Company fundamental financial position. As of the end of 2008 the company's total assets of 417 million yuan , net assets of 271 million yuan , asset-liability ratio 35.04% ; 2008 the company achieved operating income of 449 million yuan , net profit of 51.34 million , ROE20%; company currently sells products include K gold , platinum and other Jewelry ( mainly gold ) , three business revenue in 2008 accounted for 70% , 15% and 15% , from the product structure is , K gold jewelry is the company's core revenue and profit source.
Profit model to get rid of low-end manufacturing , steering earning brand value. The company will position itself in a high-end fashion jewelry development, production and marketing enterprises, while emphasizing the chain is the core . On the profit model , the company 's operations in recent years successfully transformed into a "brand management + Product Design + chain sales " Trinity , own channels increased proportion chain enterprise, its design and brand are gradually gaining market recognition. Company 2008 consolidated gross profit margin of 35.4% , from product to see gross margin of 39.6% K gold jewelry , platinum 35.2% gross profit margin from 43.9% in the channel perspective -operated stores , which is the industry Chow Sang Sang , Chow Tai Fook , TSL and Luk Fook Jewellery and compared do not fall under the wind ( industry average gross margin of about 30% ) , we can say the company to get rid of the low end of the industry value chain ( OEM brand earn a meager processing fees ) , to achieve a magnificent turn .
Jewelry jewelry consumption to maintain rapid growth. According to the National Bureau of Statistics data , above the gold and silver jewelry retail sales growth 2003-2008 compound annual growth rate of over 20% , of which the 2008 gold and silver jewelry retail sales grew 38.60 percent , 09 years ago, three quarters of the growth rate 23.8 % , in October 2009 the national key large-scale retail enterprises one hundred gold and silver jewelry retail sales growth of 35% , as a consumer upgrade an important part of our long-term bullish domestic jewelry for growth that is expected to continue in the future of the industry accelerated growth period.
Low share of female jewelry , demand potential . Women jewelry consumption has always been the main force . According to relevant statistics, China's per capita share of female jewelry was less than 5% , taking into account the urban-rural dual structure , we estimate that China's urban per capita share of female jewelry 10% -15 %, which is 68.2% in Tokyo , Singapore 48 % , 54% of Hong Kong, China , South Korea 68% , Malaysia 47% , Thailand 68% compared to the significant gap , China's women jewelry consumer market potential is huge.
Industry concentration to be improved. At present the domestic jewelry industry industry concentration is still low, in 2008 the domestic jewelry industry spending is expected at 1800 yuan, 2008 Chow Sang Sang , Luk Fook ( 2 companies in the mainland 's turnover ) , the influx of Acer 's turnover was 1.5 billion , 450 million , 450 million yuan , the proportion of total spending accounted for 1% -2 % ; we believe that with the upgrading of the level of national income , the future of both design, brand and channel advantages of the company's market share is expected to be further improved, the whole industry concentration has further room for improvement .
Mainstream market competition will appear divided . In the 1990s , the international top brands include Cartier (Cartier), Bvlgari (Bulgari), Tiffany (Tiffany) began to enter China , at this stage still firmly holding jewelry manufacturer luxury market position ; Hong Kong's four major jewelry brand ( Luk Fook , Chow Tai Fook , Chow Sang Sang , TSL ) and old Phoenix , the old temple of gold , and a few other domestic tide Acer jewelry brand jewelry consumption will lead the mass , the future of these brands are expected to share the mainstream market share increase . Existing competition , Hong Kong is more emphasis on brands and tidal Acer original design and branding , the future will play the role of chain retailers to share the entire jewelry industry value chain , while the Old Phoenix and the old temple , and many are subject to institutional philosophy reasons, are still more processing and wholesale business , the lack of continuous design innovation and branding power, the future may be to manufacture processors or in the direction of the end brands .
K gold jewelry is the company's leading products. The company started K gold jewelry , relative to other products in the class jewelers have first-mover advantage , the company K gold jewelry sales accounted for the proportion of revenue of 70% ( 2006 up to 96% in recent years, sales of platinum jewelry have gradually improved ) . 2003 China 's k gold only 5% market share in 2005, rose to 15% in 2007 to reach 20 %, due to K gold jewelry color change is more diverse, its physical properties are also able to adapt more technology, so the future is expected to become leading jewelry market category . Since K gold jewelry from a production point of view does not have a high threshold for the industry , so we expect major brands jeweler's product mix will enrichment , which to some extent or to weaken the original company in the field of K gold jewelry advantage.
Raised funds . The company intends to issue 30 million shares , raising funds 310 million yuan , mainly for the 100 self-operated stores opened and jewelry production and processing ( including design and development ) projects , the new flagship store opened five stores , outlets 15 house , department store associates 80 .
Earnings forecasts and valuations .
Revenue : We assume a 09-11 per year net to open own stores 38 , 56 and 54 , single-store revenues were 1,800,000 , 1,850,000 , 1,900,000 yuan ; newly opened brand stores 3 , 5 home, five , single -store revenue 1,000,000 yuan ,09- 11 years to gradually narrow the wholesale business , namely 15 million , 10 million , 5 million yuan ; consolidated gross margin assumptions : Suppose operated stores consolidated gross profit margin was 09-11 years 45% , 18% of brand stores , wholesale business 4 percent , consolidated gross profit margin to get 09-11 years were 39.7 %, 40.8 %, 41.5% ; two rate assumptions: sales rates with the company branding efforts to enhance the yearly improved management fee , the benefit from the large-scale benefit declined ,09- 11-year sales rates were 18% , 18.2% , 18.5% ; management fee of 3.6 %, 3.4 %, 3.2% ; tax rate assumptions : from 2006 the company began to enjoy the 2 +3 tax concessions, and 08-11 years of income tax rate of 18 %, 20 %, 22 %, 24% implemented in 2012 recovered to 25% 09-11 annual effective income tax rate is assumed to be 10%, 11 %, 24% .
Based on the above assumptions , we estimate EPS of 09-11 years were 0.69 yuan, 0.90 yuan and 0.95 yuan . Current A-share market, which can be compared with the company is Old Phoenix ( 600,612 ) , the current share price corresponding to 2010 PE27X, considering the company's end product design capability and brand concept of comparative advantage is more prominent, product business structure more clearly , we given the company in 2010 30X ~ 35X earnings, corresponding range of inquiry at 27 to 31 dollars.
Companies Investment Highlights summary. Currently the vast majority of jewelers in the domestic mainland chain in the jewelry industry is still playing the role of processors or wholesalers , unable to share profits of the whole industry chain, the main link, CHJ by emphasizing the original design and brand marketing successfully achieved the extension of the value chain ; domestic jewelry consumer coming in maintaining rapid growth while will be more emphasis on brand and design elements , the company and some of its peers through constantly updated style design, brand marketing and channel distribution, expected to share the overall market growth ; risk, At present, we believe that the main product is not designed to follow up and take advantage of market trends, and then bring inventory obsolescence risk ; gold and other raw material price fluctuations caused by large floating risk of impairment ; rapid expansion of new stores bring the management and lack of talent pool risks.OEM jewelry factory
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