Analysis of the Relationship Between Yunsai Zhilian's 73% Surge in Inventory and Order Growth

Based on public market information and financial data analysis, Yunsai Zhilian (600602.SH) indeed experienced a significant inventory growth in Q3 2024, with a year-on-year increase of 73% [1]. This phenomenon has attracted market attention to the company’s future order expectations. The following is a professional analysis from multiple dimensions:

From the perspective of financial data, there is a certain correlation between inventory surge and order growth, but they are not completely synchronized:

Data shows that in Q3 2024, when inventory surged by 73%, new orders were 650 million yuan, a quarter-on-quarter increase of 6.6%, while inventory increased by 23.2% quarter-on-quarter [1]. This indicates:

1. Inventory growth outpaces order release
   : The company may have proactively increased inventory reserves before expected order growth
2. Sustained growth in contract liabilities
   : Prepayments increased by 20% year-on-year, indicating sufficient order backlog
3. Decline in inventory turnover
   : From 3.09 in Q1 2024 to 2.32 in Q4 2024, reflecting a decrease in inventory turnover efficiency

• As a key player in Shanghai’s computing power construction, Yunsai Zhilian needs to pre-reserve equipment and materials related to computing power infrastructure with the accelerated implementation of Shanghai’s intelligent computing platform [2]
• Under the dual-drive strategy of AI intelligent computing + data elements, the company is actively deploying cloud services and big data businesses, and data center cabinet rental income is expected to grow rapidly

• Against the backdrop of increasing uncertainty in the supply of chips and key equipment, the company may increase safety stock of key components
• Expectations of raw material price fluctuations prompt the company to purchase in advance to control costs

• Shanghai is accelerating investment in computing power construction, and as the main platform for cloud services of Shanghai’s state-owned enterprises, the company directly benefits from policy support [2]
• The acceleration of urban digital intelligence transformation requires the company to prepare materials for upcoming large-scale projects

From multiple dimensions, the inventory surge is likely to signal the arrival of order growth:

• Sustained 20% growth in contract liabilities indicates sufficient order backlog
• New orders in 2024 were approximately 2.4 billion yuan (including Demo and LOI), up 10% year-on-year [1]
• Operating cash flow performance is good; net operating cash flow in 2024 was 442 million yuan, up 178.5% year-on-year

• A decline in inventory turnover may lead to an increase in capital occupation costs
• Need to pay attention to inventory impairment risks, especially for electronic components with rapid technological iteration
• There is uncertainty about whether the inventory surge can be effectively converted into revenue

1. Positive Aspects
   : An inventory surge is often a signal that a company is optimistic about future demand, especially for companies like Yunsai Zhilian that benefit from AI computing power and digital transformation
2. Points to Monitor
   : Inventory quality, turnover efficiency, and the efficiency of final conversion to revenue

• Trend of absolute inventory changes in subsequent quarters
• Speed of contract liability digestion
• Matching degree between revenue growth rate and inventory growth rate
• Provision for inventory impairment

Overall, Yunsai Zhilian’s 73% inventory surge likely reflects the company’s active preparation for future order growth. Combined with factors such as sufficient order backlog, strong policy support, and robust demand for AI computing power construction, the inventory surge probably signals that the company’s business will enter a period of rapid growth. However, investors still need to continue monitoring inventory digestion and revenue conversion efficiency.

[1] Soochow Securities - Yunsai Zhilian (600602): 2024 Annual Report and 2025 Q1 Report Review (April 29, 2025)

[2] China Post Securities - Yunsai Zhilian (600602) Positions in Shanghai’s Digital Intelligence, Dual-Driven by AI Intelligent Computing + Data Elements (October 30, 2024)