[Edaily Reporter KIM SAE-MI ] Noul Co., Ltd.(376930), a company specializing in AI-based diagnostic platforms, had an order backlog of 21.2 billion won at the end of the first half of this year, but the amount actually delivered to date amounts to only 18.7% of the total order value. Since the remaining order backlog does not necessarily represent fully confirmed orders, it remains unclear how much of it will be converted into actual revenue.

A Closer Look at

the 21.2 Billion Won Order Backlog… Actual Deliveries Total 4.9 Billion Won

According to Noul Co., Ltd.’s semi-annual report released on the 27th, as of the end of June this year, the company’s total order value was 26.1 billion won, the amount already delivered was 4.9 billion won, and the order backlog stood at 21.2 billion won. The cumulative delivery rate relative to the total order value was 18.7%. During the same period, consolidated revenue was 1.3 billion won, a 52.4% decrease from 2.8 billion won in the same period last year.

It was also confirmed that the 21.2 billion won in order backlog will not automatically be converted into confirmed revenue in the future. Noul Co., Ltd. official stated, “The remaining amount of each contract does not necessarily imply a confirmed order under the same conditions or an immediately executable purchase obligation,” adding, “Actual deliveries are subject to conditions such as customer orders based on individual contracts, local permits and approvals, budget execution, and delivery and inspection schedules.”

Minimum order quantities (MOQs) and penalties for failure to place orders also varied by contract. Noul Co., Ltd. explained, “Minimum order quantities, liabilities for failure to place orders, and penalty clauses differ by contract,” but added, “We cannot provide specific details on the terms of individual contracts as they are subject to confidentiality obligations with our business partners and constitute trade secrets.”

There are also quite a few contracts where deliveries have been significantly delayed. In particular, for a 6.6 billion won contract signed in August 2023, the cumulative delivery value by the end of the half-year was only 700 million won. The order backlog stands at 5.868 billion won, representing 88.8% of the total contract value. The contractual delivery deadline is December 31 of this year.

When Edaily asked whether the full remaining volume of that contract would be recognized as revenue within the year, the company replied, “Whether the full remaining contract amount will be recognized as revenue within the year depends on customer orders, local project schedules, and delivery, inspection, and payment terms, so it is difficult to say definitively at this point.”

The company explained that delivery timelines for other long-term contracts may also vary depending on customer orders and local business conditions. Noul Co., Ltd. official stated, “Delivery schedules for long-term contracts vary by contract, but key factors influencing them include the customer’s actual order schedule and budget execution, local permits and administrative procedures, product testing and inspection, as well as market and foreign exchange conditions in each country.”

Slow

Cash Conversion Even After Delivery… 81% of Accounts Receivable Over 6 Months Old

It is also taking a considerable amount of time to actually recover cash after sales are generated. As of the end of the first half, accounts receivable totaled 4.6 billion won, of which 3.7 billion won—80.6% of the total—had been outstanding for more than six months. Receivables outstanding for more than one year alone amounted to 2.1 billion won, accounting for 45.5%. The total amount of accounts receivable outstanding for more than one year exceeds the company’s total first-half revenue of 1.3 billion won.

Noul Co., Ltd. cited overseas transactions and the nature of public procurement as reasons for this. A Noul Co., Ltd. official explained, “A high proportion of the company’s sales comes from overseas transactions, and for some public procurement and local distribution contracts, a considerable amount of time may elapse between delivery and the completion of inspection, administrative procedures, and payment.” The official added, “Consequently, the collection period for some receivables has been prolonged.”

However, this long-term collection structure could pose a burden on Noul Co., Ltd.’s working capital and cash flow. In particular, given that 80.6% of total accounts receivable have been outstanding for more than six months and 45.5% for more than one year, it is necessary to monitor the actual pace of collection going forward.

Despite the high proportion of long-term receivables, the allowance for doubtful accounts ratio has actually decreased. The ratio of the allowance for doubtful accounts to accounts receivable fell from 15.8% at the end of last year to 12.2% at the end of this half-year. A reversal of approximately 79 million won in the allowance for doubtful accounts was also reflected in the first half.

The company explained, “The reversal amount during the half-year was not determined solely based on the age of the receivables, but rather reflects accounting estimates that took into account collection performance by customer, changes in credit risk, contractual payment terms, and future collectability.” It added, “Since the allowance coverage ratio reflects both the total amount of accounts receivable and the expected loss rate for each receivable, an increase in long-term receivables does not necessarily mean the overall coverage ratio will rise.”

Noul Co., Ltd. has repeatedly forecast rapid revenue growth, citing global market expansion and new product launches as key drivers. In this half-year report as well, the company projected that “product sales volume will increase exponentially over the next three years at a minimum, as the effects of business expansion in existing markets, entry into new markets, and the addition of new products overlap.”

However, actual first-half revenue stood at 1.3 billion won, a decline of more than half compared to the same period last year, and the pace at which the order backlog is being converted into actual deliveries and revenue remains slow. Further verification is needed to determine whether the company’s repeated growth forecasts will translate into actual revenue expansion and cash generation.