All,
We have the benefit of the Annual Report - let's not forget that (the joys of the Q1 quarterly), as it provides some useful starting points for the quarter.
For me - the first thing to note is Revenue. Q1 is traditionally the weakest quarter for online sales in China, so it's great to see a growth of 9% on the prior quarter revenue. As we move into Q2/Q3 (which are the stronger periods) this bodes well. 9% might sound weak, but quarter-to-quarter, most companies would take that in a heart-beat.
Yes - agree with others. The glaring point on this quarterly is the difference between Cash Receipts (1.9m) and Revenue (4.25m). I've been looking through, and here's what I've come up with to explain (note - it's not flawless by any means):
1) Not all revenue 'earned' in a particular quarter results in cash. In the Annual Report (FY21) there were 500k of "prepaid revenue" listed - if that revenue was earned in Q1 '22, it wouldn't have cash associated with it. So perhaps that's 500k of the 2.35m gap explained.
2) Net receivables has increased from 250k to 700k, so there's an extra 450k of uncollected comparison revenue.... now we are at 950k of 2.35m.
3) The rest is a bit of a mystery.... There's 2 possibilities I think, but this is stretching my accounting knowledge:
a) the gap is somehow due to the 900k increase in 'prepayments and deposits'. Not sure how this works, I wouldn't have thought this was a 'revenue' issue, but perhaps explains the increase in Cash costs during the quarter - see my comments below.
b) the gap is due to a sizeable increase in the AR balance (not disclosed), but this would also need to be countered by an equal increase in the AP balance (since we have the Net AR number). This is probably the most likely option in my view. If (1) and (2) are right, then AR would have increased from 1m to around 2.4m, and then AP would have increased from 850k to 1.7m. That's quite plausible, and if we look back at Q3 '21, we had almost the same scenario (Cash Receipts of 1.8M v Rev of 3.4M), which led to a huge receipts number in Q4 '21.
Overall - this is a quarterly, so I guess the details don't need to be as robust. From a numbers standpoint, I like what I see at the top-line, but the yo-yo on costs needs to be sorted out (although as mentioned, maybe these are explained to some extent by the prepayments). I did like the discussion around EBIT being only a loss of 355k - that's not too much of a profitability gap for a seasonally weak sales period to overcome going forward (particularly if revenue/costs are normalized as we continue to grow).
I say, onwards and upwards. There was a whole lot more stuff that I picked up from the quarterly, but want to give it another review and will share thoughts later. I like the general trend here, but wish they were more business savvy with the release of financial information to help investors get a clearer picture rather than having to read between the lines and interpret what it all means.
GLAH, hang in there!
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