Song Qinghui: Jewelry Industry Profits Are Getting Thinner Today

- Apr 21, 2017-

Well-known economist Song Qinghui in the "China Business" reporter, said the jewelry industry is now increasingly thin profit, on the one hand the jewelry industry store rental costs so far, raw material prices rose faster, on the other hand is the same industry More and more intense competition. In this context, Ai Dier net profit year after year to reduce.140506149981.jpg

China business reporter Liu Yuanyuan


Recently, Shenzhen Aideer Jewelery Co., Ltd. (hereinafter referred to as "Ai Deer", 002740.SZ) released the annual report of 2016, the annual report shows that in 2016, Ai Deer realized operating income of 1.184 billion yuan, an increase of 41.07%; net profit of 57.7958 million yuan, Down 14.22% year on year.


The decline in net profit did not affect the pace of expansion of Ai Dier. On March 5, Aidil issued a notice to acquire 51% of the equity interest in Shenzhen City Grand Jewelery & Beverage Co., Ltd. in cash of RMB255 million. Upon completion of the acquisition, the Company holds 51% equity interest in the broader market jewelery as its controlling shareholder. However, after the announcement, Ai Dier then received a piece of inquiry from the Shenzhen Stock Exchange, the Shenzhen Stock Exchange asked Aide Er on the large-scale jewelry to assess the high premium, nearly three years of net profit fluctuations and the reasons for the rationality of performance and other aspects of the statement.


In recent years, Ai Dier product quality and business model has also been controversial, after the Irdair products have been repeatedly detected by the quality inspection departments failed, and was subject to administrative penalties. In addition, according to the 2016 earnings, Ai Dier joined sales revenue accounted for 53.37% of total revenue, distribution sales revenue accounted for 44.05%, while direct sales accounted for only 0.18%. The industry believes that although the franchisee model initial capital investment is small, expansion speed, but not conducive to the long-term development of the brand.


In this regard, the Aidi Er Securities Affairs Department responded to the "China Business" reporter said that the decline in net profit is the company to respond to industry challenges, adjust the sales pricing strategy led to Rangli sales to maintain market share while enhancing market visibility. And for product quality problems and marketing model of the controversy that the person did not give a positive response.


Performance decline executives against the market raise doubts


According to earnings, Aidil company in 2016 in addition to revenue growth, the operating profit, net profit have a different rate of decline. The annual report for 2015 shows that its operating income fell 5.13% compared with 2014, net profit attributable to shareholders of listed companies fell 22.88%, both operating income and net profit fell.


Aidi Er in the earnings report explained that the macroeconomic boom continued weakness, the jewelry retail market a substantial increase rate is relatively small.


Well-known economist Song Qinghui in the "China Business" reporter, said the jewelry industry is now increasingly thin profit, on the one hand the jewelry industry store rental costs so far, raw material prices rose faster, on the other hand is the same industry More and more intense competition. In this context, Ai Dier net profit decreased year after year.


According to the 2017 salary plan issued by Ai Dier on March 9, the salary of 11 directors and supervisors of the Company increased sharply, of which the annual salary of the chairman of the board increased from RMB 500,000 to RMB 1 million and the salary increase was 100% From 450,000 yuan rose to 800,000 yuan, or 78%. The inquiry revealed that Eddie had adjusted the salary of the company's supervisors for two consecutive years.


Ai Deer responded to the "China Business" reporter, said the director of the high salary adjustment is the reference to the overall salary of listed companies related to the level of staff and the Shenzhen living standards, according to the company's performance appraisal program for the relevant adjustments, is conducive to stabilize and encourage management-related personnel The


M & A was consulted by the Shenzhen Stock Exchange


In order to boost the performance and further improve the industrial layout, Ai Dier since January 14, 2017 from the suspension of planning and reorganization matters. March 5, Ai Dier issued a notice that the company on March 3 and Su Yanmao, Shenzhen City Jia Ren investment partnership (limited partnership), Wu Shun water, Du Guang, Mao Jian Tao, Liang Yinghong signed the "Shenzhen Yi Deer Jewelry Co., Ltd. To pay the cash purchase of the property agreement "to be 2.55 billion yuan in cash to buy Shenzhen City, a large 51% stake in large jewelery limited liability company. After the completion of the acquisition, the company holds 51% stake in the broader market jewelry, its controlling shareholder.


