---
title: "4Paradigm: What happened to the company in H1 2024 by only looking at financial statements?"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/25794208.md"
description: "$PHANCY(06682.HK) The author has not yet fully understood the business of Fourth Paradigm. This article only observes the changes the company is undergoing in 24H1 from a financial statement perspective: 1. Revenue, gross profit, and net profit. The revenue growth rate in 24H1 was +27%, and the absolute value of the growth rate is online. However, it is also noted that since 22H2, the company's revenue growth rate has been continuously declining. According to the company's latest announcement, the revenue growth rate for 24Q1-3 is approximately +26%..."
datetime: "2024-11-28T14:24:25.000Z"
locales:
  - [en](https://longbridge.com/en/topics/25794208.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/25794208.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/25794208.md)
author: "[工程师的股票研究](https://longbridge.com/en/profiles/8877943.md)"
---

# 4Paradigm: What happened to the company in H1 2024 by only looking at financial statements?

$PHANCY(06682.HK)

The author has not yet fully understood the business of [4Paradigm](https://xueqiu.com/S/06682?from=status_stock_match). This article only observes the changes the company is undergoing in 24H1 from a financial statement perspective.

1\. Revenue, gross profit, and net profit

24H1 revenue growth was +27%, and the absolute value of the growth rate is online. However, it is also noted that since 22H2, the company's revenue growth has been continuously declining.

According to the company's latest announcement, 24Q1-3 revenue growth was approximately +26%, meaning that 24Q3 revenue slightly decreased compared to 24H1.

2\. Gross margin, expense ratio, and net margin

24H1 gross margin was 42.3%. It is also noted that since 22H2, the company's gross margin has been continuously declining.

According to the company's latest announcement, 24Q1-3 gross margin was approximately 42.0%, meaning that 24Q3 gross margin slightly decreased compared to 24H1.

24H1 actual operating margin was -17.1%, an improvement from -22.2% in 23H1 but worse than -11.3% in 23H2. This was mainly due to a significant reduction in sales and administrative expense ratios compared to 23H1, while the R&D expense ratio increased significantly compared to 23H2.

24H1 actual operating loss was approximately -319 million yuan, basically consistent with -326 million yuan in 23H1. While maintaining a +26% revenue growth, the company did not further increase losses.

24H1 net margin showed a clear reduction in losses, mainly due to a reduction in financial expense ratio and contributions from other income items. Previously, high financial expenses were due to the recognition of redemption interest before listing (no actual cash outflow). After listing in 23, this was no longer recognized, and it will return to normal thereafter.

Note: Actual operating margin is defined as gross margin - sales expense ratio - administrative expense ratio - R&D expense ratio + credit impairment loss ratio (negative value).

3\. Calculation of the breakeven point

24H1 sales and administrative expenses both showed a downward trend. Assuming 24H2 expense ratios are the same as 24H1.

Assuming absolute amounts of sales and administrative expenses do not increase from 25-28, and R&D expense ratio grows at an annualized rate of +10%.

Assuming 25-28 revenue compound growth rate is approximately +25%, and gross margin remains at 42%.

The breakeven year for actual operating profit is estimated to be around 27.

If other income contributions are significant, breakeven in reported operating profit could be achieved as early as 26.

4\. Asset structure

24H1 accounts receivable + other receivables and prepayments were approximately 2.26 billion yuan, slightly up from 2.23 billion yuan at the end of 23. While 24H1 revenue recognized was 1.87 billion yuan, accounts receivable + other receivables and prepayments did not increase significantly.

24H1 accounts payable were 1.03 billion yuan, basically flat with 1.04 billion yuan at the end of 23.

24H1 net cash on the books was approximately 3.24 billion yuan, indicating good cash reserves.

5\. Cash flow

24H1 OCF net outflow was 400 million yuan, a significant improvement from 860 million yuan net outflow in 23H1. However, this was mainly due to a 170 million yuan increase in inventory and a 220 million yuan increase in other receivables and prepayments in 23H1, which caused abnormal cash flow. From the perspective of actual operating profit, 24H1 was basically flat with 23H1.

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