Greatoo Intelligent Equipment Inc. (Stock Code: 002031) is a company that focuses on the special equipment industry for tires. With the promotion of national policies, especially a series of measures to promote auto consumption in 2023, the industry where Greatoo Intelligent Equipment is located has ushered in a new development opportunity. These policies include optimizing automobile purchase restrictions, supporting updates to old cars, accelerating the cultivation of the used car market, strengthening the construction of new energy vehicle supporting facilities, etc. These policies help to boost auto consumption, thereby driving the growth of tire demand. In the tire mold industry, as a necessary consumer product, the demand for tires is relatively rigid. In the new car market, the ratio of passenger cars to tires is 1:5, while in the replacement market, each passenger car needs to replace 1.5 tires per year. The stable growth of the auto industry, especially the rapid development of new energy vehicles, will bring sustained market demand for the tire mold industry. Greatoo Intelligent Equipment has a good market prospects and development potential in this background.

According to the Q1 2024 report, the total assets of Greatoo Intelligent Equipment increased from CNY 4.197 billion at the beginning of the period to CNY 4.318 billion at the end of the period, with a growth rate of 2.87%. Total liabilities increased from CNY 1.762 billion at the beginning of the period to CNY 1.898 billion at the end of the period, with a growth rate of 7.73%. The asset-liability ratio increased from 41.98% at the beginning of the period to 43.96% at the end of the period, indicating that the company's financial leverage has increased. Although the total assets increased, the growth rate of liabilities was faster, which may create some pressure on the company's financial stability.

In terms of profitability, Greatoo Intelligent Equipment's performance is not optimistic. The Q1 2024 operating income was CNY 159 million, a year-on-year decrease of 22.73%. Operating profit and net income were CNY -13.85 million and CNY -14.91 million, respectively, compared to CNY 7.06 million and CNY 5.58 million in the same period last year. The gross margin increased from 13% in the same period last year to 18.54% in this period, but the net margin decreased from 2.71% to -9.38%. The return on equity (ROE) also decreased from 0.23% at the beginning of the period to -0.61% at the end of the period. These data indicate that although the company has improved its gross margin, its overall profitability has significantly decreased, mainly due to the decrease in operating income and inadequate cost control.

In terms of cash flow, the subtotal of operating cash inflow for Greatoo Intelligent Equipment was CNY 234 million, an increase of 64.41% year-on-year. However, the subtotal of operating cash outflow was CNY 473 million, a significant increase of 218.38% year-on-year. This ultimately resulted in a net cash flow from operating activities of CNY -239 million, compared to CNY -6.02 million in the same period last year. The significant decrease in net cash flow is mainly due to the increase in orders for the company's vulcanizing machines, which resulted in a corresponding increase in the prepaid material costs. This indicates that the company is facing significant cash flow pressure in its operation process.

In summary, Greatoo Intelligent Equipment faces significant financial challenges in the first quarter of 2024. Although the industry outlook is bullish supported by national policies, the company still needs to further optimize its asset-liability management, profitability, and cash flow management. In the future, the company needs to take effective measures to improve operating income, control costs, and optimize cash flow management in order to achieve sustainable development.