As the consumption power of Chinese people has become stronger and stronger, the gold and jewelry industry has become more and more vigorous these years. At present, China has become the world's second largest diamond processing base, the world's largest jade and jade consumer market and the world's largest gold consumer, and is an important jewellery producer and consumer.

Throughout the scale of the entire industry, according to the statistics of the China Jewelry and Jade Jewelry Industry Association (hereinafter referred to as “Zhongbao Association”), the scale of China's jewelry retailing has now exceeded 500 billion yuan. The compound growth rate in the past five years is about 13%, which is a scale increase. One of the fastest-moving consumer goods categories. From the perspective of market composition, gold jewelry accounts for 50%, and the rest are diamonds, jadeite, pearls and other accessories. Among them, gold jewelry occupies an absolute dominant position, which also has a certain relationship with China's gold culture foundation. According to the statistics of China Gold Association, in 2015, the national gold consumption reached 985 tons, an increase of 3.66%. Among them, gold jewellery used 721 tons of gold, up 2.05% year-on-year. China has replaced India as the world's largest gold consumer. At the same time, diamond jewelry, jade jewelry and other jewelry products are also rapidly emerging among more consumers.

The development of the gold and jewellery industry over the years has also created a group of increasingly large gold jewellery companies. As of the third quarter of 2017, the number of A-share listed companies in the industry reached 15.

So, what is the overall operation of the 15 gold jewellery listed companies? Is there an investment value? To this end, the "Investor News" reporter conducted a study and sent a letter to some of the companies on some issues, in order to provide some reference for investors.

The net profit gap is relatively small

Although the steady increase in the income of Chinese people has once led to the rapid development of the jewelry industry. However, after over 30 years of rapid growth, the jewellery industry has also fallen into a period of overcapacity and brand homogenization.

According to statistics from industry statistics, in 2016, there were 6 companies with 15 revenue declines in listed companies, and 8 net profit declines. In this year, the gold jewellery industry was most mentioned as “innovation”. After the cold winter period, with the continuous recovery of domestic high-end consumption and the rise of consumer demand in second- and third-tier cities, from the data of the first three quarters of 2017 Domestic jewelry gold jewelry sales have picked up. As of the first three quarters of 2017, the number of listed companies with a decline in revenue has decreased to two, and the decline in net profit has shrunk to three.

The reporter counted the operating data of the 15 companies as of the first three quarters of 2017. The total revenue was about 128.4 billion yuan. If the industry scale of 500 billion yuan, the A-share listed companies accounted for more than one-fifth. Among them, there are 3 over 10 billion scales, which are the same as that of the same period of last year, namely Shandong Gold 600547, Diagnosed Shares 38.5 Billion Yuan, Lao Fengxiang 600612, Diagnosed Shares 32.9 Billion Yuan, Yuyuan Shares 600655, Diagnosed Shares 13.5 Billion Yuan, According to 2016 In the whole year, there are 5 companies with more than 10 billion yuan in revenue. However, the largest Shandong gold in the first three quarters of 2017, the revenue growth rate ranked third, only 2%, the other two for the 2016 revenue into the tens of billions of Jinzhou Cihang 000587, the diagnosis of shares , the In the first three quarters of 2017, the company's revenue did not increase and fell, down 2% year-on-year. The first countdown in revenue growth was Shandong Jintai 600385, which had an abnormal performance in 2017. The stock was reduced by 97%, and the net profit was the only one with a loss of about 4.66 million yuan. According to Shandong Jintai Announcement, the company has significantly reduced its gold jewellery business since 2017. The main income comes from the service fees charged by Internet access services and the rental of rental housing. From this point of view, Shandong Jintai's gold jewellery business has actually fallen into "empty shelling."

From the perspective of net profit in the first three quarters of 2017, the highest net profit is Lao Fengxiang, and the only listed company with a net profit of more than 1 billion yuan. In addition, the net profit of 4 companies has not exceeded 100 million yuan. From this point of view, although the listed companies of gold and jewellery are all "blessed", it is more difficult to earn money.

Diamond companies have higher gross profit margins

Why do gold and jewelry listed companies have a large gap in revenue, but the net profit is still relatively close? This can be seen from the ranking of the gross profit margin of listed companies.

As of the first three quarters of 2017, the largest gross profit margins of Shandong Gold and Laofengxiang ranked fourth and second to last, respectively, at 8.9% and 7.9%. In addition to the abnormal Shandong Jintai, the gross profit margin ranks Laiwu Tongling 603900, 54% of diagnostic stocks , 002356 of Hemei Group, 45% of diagnostic stocks , 002345 of Chaohongji, 38% of diagnostic stocks , 002867 of Zhou Dasheng, and 33 stocks. %, look at the companies with the largest revenue share of these companies, mostly diamonds, diamond inlaid jewelry, K gold jewelry, etc. Among them, the highest ranked Laiwu Tongling and Hemei Group are all diamond business, Laiwu 2016 The Psychic Diamond business accounted for 89% and the Hemei Group was 56%. After Zhou Dasheng, the gross profit margin of the remaining listed companies fell below 15%, and the main businesses of these companies are mainly gold products.

