - Net profit attributable to the parent company stood at 2.167 billion yuan, a remarkable 1434% increase from last year, primarily driven by fair value changes related to Chery's IPO, with non-recurring gains totaling 2.154 billion yuan; for the first three quarters, net profit attributable to the parent company was 2.533 billion yuan, representing a 514.35% spike year-on-year. - The adjusted net profit attributable to the parent company, excluding non-recurring items, was just 12.51 million yuan, a 54% increase year-on-year. - Inventory surged 65% year-on-year to 11.746 billion yuan, indicating a significant buildup in stock. - Ongoing construction projects reached 21.040 billion yuan, a 42% increase since the beginning of the year, with two new 20GWh battery base projects initiated, each capped at 4 billion yuan in investment. - Operating cash flow was 457 million yuan, up 88% year-on-year but still considerably lower than revenue; cash outflow from investment activities totaled 5.771 billion yuan.
Chery's IPO Drives Book Profitability Non-recurring gains accounted for a substantial 2.154 billion yuan, including a fair value change gain of 2.326 billion yuan. This suggests that, excluding investment returns and various subsidies, the adjusted net profit attributable to the parent company for Q3 was merely 12.51 million yuan. In the first three quarters, cumulative adjusted net profit attributable to the parent amounted to 85.38 million yuan, a 49.33% increase compared to the same period last year, comparatively small against an enormous asset scale exceeding 100 billion and nearly 30 billion in revenue. Other non-current financial assets increased from 1.571 billion yuan at the beginning of the year to 3.444 billion yuan, a 119% increase, with the fair value changes in this asset category fueling the profit report.
Dual Aspects of Expansion and Inventory Buildup Revenue performance was relatively stable. Total revenue in the first three quarters was 29.508 billion yuan, marking a 17.21% year-on-year increase, with Q3 revenue alone at 10.114 billion yuan, a 20.68% rise. Although the growth rate is not particularly outstanding in the industry context, it has maintained positive expansion. The rapid accumulation of inventory was notable. By the end of Q3, the inventory balance reached 11.746 billion yuan, significantly up from 7.121 billion yuan at the beginning of the year, a 64.94% increase. The company explained this as "increased sales scale necessitating higher inventory reserves," but the rate of inventory growth far outpaced revenue growth. Accounts receivable were reported at 18.8 billion yuan, up 14.24% since the beginning of the year, slightly below the revenue growth rate, indicating generally reasonable receivable management. The total of notes payable and accounts payable was 30.362 billion yuan, a 15.67% increase from the start of the year, maintaining stable bargaining power upstream.
Heavy Asset Capacity Expansion Continues Gotion is pressing on with capacity expansion efforts, with construction projects reaching 21.040 billion yuan, a 42.16% increase from 14.799 billion yuan at the year's start. In late August, the board approved investments to establish two 20GWh battery bases in Nanjing, Jiangsu, and Wuhu, Anhui, each with investment limits not exceeding 4 billion yuan, totaling 40GWh of new capacity. Fixed assets totaled 28.376 billion yuan, down slightly by 5.47% since the beginning of the year, primarily due to depreciation. Cash outflows for fixed and intangible asset purchases reached 5.860 billion yuan, with 3.982 billion yuan spent on investments, totaling 9.842 billion yuan in investment cash outflows, significantly surpassing operating cash inflows. Amid widespread underutilization of capacity in the industry, the return period and profitability certainty of such large-scale new investments remain in question.
Cash Flow and Debt Pressure In the first three quarters, the net cash flow from operating activities was 457 million yuan, representing an 87.72% year-on-year increase but only 1.55% of revenue, indicating limited self-financing capabilities. Cash receipts from goods sold amounted to 22.805 billion yuan, accounting for 77.3% of total revenue, reflecting average collection quality. Financing activities generated cash inflows of 24.912 billion yuan, predominantly from loans amounting to 22.064 billion yuan, with capital inflows of 2.113 billion yuan (including minority shareholder investments of 1.896 billion yuan). Debt repayments totaled 17.745 billion yuan, with interest and dividend payments amounting to 1.401 billion yuan, leading to a net cash inflow from financing activities of 3.809 billion yuan. By the end of Q3, short-term borrowings amounted to 18.714 billion yuan and long-term borrowings to 20.327 billion yuan, with total interest-bearing liabilities exceeding 39 billion yuan. Financial expenses totaled 1.047 billion yuan, up 37.31% year-on-year, mainly due to increased interest expenses, which rose to 1.188 billion yuan. The debt ratio stood at 71.72%, indicating significant debt pressure. Moreover, Volkswagen maintains its position as the largest shareholder with a 24.29% stake, followed by Nanjing Gotion Holding with 10.59%, and the founder Li Zhen and his son Li Chen combined holding 7.26%. For the first three quarters, a dividend of 179 million yuan for the fiscal year 2024 was declared.
Comments