Hand Enterprise Solutions Co., Ltd. (Hand) recently announced plans to issue H-shares and list on the Hong Kong Stock Exchange’s main board for fundraising.

Despite its robust cash position—with combined monetary funds and tradable financial assets nearing ¥1.7 billion as of Q3 2025 and interest-bearing debts at only ¥460 million—the company’s debt-to-asset ratio remains below 20%. Earlier this year, Hand disclosed intentions to allocate up to ¥500 million for wealth management products and ¥800 million for derivative investments.

A critical concern is Hand’s persistently high accounts receivable, particularly long-dated ones. Over 25% of its receivables are aged beyond three years, significantly exceeding industry peers. Notably, 17.68% are over five years old. The company applies divergent bad debt provisioning policies for state-owned (SOE) and non-SOE clients, with SOEs enjoying a ~25% lower provisioning rate. Had Hand applied the stricter non-SOE policy uniformly, its 2024 net profit of ¥188 million might have remained negative after adjusting for an additional ¥191 million in provisions.

**Financial Snapshot**: - **Liquidity**: ¥1.41B cash + ¥286M tradable assets = ¥1.696B total. - **Debt**: ¥460M interest-bearing liabilities; 16.34% debt-to-asset ratio (Q3 2025). - **Receivables**: SOE clients (e.g., China Mobile, CATL) account for ¥752M (2024), provisioned at 17.82% vs. non-SOE’s 43.25%.

**Key Risks**: - **Aged Receivables**: 3+ years占比24.53% in H1 2025, dwarfing the 13.43% peer average. - **Provisioning Discrepancy**: SOE policies (e.g., 3% for <1 year) are lenient versus non-SOEs (5% for <1 year, 100% for >2 years). - **Historical Losses**: ¥27.19M bad debts written off in 2024 due to unrecoverable aged receivables.

Hand cites "global expansion and capital optimization" as IPO motives, but investors may scrutinize its receivables management and provisioning rigor.