Eagle Eye Warning: Fuhuan Micro's Operating Revenue Declines

Sina Finance Listed Company Research Institute | Financial Report Hawk-Eye Early Warning

On April 3, Furun Micro released its 2025 annual report, and the audit opinion was a standard unmodified audit opinion.

The report shows that the company’s operating revenue for 2025 was RMB 1.69 billion for the full year, down 5.62% year over year; net profit attributable to the parent was RMB 145 million, down 43.74% year over year; non-recurring profit attributable to the parent was RMB 132 million, down 40.27% year over year; and basic earnings per share were RMB 0.63 per share.

Since listing on the market in February 2017, the company has issued cash dividends 9 times, with cumulative cash dividends of RMB 178 million already implemented. According to the announcement, the company plans to distribute cash dividends of RMB 0.8 per 10 shares to all shareholders (including tax).

The listed-company financial report hawk-eye early warning system performs intelligent quantitative analysis of Furun Micro’s 2025 annual report from four major dimensions: performance quality, profitability, capital pressure and safety, as well as operating efficiency.

I. Performance Quality

During the reporting period, the company’s revenue was RMB 1.69 billion, down 5.62% year over year; net profit was RMB 120 million, down 48.12% year over year; and net cash flow from operating activities was RMB 444 million, up 56.49% year over year.

From the overall performance perspective, the following needs close attention:

• Operating revenue declined. During the reporting period, operating revenue was RMB 1.69 billion, down 5.62% year over year.

• Net profit attributable to the parent fell sharply. During the reporting period, net profit attributable to the parent was RMB 140 million, down 43.74% year over year.

• Non-recurring net profit attributable to the parent fell sharply. During the reporting period, non-recurring profit attributable to the parent was RMB 130 million, down 40.27% year over year.

In terms of the matching between revenue, costs, and period expenses, the following needs close attention:

• The change in selling expenses differs significantly from the change in operating revenue. During the reporting period, operating revenue changed year over year by -5.62%, selling expenses changed year over year by 75.92%, and the difference between the changes in selling expenses and operating revenue was significant.

• Operating revenue diverged from changes in taxes and surcharges. During the reporting period, operating revenue changed year over year by -5.62%, taxes and surcharges changed year over year by 61.37%, and operating revenue diverged from the changes in taxes and surcharges.

Combining cash flow quality, the following needs close attention:

• Operating revenue and net cash flow from operating activities moved in opposite directions. During the reporting period, operating revenue decreased by 5.62% year over year, net cash flow from operating activities increased by 56.49% year over year, and operating revenue diverged from net cash flow from operating activities.

II. Profitability

During the reporting period, the company’s gross profit margin was 37.18%, down 1.29% year over year; net profit margin was 7.12%, down 45.03% year over year; and return on net assets (weighted) was 5.11%, down 47.86% year over year.

Combining the company’s operating side to assess returns, the following needs close attention:

• Selling gross margin continued to decline. In the last three annual reports, selling gross margin was 38.78%, 37.67%, and 37.18%, respectively, showing a continuing downward trend.

• Selling net margin continued to decline. In the last three annual reports, selling net margin was 13.85%, 12.96%, and 7.12%, respectively, showing a continuing downward trend.

Combining the company’s asset side to assess returns, the following needs close attention:

• Return on net assets continued to decline. In the last three annual reports, the weighted average return on net assets was 10.48%, 9.8%, and 5.11%, respectively, showing a continuing downward trend.

In terms of customer concentration and minority shareholders, the following needs close attention:

• Loss attributable to minority shareholders is negative, while net profit attributable to the parent is positive. During the reporting period, loss attributable to minority shareholders was -RMB 20 million, while net profit attributable to the parent was RMB 140 million.

• The top five customers account for a relatively large share of revenue. During the reporting period, the sales of the top five customers / sales total ratio was 82.45%, indicating that customers are overly concentrated.

• The top five suppliers account for a relatively large share of procurement. During the reporting period, the procurement amount of the top five suppliers / procurement total ratio was 85.52%, so be alert to the risk of over-dependence on suppliers.

III. Capital Pressure and Safety

During the reporting period, the company’s asset-liability ratio was 25.28%, up 7.85% year over year; the current ratio was 7.22, and the quick ratio was 6.23; total debt was RMB 719 million, including short-term debt of RMB 162 million, and short-term debt as a proportion of total debt was 22.5%.

In terms of short-term capital pressure, the following needs close attention:

• The cash ratio continued to decline. In the last three annual reports, the cash ratio was 6.96, 6.68, and 4.9, respectively, continuing to decline.

In terms of capital management, the following needs close attention:

• Prepayments vary significantly. During the reporting period, prepayments were RMB 130 million, with a period-beginning change rate of 68.59%.

• The ratio of prepayments to current assets continues to grow. In the last three annual reports, the ratio of prepayments to current assets was 2.19%, 2.54%, and 3.95%, respectively, continuing to increase.

• The growth rate of prepayments is higher than the growth rate of operating costs. During the reporting period, prepayments increased by 68.59% from the beginning of the period; operating costs increased year over year by -4.89%; and the prepayments growth rate was higher than the operating costs growth rate.

IV. Operating Efficiency

During the reporting period, the company’s accounts receivable turnover ratio was 3.78, down 3.85% year over year; inventory turnover ratio was 2.3, down 13.73% year over year; and total asset turnover ratio was 0.42, down 11.15% year over year.

In terms of operating assets, the following needs close attention:

• Accounts receivable turnover continues to decline. In the last three annual reports, the accounts receivable turnover ratio was 5.11, 3.93, and 3.78, respectively, indicating weakening accounts receivable turnover capability.

In terms of long-term assets, the following needs close attention:

• Total asset turnover continues to decline. In the last three annual reports, total asset turnover ratio was 0.51, 0.47, and 0.42, respectively, indicating weakening total asset turnover capability.

• Deferred tax assets changed significantly, while income tax expense is negative. During the reporting period, deferred tax assets were RMB 2.295 million, up 104.55% from the beginning of the period; income tax expense was -RMB 2.3M.

• Other non-current assets changed significantly. During the reporting period, other non-current assets were RMB 5.21M, up 70.79% from the beginning of the period.

In terms of the three expense categories (selling, administrative, and R&D), the following needs close attention:

• Selling expense growth exceeds 20%. During the reporting period, selling expenses were RMB 7.71M, up 75.92% year over year.

• The ratio of selling expenses to operating revenue continues to increase. In the last three annual reports, the ratio of selling expenses to operating revenue was 1.15%, 1.53%, and 2.84%, respectively, continuing to rise.

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Responsible editor: Xiao Lang Express