How do mining companies navigate bull and bear cycles? An analysis of Canaan Technology's financial report

1. Stock Indicator Analysis

Canaan Technology's earnings per share and net assets per share experienced significant fluctuations from 2019 to 2023. In 2019, the company suffered severe losses, with negative earnings per share, primarily due to intense market competition and large-scale R&D investments. In 2020, losses decreased somewhat, thanks to the implementation of cost control measures and a rebound in sales. In 2021, profits significantly increased, closely related to the rise in the Bitcoin market, which boosted sales and prices of mining machines. In 2022, profits further grew, with successful new products and technological innovations. However, in 2023, losses reoccurred, mainly influenced by the fluctuations in the Bitcoin market.

In terms of net assets per share, it rose from 1.49 yuan in 2019 to 25.46 yuan in 2020, then slightly decreased to 20.13 yuan in 2021. In 2022, it dropped significantly to 2.79 yuan, and in 2023, it slightly rebounded to 4.42 yuan. This change reflects the fluctuations in the company's asset scale, particularly influenced by the volatility of the Bitcoin market.

2. Operational Capability Analysis

Canaan Technology's operational performance in 2020, 2022, and 2023 was poor, primarily due to the Bitcoin bear market leading to sluggish demand for mining machines and slow inventory turnover. However, compared to 2020, the company's operational capacity improved in 2022 and 2023, mainly benefiting from the following aspects:

1. Technological innovation drives improvements in mining.
2. Optimize capital raising and cash flow management
3. Diversified mining layout to improve asset utilization rate.

3. Profitability Analysis

The return on equity gradually improved from -221.58% in 2019, reaching a peak of 102.81% in 2021, and then declined again. The trend of the net profit margin is basically consistent with that of the return on equity. The gross profit margin rose from a negative value in 2019 to 57.17% in 2021, and then gradually declined and turned negative again.

Overall, the profitability of Canaan Technology has fluctuated significantly over the past few years, with various indicators showing noticeable ups and downs, reflecting the company's susceptibility to market conditions and operational strategies. Especially in 2020 and 2023, the company faced considerable challenges in its operations due to the impact of the Bitcoin bear market.

4. Financial Indicator Analysis

The financial indicators of Canaan Inc. show a declining trend in the company's debt repayment ability:

• The debt-to-asset ratio shows an upward trend, higher in 2020 and 2023.
• The current ratio has overall decreased, dropping to 1.70 in 2023.
• The quick ratio also shows a downward trend, at 1.32 in 2023.
• The proportion of current assets to total assets has decreased, with 73.72% in 2023.
• The proportion of current liabilities to total liabilities fluctuated, reaching 93.17% in 2023.

These indicators reflect that the company's short-term debt repayment ability is relatively weak, necessitating further optimization of the asset-liability structure and improvement of liquidity levels.

5. Comprehensive Conclusion

Canaan Technology has experienced market fluctuations and challenges over the past five years. The financial performance in 2023 has improved, mainly due to the following measures:

1. Strengthen ASIC chip design capabilities and expand into the AI field.
2. Enter the Bitcoin mining business through strategic partnerships.
3. Improve production capacity and supply chain management
4. Change the reporting currency to USD to adapt to global business development.
5. Achievements in multiple technological fields
6. Plan to expand the customer base and launch more products and solutions.

These measures have helped Canaan Technology achieve significant results in technical capability, market expansion, operational optimization, and cost management. In the future, the company will continue to focus on market changes, maintain competitiveness, and adopt proactive development strategies to achieve long-term growth.