Analysis of Canaan Technology's Financial Report: How Mining Companies Respond to Market Cycles

1. Analysis of Per Share Indicators

Canaan Technology's per-share indicators exhibited significant fluctuations from 2019 to 2023. In 2019, the company incurred losses, with negative earnings per share, primarily due to intense market competition leading to sales falling short of expectations, as well as large-scale R&D investments that did not yield profits in a timely manner. In 2020, losses decreased somewhat, thanks to cost control measures and improved operational efficiency.

In 2021, the company achieved profit growth, closely related to the increase in mining machine sales driven by the rise of the Bitcoin market. The launch of new products and services also brought new sources of profit to the company. In 2022, profits further increased, market demand continued to grow, and R&D investment began to show results. However, in 2023, the company suffered losses again, mainly due to fluctuations in the Bitcoin market, leading to a decline in sales performance.

In terms of net asset per share, there has been a trend of rising first and then falling from 2019 to 2023. In 2020, it surged to 25.46 yuan, reflecting the rapid expansion of the company’s asset scale. In 2022, it dropped to 2.79 yuan, which may be related to the volatility of the Bitcoin market and non-recurring expenses. In 2023, it slightly rebounded to 4.42 yuan, but is still lower than the levels of previous years.

Overall, the financial performance of Canaan Technology is significantly affected by the fluctuations in the Bitcoin market, and the company needs to continuously adjust its business strategies to respond to market changes.

2. Operational Capability Analysis

Canaan Technology's operational performance in 2020, 2022, and 2023 has been relatively weak, primarily affected by the Bitcoin bear market, with sluggish demand for mining machines leading to slow inventory turnover. However, compared to 2020, the company's operational situation has improved in 2022 and 2023, mainly due to the following aspects:

1. Technological innovation drives improvements in mining, optimizing services to adapt to changes in the regulatory environment.
2. Strengthen fundraising and cash flow management to enhance financial resilience.
3. Achieve the growth of cryptocurrency assets through diversified mining layouts and improved operational efficiency.

These measures help the company maintain a certain level of competitiveness amid market fluctuations.

3. Profitability Analysis

The profitability indicators of Canaan Technology showed significant fluctuations between 2019 and 2023:

• Return on net assets: improved from -221.58% in 2019 to 102.81% in 2021, and then fell back to negative.
• Net profit margin: The trend is basically consistent with the return on equity, and in 2023, sales revenue is insufficient to cover costs and expenses.
• Sales gross margin: Increased from a negative value in 2019 to 57.17% in 2021, and then decreased to a negative value again.

The changes in these indicators reflect that the company's profitability is significantly influenced by the market environment. In particular, the bear market of Bitcoin in 2020 and 2023 had a significant impact on the company's operations. The company needs to further optimize its management and improve profitability and capital utilization efficiency.

4. Financial Indicator Analysis

Canaan Technology's financial indicators in recent years have shown the following characteristics:

• Debt-to-Asset Ratio: Showing an upward trend, relatively high in 2020 and 2023.
• Current ratio and quick ratio: overall showing a downward trend, at 1.70 and 1.32 respectively in 2023.
• Equity multiplier: Highly volatile, reaching a peak value of 2.40 in 2020.
• Proportion of current assets to total assets: showing a downward trend, at 73.72% in 2023.
• Current liabilities as a percentage of total liabilities: 93.17% in 2023.

These changes in indicators reflect a general downward trend in the company's debt repayment ability, mainly due to the following reasons:

1. The debt-to-asset ratio has increased, adding debt pressure.
2. The current ratio and quick ratio have decreased, weakening short-term solvency.
3. The proportion of liquid assets has decreased, which may affect short-term solvency.

The company needs to further optimize its asset-liability structure and improve liquidity levels to ensure the robustness of its debt repayment capabilities.

5. Comprehensive Conclusion

Canaan Technology has experienced market fluctuations and challenges over the past few years. The improvement in financial performance for the year 2023 is mainly attributed to the following measures:

1. Strengthen ASIC chip design capabilities and expand business in the AI field.
2. Entering the Bitcoin mining business through strategic cooperation, as the second growth engine.
3. Optimize production capacity and improve product quality and stability.
4. Change the reporting currency to USD to accommodate global business development.
5. Achieve breakthroughs in key technology areas to enhance competitive advantages.
6. Plan to expand the customer base and launch more products and solutions.

Through these initiatives, Canaan Technology has made significant progress in technical capabilities, market expansion, and operational 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.