Baiying Biological's third-party payments remain high: cash and cash equivalents hit a new high, while production capacity utilization is not yet saturated.

Ask AI · How Does High Third-Party Receivables Impact Financial Transparency at Baiying Biotech?

Harbor Business Observer by Wang Lu

On March 31, Shanghai Baiying Biotechnology Co., Ltd. (hereinafter, Baiying Biotech)’s BeiJing (Beijing) Stock Exchange IPO journey will welcome its first preliminary review meeting. The sponsor is Caitaï Haitong Securities.

On June 27, 2025, Baiying Biotech submitted its application to the BeiJing (Beijing) Stock Exchange. Before the meeting, the company had undergone two rounds of review inquiry letters. The regulators mainly focused on issues such as the reasonableness of performance growth and the necessity of the fundraising projects.

1

Strong Performance, with Overseas Revenue Accounting for More Than 60%

According to the prospectus and information shown on Tianyancha, Baiying Biotech was established in March 2012. It is a CRO company focusing on antibody and protein expression, antibody discovery and optimization. The company mainly provides customized technical services such as antibody and protein expression, discovery, and optimization to biopharmaceutical companies. In addition, it is also engaged in the production and sales of research reagents such as general antibodies and recombinant proteins.

The prospectus states that during the reporting period, the company’s service process and service quality were also recognized by many MNC customers, such as AstraZeneca, Moderna, AbbVie, Bayer, Johnson & Johnson, and other well-known multinational biopharmaceutical enterprises. In terms of industrialized services, the company currently has nearly 29,000 m2 of R&D laboratories and production bases in use, with more than 600 employees. It has flexible service capabilities covering culture specifications from 1 mL to 200 L, enabling it to meet diversified, multi-product, and multi-specification service needs. The types of antibody and protein expression services include monoclonal antibodies, bispecific antibodies, multispecific antibodies, recombinant proteins, and more. The company has cumulatively provided services such as drug R&D outsourcing to more than 2,600 pharmaceutical companies both at home and abroad.

On the financial data level, for 2022–2024 and the first half of 2025 (within the reporting period), the company’s revenue was RMB 260 million, RMB 338 million, RMB 402 million, and RMB 247 million, respectively. Net profit was RMB 57.6529 million, RMB 84.0211 million, RMB 124 million, and RMB 83.0010 million, respectively. Net profit margins were 22.14%, 24.83%, 30.77%, and 33.62%, respectively.

Baiying Biotech’s net profit and net profit margin both show an upward trend, mainly because the company continuously expands its domestic and overseas businesses, and its revenue scale continues to grow. At the same time, the company promotes improvements in its technical service level through R&D investment, and continuously optimizes production processes through ongoing exploration of automation and informatization. Through relatively good cost control, the company’s profitability has been maintained at a relatively high level.

In 2025, the company’s operating revenue was RMB 608 million, up 51.16% from the same period last year. Net profit attributable to shareholders of the parent company was RMB 216 million, up 74.41% from the same period last year. Net profit attributable to shareholders of the parent company after deducting non-recurring gains and losses was RMB 213 million, up 83.76% from the same period last year.

In this year’s first quarter, the company expects revenue of RMB 200 million–RMB 210 million, a year-on-year increase of 84.06%–93.27%. Net profit attributable to owners of the parent company was expected to be RMB 60 million–RMB 66 million, a year-on-year increase of 84.66%–103.13%.

Meanwhile, the company’s gross margin is also in a relatively strong position overall. During the reporting period, it was 65.88%, 66.15%, 70.04%, and 69.03%, respectively. More specifically, the gross margin for domestic business was 66.14%, 63.78%, 66.46%, and 62.64%, respectively, and the gross margin for overseas business was 66.06%, 68.75%, 72.94%, and 72.78%, respectively. Compared with peers, the company’s gross margin is also far higher than the average value of comparable companies.

During the reporting period, the company’s overseas revenue from its principal business was RMB 66.7210 million, RMB 163 million, RMB 222 million, and RMB 155 million, respectively, and the proportion of principal business revenue increased from 25.71% to 62.99%. Overseas sales revenue continued to grow and remained at a high share. It was mainly settled in US dollars. During the same period, the company’s exchange gain and loss was RMB -3.5951 million, RMB -1.8078 million, RMB -2.0338 million, and RMB -0.1705 million, respectively.

2

Overseas Revenue Recognition Draws Attention; Third-Party Receivables Are Not Low

Although overseas business revenue keeps increasing and its share exceeds 60%, the way it recognizes its revenue has also raised questions from the public. Unlike domestic revenue, which can be recognized only after customers respond with an acceptance email, for Baiying Biotech, revenue for overseas customers can be recognized simply by sending a closeout email, without requiring customers to complete the acceptance process. At the same time, it adopts both a parallel order settlement model and a monthly settlement model, and the share of monthly settlement is not low. This dual-track revenue recognition system with internal-external differences significantly increases the difficulty of verifying overseas revenue, and also leaves room for the company to adjust performance by changing settlement timing points and recognizing revenue in advance.