From this point of view, the “one long-lasting” diamond “oil and water” is also larger, while the gold listed companies have limited profit margins. Some insiders believe that "this is also related to the high added value of China's gold jewelry products. At present, most of the gold business is wholesale business, the profit margin is relatively small, and the price war is more intense."

However, it is worth noting that the same interest rate as the diamond company's Adil 002740, the stock price in the first three quarters of 2017 was only 8.03%, far lower than other diamond companies. The "Investor News" reporter had asked the company about the relevant issues, but did not receive a reasonable explanation. The company previously said: "This is because of the rapid occupation of the sales market, the sale of the franchisees to the profitable." However, the same as the diamond company's Laiwu Tongling, Hemei Group's gross profit margin is about 40 points, Investors believe that there are still many questions.

Advertising marketing is naturally very important for consumer goods such as jewellery. The advertising marketing expenses were included in the sales expenses. The reporter made statistics on the sales expenses of 15 companies in the total operating cost. The top three were Laiwu Tongling, Chaohongji and Zhou Dasheng, which reached 30% and 24% respectively. 13%, these companies have relatively high gross margins, which means more room for advertising. Among them, the diamond business accounted for 89% of Laiwu Psychology in this regard, the most "rich and rich", its sales expenses accounted for the highest proportion of revenue, reaching 23%, which also reflects the advertising for a company's revenue to some extent. Importance.

Interestingly, Shandong Gold, which has the largest revenue, ranks very low in terms of absolute value or total cost. In the first three quarters of 2017, its sales expenses were only 24.27 million yuan. Shandong Jintai, the item data, ranked second last in Shandong Gold, accounting for 0.07% of the total cost, ranking last.

Does this mean that Shandong Gold does not need too much advertising investment to make it known? Is it also a side note that companies like Laiwu Psychic need to improve their brand and popularity, and will they pay more in this area?

In addition, what is the salary of these companies to employees while spending a lot of money on advertising? The reporter checked the cash and employee numbers in the cash flow statement for the first three quarters of 2017. After rough calculation, the first ranked first is Lao Fengxiang, the second largest revenue. The average salary of employees in the first three quarters was 188,000. Yuan, and the largest Shandong gold is 89,000 yuan. Higher advertising and marketing costs Levin gentry psychic, tidal Acer, Chow Tai Seng, a culture 002,721 gold, stocks and other clinic staff salaries are the first three quarters of per capita behind 8, between 55,000 -7.5 million. The per capita salary of Shandong Jintai, which has suffered losses, is also low, at 33,500 yuan. The final ranking is the production of gold jewelry-based Qiulin Group 600891, with a diagnostic stock of 32,800 yuan. Qiulin Group is the only commercial company in Heilongjiang Province, but the net profit in the first three quarters of 2016 and 2017 is declining. The reporters checked the financial report, but the company did not explain it.

Multi-shopping channels

At present, the sales model of the jewelry industry mainly adopts three chain modes: self-operating, distribution and joining. These three models have their own characteristics in terms of channel expansion, brand building and profitability. The self-operated model has high requirements for the financial strength and flat channel management capabilities of jewelry companies, including store opening, channel expansion, employee management, marketing and inventory control. International high-end jewelry brands such as Tiffany, Cartier and Chaumet are 100% self-operated channels.

The distribution and franchise model is conducive to the rapid expansion of the brand and gain market share, but it also requires the company to have better franchisee management capabilities and brand maintenance capabilities.

Among the A-share listed companies, Chaohongji is mainly self-operated. As of the first three quarters of 2017, there were 718 self-operated stores, while Zhou Dasheng, Dongfang Jinluo 600086, Diagnostics , Jinyi Culture, Aideier, Mingpai Jewelry 002574, Diagnostics , Lao Fengxiang, etc. are more franchise stores, of which, Zhou Dasheng joined the store 2,162, Lao Fengxiang 1,239, Ming brand jewelry less than 1,000.

Different channels are built, and the operating models of each jewellery company also have their own characteristics. At present, jewellery operations can be classified into three main modes: one is jewellery processing enterprises mainly engaged in production and processing, and the small-scale enterprises are small and medium-sized enterprises, mainly for the jewellery industry cluster base; Production and sales of jewelry enterprises, such as Lao Fengxiang, Chao Hongji, etc., such enterprises have relatively strong design innovation capabilities, and the revenue ranking is also relatively high; the third is heavy brand, channel construction and operation, such as Zhou Dasheng, etc. Companies need strong industry integration capabilities and operational efficiencies because they need to quickly expand their markets and increase brand value.