According to reports, the market jewelery was established in June 9, 2006, the registered capital of 80 million yuan, the scope of business "to set up industrial; jewelry, platinum jewelry, silver jewelry sales; precious metals catalyst and reagents buying and selling; The


The deal immediately attracted the attention of regulators, the Shenzhen Stock Exchange then sent an inquiry letter to Ai Dier.


On March 9, Eddie said in a reply to the Shenzhen Stock Exchange that the historical business data also showed a sustained profitability due to the favorable market share of the broader market jewelery brand, product and channel, increased the market share of the company through acquisitions , And can continue to the future business, so the acquisition of large-scale jewelry, value-added rate as high as 208%.


Data show that large-scale jewelry in 2014, 2015, 2016 net profit of 28.525 million yuan, -197.38 million and 25,376,200 yuan. Market jewelry commitment, 2017, 2018, 2019 net profit of not less than 36 million yuan, 46 million yuan, 56 million yuan.


Ai Dier said that although the current market share of the lower market, but in the course of years of development with a strong supply chain integration capabilities and high quality marketing channels, with a certain performance growth and sustainability.


Business model hidden trouble


Data show that Ai Dier was established in August 2001, by Su Yongming, Di Ailing co-financing, the proportion of 50% of the investment. Today, with the dilution of equity, shareholder holdings have changed, but Ai Dier, chairman of the Soviet Union, many of the relatives are listed in the list of shareholders. According to the 2016 earnings, Su Ri-ming, Di Ailing couple for the same action, holding a total of 32.77% stake in the company. Su Yongming Su Zhongming brother, Su Yongming, Su Qingxiang couple for the same action, the total holding company 12.33% stake.


In addition to PE and other institutions, Ai Deer's core executives, employees and franchisees are shares. For this complex ownership structure, Song Qinghui that will affect the company to a certain extent and long-term healthy development.


According to the introduction of Ai Dier, the company joined the franchisee to join sales and non-franchisee dealers to sell a combination of business model, the country has a total of two outlets and 439 stores.


In the CIC knowledge consulting executive director Zhao Xiaoma view, direct and joined the weight of the pros and cons of jewelry brand has been an important management issues. Direct management can manage the brand image, including product sales management and after-sales service, but the management cost is too high, the expansion is slow; join can quickly help product expansion, speed up brand exposure, but the various stores in the service, Quality assurance sometimes brings some problems.


On the eve of the company's listing, Ai Deer's products have been repeatedly detected failed. May 8, 2014, the Guangdong Provincial Quality Supervision Bureau announced the 2013 Guangdong Province, precious metal products, special quality supervision and inspection results, was just pre-disclosure ready to list the listing of Ai Dier. Spot checks show that the production of Ai Dier products "platinum Pt950 diamond bracelet" precious metal purity project failed. Guangdong Provincial Quality Supervision Bureau, has instructed the relevant departments in accordance with the relevant laws and regulations, spot checks found in substandard products and their production enterprises to punish.


Prior to this, the Guizhou Provincial Trade and Industry Bureau, Zhejiang Province, Jinhua City Trade and Industry Bureau, Gansu Province Quality Supervision Bureau has also identified some of Edel's products failed, including labels, imprint, no warning signs and other issues.


For product quality problems, March 16, Ai Dier said in an interview reply, the company continued to improve the raw materials procurement, production, production and other aspects of production quality control system, which may affect the quality of the product are carried out Strict quality inspection to ensure that the products sold in line with national and industry standards. Original title: Ai Dier net profit volatility volatility acquisition of the broader market jewelry by the Shenzhen Stock Exchange


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