The audit inquiry letter also asked the company to explain the arrangements regarding the “advance payment” clauses in cooperation with domestic and overseas customers; the ways in which customers and third parties agree on and execute the terms related to funding receipt and payment, business expenses, and so on; whether there are situations where no advance payment party was agreed upon or no advance payment agreement was signed—if so, explain the corresponding receivables identification, revenue verification procedures, and their effectiveness; and, based on the execution status of internal control measures related to third-party receivables, explain whether the issuer and its actual controller, directors and senior executives, and other key parties and their related parties have any related-party relationships or other arrangements of interest with the payment party of third-party receivables; whether the third-party receivables are authentic; whether there are fabricated transactions or situations of adjusting the aging of accounts; and whether there is any off-balance-sheet circulation of funds.

As is understood, during the reporting period, the amounts of operating revenue realized through platform transactions were RMB 6.8953 million, RMB 29.1369 million, RMB 37.5207 million, and RMB 31.2447 million, respectively, accounting for 2.66%, 8.61%, 9.33%, and 12.66% of principal business revenue, respectively. The shares of income involved in third-party receivables were 89.64%, 94.06%, 81.79%, and 73.85%, respectively.

Baiying Biotech stated that in the future it will continue to increase efforts to expand its overseas market. Therefore, the company will continue to face risks from exchange rate fluctuations. In addition, because China’s exchange rate marketization process is accelerating and given the impact of global economic conditions, it cannot be ruled out that there may be significant exchange rate fluctuations in the future, which would in turn have a certain impact on the company’s performance.

At the end of each period during the reporting period, the balances of accounts receivable were RMB 82.8605 million, RMB 84.7391 million, RMB 84.1526 million, and RMB 107 million, respectively, representing proportions of current operating revenue of 31.82%, 25.04%, 20.91%, and 21.76% (annualized), respectively. The net book value of accounts receivable was RMB 78.8034 million, RMB 80.0597 million, RMB 77.4205 million, and RMB 98.9392 million, respectively, representing the proportion of current assets of 13.09%, 12.56%, 10.07%, and 11.98%, respectively.

What is worth noting is that within the credit period, Baiying Biotech’s accounts receivable and those outside the credit period show a seesaw effect: the proportion of accounts receivable within the credit period was 36.49%, 47.73%, 54.50%, and 66.03%, respectively, while the proportion of accounts receivable outside the credit period was 63.51%, 52.27%, 45.50%, and 33.97%, respectively.

3

Cash and Cash Equivalents Hit a New High; Capacity Utilization Is Not Sufficient

In terms of cost expenditures, during the reporting period, the company’s total period expenses were RMB 104 million, RMB 141 million, RMB 146 million, and RMB 74.7510 million, respectively, showing an overall upward trend. Period expenses as a proportion of operating revenue were 39.91%, 41.56%, 36.36%, and 30.28%, respectively, with the ratio remaining relatively stable. In 2024 and the first half of 2025, as revenue growth increased significantly, the proportion of period expenses declined.

Looking more specifically, the company’s selling expenses were RMB 35.1558 million, RMB 46.3642 million, RMB 51.0900 million, and RMB 25.8033 million, respectively, accounting for 13.50%, 13.70%, 12.70%, and 10.45% of operating revenue in the same period, respectively. Apart from share-based payment expenses, the company’s selling expenses are mainly composed of employee compensation, advertising and publicity expenses, exhibition expenses, and so on. Research and development expenses were RMB 27.0967 million, RMB 42.7789 million, RMB 46.6126 million, and RMB 23.7527 million, respectively, accounting for 10.40%, 12.64%, 11.58%, and 9.62% of operating revenue, respectively.

For this IPO, Baiying Biotech plans to raise RMB 491 million. Of this, RMB 106 million will be used for the Shanghai R&D center upgrade project, and RMB 385 million will be used for the Jiangsu production base construction project.

What many outside parties question is that Baiying Biotech’s current cash and monetary balances appear healthy, so its fundraising rationale may still be open to doubt. At the end of each period during the reporting period, the company’s cash and cash equivalents balances were RMB 149 million, RMB 505 million, RMB 629 million, and RMB 651 million, respectively.

Meanwhile, the company’s capacity situation overall is also not saturated. During each period in the reporting period, the company’s capacity utilization rate was 71.12%, 65.36%, 78.95%, and 88.54%, respectively.

An IPO observer pointed out that, on the one hand, the company has ample funds and has continued to increase year after year, suggesting that from a development perspective it is not short of money. On the other hand, overall, capacity utilization has also not been saturated. Under these circumstances, expanding capacity through fundraising may face doubts regarding its reasonableness.

In its audit inquiry letter, Baiying Biotech stated that its antibody protein expression services mainly include a series of production processes such as gene synthesis, plasmid preparation, cell transfection, expression and purification, and sample quality inspection. The linkage and handoff among the above business processes place high requirements on the company’s level of automation and informatization, as well as its technical service capabilities. If any of the processes becomes a bottleneck, causing an increase in the average order execution cycle, it will have a certain impact on the capacity utilization of the issuer’s antibody and protein expression services. In 2024, the surge in order volume put pressure on the company’s throughput capacity, and the average order execution cycle increased to some extent; actual capacity utilization has already been constrained to a certain degree. (Harbor Finance and Economics)