Due to an increase in credit impairment losses on accounts receivable and an increase in marketing expenses in sales expenses, Ruian Gene's net profit for the first half of the year fell by 43.20% to 9.2218 million yuan. Regarding the issue of multiple senior executives suspected of illegal operations, Ruian Gene revealed that the relevant evidence collection work is in progress and further investigation is still required.
On the evening of August 29, Ruian Gene (688217.SH) released its 2024 interim report, achieving revenue of 0.135 billion yuan in the first half of the year, a year-on-year increase of 5.66%. The net profit attributable to the parent company was 9.2218 million yuan, a year-on-year decrease of 43.20%. The net cash flow from operating activities was 12.292 million yuan, a year-on-year decrease of 48.38%.
Regarding the significant decline in net profit, Ruian Gene provided two reasons. On the one hand, there was an increase in credit impairment losses on accounts receivable. On the other hand, there was an increase in marketing expenses in sales expenses.
Regarding the first reason, Ruian Gene explained that the company's main customers are medical institutions. Affected by the downturn in the medical industry, downstream customers have slowed down the payment, resulting in an increase of 15.6026 million yuan in accounts receivable with an age of 1-2 years and an increase of 3.7184 million yuan in accounts receivable with an age of over 3 years. As a result, the company has provisioned an increase of 3.1205 million yuan and 3.7184 million yuan in credit impairment losses respectively.
Therefore, while Ruian Gene disclosed its semi-annual report, it also issued an announcement on the provision of asset impairment reserves for the first half of 2024. Due to bad debt losses on accounts receivable and other receivables, a credit impairment loss of 6.1859 million yuan is planned to be provisioned. Due to the impairment of goodwill and the write-down of inventory, an asset impairment loss of 0.6891 million yuan is planned for provision. The total planned provision for the first half of the year is 6.875 million yuan.
However, Ruian Gene also stated that due to the fact that most of the company's customers are large domestic tertiary hospitals, the probability of unrecoverable accounts receivable in the future is small.
Regarding the increase in marketing expenses, Ruian Gene stated that due to the downturn in the medical industry and the increased marketing efforts for new products including lymphoma gene rearrangement test kits in recent years, the marketing expenses in sales expenses increased by 3.9174 million yuan compared to the same period last year.
The semi-annual report shows that the sales expense of Ruiang Gene during the reporting period was 38.5554 million yuan, an increase of 12.77 percentage points year-on-year. The proportion of sales expenses to operating income was 28.60%, an increase of about 2 percentage points compared to the same period last year.
Similarly, considering the changes in the external market environment and its own development, Ruiang Gene announced tonight that it has decided to terminate the plan to issue convertible bonds to unspecified targets.
Ruiang Gene had originally planned to issue convertible bonds not exceeding 0.45 billion yuan, of which 0.23 billion yuan was for the industrialization construction project of molecular diagnostic reagents, 0.143 billion yuan was for the construction project of molecular diagnostic reagent R&D center, and 77.251 million yuan was for supplementary working capital.
It must be pointed out that one of the things that the outside world is more concerned about with Ruiang Gene is the progress of several senior executives being under compulsory measures due to suspected illegal business operations.
In July of this year, due to suspected illegal business operations, Xiong Hui, the actual controller, director, and general manager of Ruiang Gene, Xiong Jun, the actual controller, director, and deputy general manager, and deputy general manager Xue Yuwei were placed under residential surveillance by the public security organs, while deputy general manager He Junyan was placed under criminal detention by the public security organs.
Ruiang Gene revealed the latest progress of the case in the semi-annual report, stating that the relevant evidence collection work is in progress and the matter requires further investigation. It also reminded that if the public security organs determine that the actual controllers and senior executives are involved in criminal activities, this matter may have an adverse impact on the company's business in the future.
Information shows that Ruiang Gene is a gene testing company focusing on the field of tumors. Its main products are gene molecular diagnostic kits related to leukemia, lymphoma, solid tumors, and infectious diseases. Its main services include providing third-party medical testing services for various medical institutions, pharmaceutical companies, individual patients, etc., as well as providing genetic testing research services for research hospitals, pharmaceutical companies, research institutions, third-party testing institutions, and other enterprises and institutions.