Is The Golden Emblem shares worth the subscription? First, plus points: the issue price is 10.80 yuan, and the price-to-earnings ratio is 22.98 times. Such a low issue price, and it is a non-registered stock, what is there to do

Is The Golden Emblem shares worth the subscription?

First, plus points: the issue price is 10.80 yuan, and the price-to-earnings ratio is 22.98 times. With such a low issue price and unregistered shares, what is there to worry about?

Second, a plus: steady growth in performance. The company's earnings per share since 2019 were: 0.19 yuan and 0.41 yuan, respectively. Earnings per share were RMB0.53 last year. It is expected that the performance of January-March 2022 will increase slightly, with net profit attributable to about 140 million yuan to 155 million yuan, up 15.00% to 25.00% year-on-year, operating income of about 320 million yuan to 340 million yuan, up 2.56% to 9.62% year-on-year, and deducting non-net profit of about 140 million yuan to 155 million yuan, up 15.00% to 25.00% year-on-year.

Third, the minus item: a typical family business, the internal governance of the company is very opaque, there is a possibility of hollowing out the listing. The main business of Jinhui Co., Ltd. is the mining and trading of non-ferrous metals, and the main products are zinc concentrate and lead concentrate (including silver), of which the metal silver assigned to lead concentrate is priced separately. Gansu Yate Investment holds 495 million shares of Jinhui shares, accounting for 56.25% of the total share capital, and is the controlling shareholder of the company. Li Ming holds 98% of the equity of Yate Investment, and Li Ming is the actual controller of Jinhui shares. The Li Ming family controls 29 companies in real estate development, property management, liquor, commerce, and hotels. Among them, the most well-known is Jinhui Wine, but last year Li Ming has transferred 29.99% of the equity of Jinhui Wine, and Fuxing Guo Guangchang replaced Li Ming as the new actual controller.

Jinhui shares are a typical family business, and the family shareholding ratio is too high. Among the top ten shareholders, the actual controller of the second largest shareholder, Zhongming International, is Li Ming's nephew Zhou Xiaodong, the actual controller of the fourth largest shareholder, Aoya Industry, is Li Ming's niece Zhou Junmei, the seventh largest shareholder, Li Ming holds 19.4% of the shares, and the eighth largest shareholder, Li Xiong, is Li Ming's brother. The largest shareholder, Yate Investment, holds 56.25% of the shares, and the above shareholders hold a total of 93%. Internal dazzling mutual guarantees, borrowing funds, and even "refinancing" reflect the lack of internal control system construction, there are many violations, and there is a risk of infringing on the interests of small and medium-sized investors in the future, and even internally vacating and hollowing out listed companies.

Fourth, the subtraction: cyclical stocks, listing coincides with the non-ferrous metal industry is at the peak of the cyclical boom, there is a possibility of listing is the peak. The main business income of Jinhui Co., Ltd. is composed of zinc concentrate, lead concentrate, lead concentrate silver and mining engineering services, and the sales price of lead concentrate, the main product, has declined for two consecutive years.　

Fifth, sub-item deduction: higher debt ratio. As of the end of 2020 and the end of June 2021, the balance of interest-bearing debt of the company accounted for 52.08% and 44.98% of the total assets. During the reporting period, the asset-liability ratio (parent company) of Jinhui Mining was 83.67%, 70.20%, 62.39% and 56.53% respectively; among comparable listed companies in the same industry, the asset-liability ratio of Shengda Resources (parent company) was 31.51%, 34.38%, 31.74% and 34.45%, respectively, and the asset-liability ratio of Guocheng Mining (parent company) was 7.40%, 7.18%, 29.56% and 40.88%, respectively. The asset-liability ratio of Tibet Everest (parent company) was 36.77%, 12.70%, 23.85% and 17.43% respectively, the asset-liability ratio of Huayu Mining (parent company) was 43.68%, 47.65%, 46.67% and 46.02%, respectively, and the asset-liability ratio of Xingye Mining (parent company) was 33.73%, 22.00%, 20.14% and 19.92% respectively. Obviously, the debt ratio of Jinhui shares is much higher than that of its peers.

Sixth, plus: gross profit margin is higher than peers. The gross profit margin of the company's main business was 68.41%, 66.20%, 69.74% and 72.57%, and the comprehensive gross profit margin was 68.29%, 66.17%, 69.72% and 72.55%, respectively, which was higher than the average gross profit margin of comparable listed companies in the same industry. From 2018 to 2020, the average gross profit margin of comparable listed companies in the same industry was 62.32%, 54.98% and 55.51%, respectively.

Seventh, comprehensive assessment: the company belongs to a typical cyclical industry, and its performance fluctuates greatly. In the past two years, the non-ferrous industry has been prosperous and the company has made a lot of money, but the current high prosperity is difficult to sustain, so it is necessary to prevent the high point of the opening day after the listing like Dazhong Mining, which is the historical high point that is difficult to overcome. Given that it is an unregistered stock, there is no risk of a breakout.

Eighth, recommendation: subscription.