New stock outlook | Accounts receivable accounts for more than 60% of revenue, how can Youlesai tell a good story of circular packaging?

Under the dual driving forces of tightened environmental policies and deepening ESG concepts, the Chinese logistics packaging industry is accelerating its transformation from a disposable packaging model to a circular and sustainable direction. A report from Frost & Sullivan shows that by 2024, the market size of circular packaging services in China had reached 51.5 billion yuan, and it is expected to further increase to 89.6 billion yuan by 2030. Yolesai, which specializes in circular packaging services in the automotive sector, is benefiting from this industry trend. As a leading provider of circular packaging services in China, the company officially submitted its listing application to the Hong Kong Stock Exchange on December 25, with China Securities Co., Ltd. as the sole sponsor. According to the prospectus, the proceeds from this listing will be mainly used to improve and upgrade digital systems and platforms, promote overseas expansion strategies, expand nationwide service networks, and strengthen core competitiveness. However, despite the industry's dividends, the company still faces challenges such as high customer concentration, large accounts receivable and slow turnover, and cost fluctuations, which investors need to pay attention to. Yolesai, the second largest provider of circular packaging services in China, was established in 2016 and focuses on providing circular packaging solutions for automotive parts manufacturers and OEMs. The company's core business includes container services and container sales. Container services are the company's core operation, accounting for over 80% of its revenue. This business includes shared operation services, rental services, and other value-added services. The shared operation services provide a comprehensive solution for the design, distribution, recovery, and maintenance of standardized circular containers. On the other hand, rental services offer containers for a fixed period, with the company managing the container operations. The company also provides other value-added services such as logistics transport, warehouse management, and customer-owned container management to meet diverse customer needs. The container sales business targets customers with logistics capabilities and procurement needs, supplying the company's products directly to them, including large collapsible turnover boxes, small turnover boxes, custom-developed linings, and custom metal utensils. In the first 8 months of 2025, the container sales business generated revenue of 66.49 million yuan, accounting for 12.5% of total revenue. As of August 31, 2025, Yolesai had a total of 1.5495 million sets of containers under management, including 736,000 large collapsible turnover boxes, 770,900 small turnover boxes, and 35,000 metal utensils, with a service network covering over 100 cities and efficient scheduling enabled by 78 warehouse nodes (25 self-operated, 53 third-party cooperations). In terms of market position, according to Frost & Sullivan data based on 2024 revenue, the company is the second largest provider of circular packaging services in China with a market share of 1.5%; the company ranks first in the Chinese automotive shared operation services market with a market share of 8.2%. Yolesai stands out in the highly dispersed logistics packaging market due to its dual driving model of technology empowerment and network coverage, as well as its accumulation of high-quality and stable customer resources. The company has developed three major digital systems Box Management, FindMe, and Box Return, forming a closed-loop management system that covers the entire life cycle of containers. The Box Management platform integrates order, transport, storage, and settlement management functions, enabling standardized container scheduling and intelligent settlement. The FindMe system allows real-time tracking, inventory alerts, and environmental sensing for over 145,000 containers, improving supply chain transparency. Box Return focuses on inspection and monitoring in the container recovery process to ensure recycling efficiency. The application of these digital systems reduces container loss rates and optimizes inventory turnover, with each container in shared operation services averaging 6.7 turnovers in 2024. The company's nationwide service network provides strong support for its business expansion. As of August 31, 2025, the company's warehouse network covers major automotive industry clusters in East China, South China, and Northeast China, enabling rapid response to customers' cross-regional logistics needs, achieving remote pickup and return of containers, and significantly reducing response times. Additionally, the company has established overseas subsidiaries in Thailand, aligning with the growing trend of China's automotive industry exports. With improved service capabilities, Yolesai maintains stable cooperation relationships with its customers. The company's main customers are traditional and new energy automotive industry parts manufacturers and OEMs, including several leading global automotive companies and their core suppliers. As of August 31, 2025, the company's major customers (contributing annual revenues exceeding 1 million yuan) reached 128, accounting for 89.9% of total sales; the top five customers contributed 26.5% of the revenue. Despite facing multiple challenges, Yolesai has demonstrated steady revenue growth with its expanding business scale. From 2022 to 2024, the company's revenue increased from 648 million yuan to 838 million yuan, with a compound annual growth rate of 13.7%. In the first 8 months of 2025, the company achieved revenue of 533 million yuan, a year-on-year increase of 