Jewellery industry favored PE investor should pay attention to risk

The jewellery industry has been a nobleman in manufacturing. And China's jewelry industry is increasingly becoming the PE industry favored by the object. Data statistics show that over the past 5 years, the domestic 14 jewelry industry-related enterprises to obtain PE investment, the total size of financing nearly 1.8 billion yuan. As of early May, there were 3 jewellery companies in the list of listed companies that the SFC has disclosed. However, analysts also pointed out that the jewelry industry's high cost of goods and inventory, first-class designer and the lack of brand culture will become the main bottleneck affecting the long-term development of enterprises, so PE investors should pay due attention to the relevant risks, prudent investment.

China Jewelry and Jade Jewelry Industry association data show that as of 2011, China's jewelry industry sales total development to 380 billion yuan, an increase of 40%, jewelry exports amounted to 27.5 billion U.S. dollars, an increase of 123.5%. China's gold, platinum, diamonds, silver, Jade Jadeite, non-ferrous stones and other products consumption in the forefront of the world, has become the world's important jewelry processing and consumer markets.

The outstanding performance of listed companies also highlights the better development momentum of the industry, according to the 2011 earnings statistics of the jewellery industry, the domestic a-share listed enterprises, the Tide Acer (002345.SZ) net profit of 150 million yuan, 46%, Oriental Jinyu (600086.SH) Net profit of 338 million Yuan, 34.72%, Ming brand Jewellery (002574.SZ) net profit of 250 million yuan, compared to 15.69%.

Industry's high growth and high value-added also attracted PE to stop, chinaventure Group data statistics show that 2007 to date the jewelry industry has a total of 24 financing cases, involving 14 enterprises, Cumulative financing scale of 1.795 billion yuan, of which the traditional channel jewelry enterprises have 15 cases of financing, involving 10 enterprises, the cumulative financing limit of 1.025 billion yuan, jewelry electric business enterprises have 9 financing transactions, involving 4 enterprises, disclosure of financing scale of 770 million yuan.

September 2011, the deep venture investment and other agencies to Zhao instrument xintiandi Jewelry 187 million yuan in the transaction, become the traditional channel jewelry enterprises in China to finance the largest trade together, and in February 2011, the Square source of capital, joint venture source of China's first diamond electric business Diamond Bird's 50 million dollar investment, It has become one of the largest financing companies in the diamond-electric business. The involvement of PE institutions will also change the competitive pattern of jewellery industry and bring the domestic brand into the international market, while bringing full fund support to the jewellery industry.

IPO, up to now, a total of 8 domestic jewellery enterprises through the IPO landing capital Market, a-share market only Oriental Jinyu, Chao Acer, Ming brand jewelry 3. As of May 10, a total of 3 jewellery companies were listed on the list of listed companies which were disclosed by the SFC, namely, the gold and silver jewellery of Shenyang, huayi jewellery, ideal jewellery, in which huayi jewellery and ideal jewellery had been invested in VC/PE. Earlier, 2010 Ranche Pearl due to suspected financial fraud, 2011 Millennium Star due to the franchise store income into wholesale income, the first application has not been approved by the SFC.

Chinaventure Group analyst million think that, although PE on the relevant areas of investment momentum is good, but the jewelry industry high cost of goods and inventory, first-class designer and the lack of brand culture, will become the main bottleneck affecting the long-term development of enterprises.