Mainland rail giant CSR laboured under a mounting pile of unpaid accounts in the first nine months, due to funding problems at the cash-strapped Ministry of Railways.
As of September 30, the amount owed to the Hong Kong and Shanghai-listed firm by its customers grew by 20.83 billion yuan (HK$25.66 billion), or 152.16 per cent, from the beginning of the year, owing to the rise in sales and decline in payments from the company's customers, the state-owned firm said. CSR's long-term receivables leapt 9,853 per cent to 1.03 billion yuan in the period, due to growth in the company's financial leasing business.
"The main customer is the Ministry of Railways. The ministry has a lot of debt, and owes its suppliers a lot of money," Mizuho Securities analyst Ole Hui said.
Macquarie Securities analyst He Saiyi agreed that the surge in CSR's accounts receivable was due to funding problems at the ministry. She said one sign the ministry badly needed cash was the high number of bonds it had issued recently.
CSR's cash and bank balances fell by 57.19 per cent to 10.16 billion yuan from the beginning of the year to September 30, mainly due to the repayments of bank borrowings and cash payments for operating activities. Net profit grew only 1.2 per cent to 2.85 billion yuan in the first nine months, while turnover rose 8.3 per cent to 63.52 billion yuan. In the third quarter, net profit rose 20.9 per cent to 933.81 million yuan.
"The third quarter was a tad weak, but no disaster [for CSR]," a Jefferies report said.