5.1%. In terms of profitability, the company's gross profit margin steadily improved from 19.7% in 2022 to 22% in 2024, reaching 20.8% in the first 8 months of 2025. The gross profit margin for the container services segment has been maintained at above 20%, reaching 22.5% in 2024, while the gross profit margin for the container sales segment has fluctuated, reaching 18.4% in the first 8 months of 2025. As for net profit, there was an upward trend from 2022, with a peak of 64.149 million yuan in 2023, a year-on-year growth of 105.6%. Subsequently, net profit showed a declining trend with 26.892 million yuan in the first 8 months of 2025, a year-on-year decrease of 12.5%. The decline in net profit is partly constrained by cost pressures. Vehicle and transportation costs account for a major part of sales costs, representing 38.9%, 37.5%, 38.8%, and 35.9% of total sales costs respectively during the reporting period. This cost component is greatly affected by external factors such as rising fuel prices and labor costs, leading to strong uncertainties. Moreover, the proportion of warehouse costs has been on the rise, increasing from 19.8% in 2022 to 27.7% in 2024, and 27.6% in the first 8 months of 2025, mainly driven by rising lease expenses and warehouse network expansion. If the future increase in core costs exceeds the company's pricing adjustment space, it may directly squeeze gross profit margin levels and weaken profitability resilience. It is worth noting that Yolesai's accounts receivable and notes receivable have been at a high level for a long time. During the reporting period, the company's accounts receivable and notes receivable net values were 311 million yuan, 361 million yuan, 382 million yuan, and 325 million yuan respectively. In the first 8 months of 2025, accounts receivable accounted for over 60% of revenue. During the same period, the days receivables and notes receivables turnover were 168.3 days, 159.9 days, 167.9 days and 167.8 days respectively; the amount of the impairment provision for accounts receivable was approximately 11 million yuan, 13 million yuan, 14 million yuan, and 14 million yuan respectively. Yolesai indicated in its prospectus that the company may not be able to fully recover these debts, or may not be able to recover them at all. Although the company has recorded loss provisions for accounts receivable and notes receivable, if the company fails to manage credit risks related to accounts receivable and notes receivable, its cash flow and operating performance may be significantly adversely affected. Against this background, the company's debt structure deserves attention. During the reporting period, the company's balance of cash and cash equivalents was 33.201 million yuan, 32.343 million yuan, 56.776 million yuan, and 88.915 million yuan respectively. Meanwhile, interest-bearing bank loans and other borrowings were 119 million yuan, 118 million yuan, 120 million yuan, and 178 million yuan respectively during the same period, which puts pressure on the company's short-term debt repayment, potentially increasing its liquidity risk. Despite facing multiple challenges, Yolesai operates in a rapidly growing circular packaging arena, and with the support of listing proceeds, the company's long-term growth potential remains promising. In terms of industry prospects, policy incentives and market demand upgrades create a double positive impact. The Chinese government has been continuously issuing policies to encourage the application of circular packaging. For example, the "Transport and Logistics Cost Reduction and Efficiency Improvement Action Plan" clearly states the acceleration of the circular sharing of unitized logistics vehicles such as turnover boxes, providing a favorable policy environment for the industry's development. Meanwhile, as the automotive industry transitions towards electrification and intelligence, the safety and adaptability requirements for packaging in parts transportation are increasing, coupled with the deepening of ESG concepts in corporate operations. The trend of circular packaging replacing disposable packaging will be further strengthened. According to Frost & Sullivan's forecast, the compound annual growth rate of the Chinese automotive shared operation services market from 2025 to 2030 will reach 13.4%, and as a leading enterprise in this submarket, Yolesai is expected to continue benefiting from industry growth dividends. The listing proceeds will provide crucial support for the company's strategic implementation. According to the prospectus, the proceeds from this listing will be mainly used for multiple directions, including: improving and upgrading digital systems and platforms to further enhance operational efficiency; promoting overseas expansion strategies with a focus on rapidly growing automotive industry regions such as Southeast Asia, in line with the trend of China's automotive industry exports; expanding nationwide service networks to optimize warehouse node layout and enhance coverage of core industry clusters. Additionally, some funds will be used to expand downstream application scenarios through mergers and acquisitions, reduce reliance on the automotive industry, and supplement operating capital. If the proceeds are successfully raised and effectively implemented, it will further solidify the company's technological and network advantages, and broaden its growth space. Yolesai, with its leading position in the industry and the support of listing proceeds, is poised to seize the growth dividends of the circular packaging track. However, risks such as accounts receivable and cost fluctuations still need to be continuously monitored. Investors need to rationally evaluate the long-term investment value based on the effectiveness of the fundraising and risk management capabilities.