By Li Panpan

(JW Insights) Oct 20 -- Chinese electronic component distributor Senarytech Group (深蕾科技) faces pressure with its inventory book value of RMB1.9 billion ($259.64 million) in 2022, reported JW Insights recently.

Headquartered in Shenzhen, southern China's Guangdong Province, and with branches in about 20 cities, Senarytech Group is China's leading electronic component distributor.

Since 2022, the global semiconductor industry has experienced a severe decline. End customers have been cautious in stocking up, which has also trapped semiconductor distributors.

Distributors typically need to advance funds to purchase IC products and then sell them to downstream customers to earn the price difference, generating higher inventory and accounts receivable. Senarytech Group faces such pressures.

In 2022, Senarytech Group's inventory book value and book value of accounts receivable reached RMB1.9 billion ($259.64 million) and RMB579 million ($79.12 million), accounting for 61.43% and 18.70% of its current assets, respectively. The percentage totaled more than 80%, putting greater pressure on its capital liquidity and creating a negative net cash flow of RMB-766 million ($-104.68 million) in the year.

Senarytech Group's gross and net profit margin in 2022 was 6.54% and 1.52%, lower than the industry average.

With that, it had to borrow money to move forward. From 2020 to 2022, its current liabilities were RMB1.749 billion ($239.01 million), RMB2.125 billion ($290.39 million), and RMB2.113 billion ($288.75 million), respectively.

The risk of inventory price decline also increased with the semiconductor market downturn. In 2022, many Chinese and international semiconductor companies, including Intel, Micron, Goodix Technology, Will Semiconductor, and Longsys, experienced performance decline due to inventory impairment losses, and some even fell into losses.

In 2022, Senarytech Group's asset impairment losses were mainly losses from inventory depreciation, with RMB24.8918 million($3.40 million). The company attributed the loss mainly to the large increase in inventory at the end of 2022 and price reduction provisions, resulting in

inventory depreciation.