Re-engineering innovation or laying the heavy channel is the key to these business logics. From the perspective of the composition of the terminal stores of these companies, the distribution and franchise models are relatively more.

Some people in the industry said: "As the competition of gold and jewellery companies becomes more and more fierce, fast shop is to occupy the market faster. In addition, in addition to this practice, many companies are looking for extension M&A." For example, landing in January 2014 The three-board Jinyi culture started mergers and acquisitions at the end of the year. On December 30, 2014, Jinyi Culture purchased 100% equity of Yuewang Jewelry by issuing shares and paying cash, at a price of 900 million yuan. In April 2015, Jinyi Culture announced that it had signed an agreement to purchase assets, and planned to acquire a 51% stake in Nanjing Baoqing Shangpin with its own funds of RMB 37.78 million. The rapid acquisition has shifted from a precious metal crafts design and sales company to the entire gold jewelry sector. At the end of 2016, Jinyi Culture announced that it plans to spend 3.03 billion yuan to acquire 100% equity of Jinyi Jewelry, 100% equity of Jiefu Jewelry, 99.06% equity of Qibaotong, Baoqing Shang by issuing shares and paying cash. 49% equity and 49% equity of Guitian Diamond. The current merger has been reviewed by the China Securities Regulatory Commission.

Also added to the merger is the Adil jewelry. Previously, it also participated in Jiangsu Millennium Jewelry, Hunan Zhendimei and Chengdu Yanmao Diamonds. In the past few years, Oriental Jinlu has also issued several fixed plans, but most of them have not succeeded.

However, can these extended mergers and acquisitions really promote the company's endogenous development? Has it reached the stage where it can only grow by relying on outreach? These questions remain to be seen.

M&A active capital chain tension

From the cash flow situation, as of the first three quarters of 2017, the net cash flow of Jinyi Culture and Dongfang Jinhao, which were more active in the previous mergers, were ranked second to last and last to last, at 1.9 billion yuan. 2 billion yuan. And the decline in monetary funds is also the largest, at 37%, 61%, of which the absolute value of the currency of the Oriental Golden Jubilee is also less, at 330 million yuan, ranking fourth in the bottom.

It is worth noting that the last one in the monetary fund ranking is the diamond company Laiwu Tongling, which has higher gross profit margin and the highest advertising cost, with a net investment of 142 million yuan. The amount of funds on the account is relatively small, which is basically equivalent to its business activities. The net cash flow is 120 million yuan. The net amount of net financing and net investment are negative. Will it increase funding in the future? The Jinyi Culture and Oriental Jinyu, which are more active in mergers and acquisitions, are also very active. Except for Shandong Gold, the two companies are ranked second and third respectively, with 2.2 billion yuan and 1.9 billion yuan.

In addition, in the first three quarters of 2017, Jinyi Culture’s accounts receivable amounted to “top of the list”, at 4.4 billion yuan, surpassing the ranking of the second old Fengxiang 1.5 billion yuan, but Lao Fengxiang’s revenue and net profit were higher than Jinyi culture. Does this also mean that Jinyi Culture, which is constantly expanding its mergers, also gives a more relaxed account period in order to achieve a large scale of performance? From the perspective of debt ratio, Jinyi Culture and Oriental Jinyu are ranked in the top two, 76% and 72% respectively. This also explains the tension of the capital chain of the two companies from another angle, and continues to make large-scale mergers and acquisitions. Will it increase the pressure on the company's capital chain?

Judging from the proportion of shares pledge, the highest ranked is the diamond company Hemei Group, which is 69%, and the Qiulin Group, which ranks the top in the bottom of the revenue and net profit, ranks second with 59%. Oriental Jinyu and Jinyi culture ranked third and fifth, respectively, at 52% and 48%, and also had a greater relationship with their financial tension.

From the perspective of stock price resilience, from February 10, 2017 to February 10, 2018, except for Zhou Dasheng, who had been listed for less than one year, Laiwu Tongling fell the most, with a period of 3.6%, during the Jinyi Culture period. The second decline was 2.9%, and the decline in net profit of Lao Fengxiang was 2.1%. This 15 companies, only Sui Wah jewelry 002,731 shares diagnosed shares rose 0.65% in the period, the rest are down.

From the perspective of price-earnings ratio, as of February 10, 2018, the top three are Jinyi Culture, Hemei Group, and Oriental Jinlu, which are 73 times, 65 times, and 48 times respectively, and these three companies are 2017. The net profit of the first three quarters ranked 10th, 9th and 6th respectively, and it is yet to be seen whether the future performance can support the price-earnings ratio.