There is no shortage of concepts in A-shares, from low-altitude economy, flying cars to synthetic biology, one after another.
Synthetic biology is the latest and hottest concept, and the related Blue Biotechnology, Guangji Pharmaceutical, Borui Pharmaceutical, and Twining Biology have attracted much attention.
Synthetic biotechnology can be widely used in food, energy, environment, medical treatment, etc., and has a very broad prospect. But at the moment it's more hype, and whether it's sustainable needs a question mark.
We should focus on places where there is more certainty, such as high-quality companies with high dividends.
Since the new National Nine Articles proposed to strengthen the supervision of cash dividends of listed companies, there has been a new trend in the market with high dividends as the main line of investment.
Private equity funds, Niu San, and major brokerages have gathered high dividends and high dividends and high-quality companies among them, such as CATL, CNOOC, Kingsoft Office, and Desay SV.
At present, everyone knows that the coal and liquor industries have high dividend rates, but there is another industry that has been ignored by many people, that is, the golden track.
Gold has anti-inflation and anti-cyclical properties, and it is not inferior to liquor in all aspects, and the track is wide enough.
On the demand side, gold is a symbol of personal wealth and will never be saturated.
According to the data, the international gold price was reported at 2,301 US dollars / ounce on May 6, and the real-time basic gold price of Chinese gold was 542 yuan / gram, although the price fell from the beginning of April, it was still at a high level.
Moreover, the price of gold jewelry is even higher, and on May 6, the price of gold per gram of Chow Tai Sheng, Chow Tai Fook and Lao Fengxiang exceeded 700 yuan.
According to the data of the National Bureau of Statistics, the zero growth rate of gold, silver and jewelry companies in 2023 will be 13.3%, which is the fastest growing category in the commodity retail category, and the prosperity is very high.
On the supply side, gold is a scarce resource in the world.
The earth's gold reserves are about 400 million tons, which is very large, but the cost of gold mining is particularly high, and some cannot be moved at all.
So, to date, only 1.6 billion tonnes of gold have been mined in the world, less than one ten-thousandth of the gold reserves, and gold is a very scarce resource on the entire planet.
Restricted by the difficulty of mining, gold will be in short supply for a long time in the future, which determines that the price of gold is bullish in the long run.
Therefore, jewelry companies that use gold as raw materials also have the same anti-cyclical and anti-inflation attributes as gold, which has both growth and certainty.
Among the 15 listed jewellery companies, Chow Tai Sang is the most eye-catching.
So, what are the highlights of Chow Tai Sheng?
First of all, the dividend yield is the first in the industry, crushing Gree and Midea.
The dividend yield is the ratio of dividends per share to the stock price, and it is also the ratio of the dividend ratio to the price-earnings ratio.
From the perspective of shareholders, a high dividend yield means a high return, and a low P/E ratio indicates a high margin of safety for investment. In a low interest rate environment, high-dividend companies are very attractive.
Chow Tai Sheng's dividend yield in 2023 is 6.26%, which not only surpasses Lao Fengxiang, Chow Tai Fook, China Gold and other peer rivals, but also surpasses Midea Group and Gree Electric, which are known for their high dividends, and can even compete with super leaders such as China Shenhua, CNOOC, and Conch Cement.
In terms of trends, the company's dividend yield has increased from 2.36% in 2019 to 6.26% in 2023. There are two main reasons for this:
One is that the dividend rate continues to increase. Driven by the steady growth of performance, Chow Tai Sang has given more and more generous feedback to shareholders. From 2019 to 2023, the dividend payout ratio increased from 32.85% to 78.36%.
The other is a decline in valuations. Especially since 2021, Chow Tai Sang's valuation has dropped from 27 times to 13 times now, a shrinkage of as much as 50%.
Secondly, the ROE has exceeded 20% in the past five years, and the profitability is strong.
In addition to dividend yield, ROE is also the core indicator to measure a company's return on investment from the perspective of shareholders.
ROE is equal to net profit compared to net assets, which indicates how much net profit can be created by shareholders investing 1 yuan in net assets, and the larger the ROE, the stronger the comprehensive profitability.
The average ROE of Chow Tai Sang from 2019 to 2023 is 20.75%, and its comprehensive profitability ranks first in the industry. As a result, the company received 322 institutions to gather and scramble (by the end of 2023).
According to DuPont's analysis, there are three drivers of ROE, net profit margin, total asset turnover, and equity multiplier.
From 2019 to 2023, Chow Tai Sang's equity multiplier has barely changed, the net profit margin has declined overall, and the total asset turnover ratio has increased.
The decline in net profit margin was due to the increase in the proportion of revenue from plain gold jewelry, which had a low gross profit margin.
The company's revenue mainly comes from plain gold jewelry, inlaid jewelry, and franchisee brand royalties, with gross profit margins of 8.7%, 31.7%, and 100% respectively.
In 2020 and before, the revenue of inlaid jewelry accounted for more than 40%, and the overall gross profit margin could reach about 40%.
Nowadays, young people's consumption concept has changed, and they are no longer keen on diamonds, but prefer gold.
The company closely followed the market changes and transformed its gold products in 2021, accounting for 60.79% of the revenue of plain gold jewelry that year, nearly double that of 2020, and it is still improving.
With the increase in the proportion of plain gold jewelry with low gross profit margin, the company's gross profit margin has slipped from 40% to around 18% in 2023.
In the absence of significant changes on the expense side, the net profit margin decreased from 18.23% in 2019 to 8.06% in 2023.
Fortunately, the sales of plain gold products in the consumer market are better, and the company's inventory turnover rate has increased significantly.
The increase in inventory turnover is the main reason for the increase in total asset turnover, and it is also the core factor to resist the decline in net profit margin and keep ROE stable at more than 20%.
In 2019 and 2020, Chow Tai Sang's inventory turnover rate was about 1.2 times a year, and with the increase in the proportion of plain gold jewelry, the inventory turnover rate can reach 3.8 times a year by 2023, an increase of more than 2 times.
This means that the company's inventory liquidity is enhanced, making it easier to convert products to revenue. Moreover, if the inventory turnover is fast, it will not occupy funds, and while ensuring good management, it also improves the efficiency of capital use.
What's more, 90% of Chow Tai Sheng's inventory is gold, so there is no need to worry about depreciation, and even when the price of gold rises, the inventory can still increase in value, which is a good business.
In addition to high dividends and high ROE, the company also has the advantage of scale.
As of the end of 2023, Chow Tai Sang has a total of 5,129 terminal stores across the country, second only to Chow Tai Fook (7,501) and Lao Fengxiang (5,994).
In 2021, the company introduced the provincial generation model, which has richer customer resources and operating retail experience. With the help of the provincial generation, the company's channels will begin to expand rapidly in 2023, and it is expected that the number of net stores will be at least 400 in 2024, further consolidating the scale advantage.
In general, gold is the representative of the high-quality track, among which Chow Tai Sheng has the highest dividend yield and the strongest profitability, and the growth logic is not inferior to Kweichow Moutai, Pien Tze Huang, Hengrui Pharmaceutical and other enterprises.
In the longer term, the certainty that the company will maintain high dividends in the future is extremely high.
Because, the prosperity of the gold industry remains at a high level, and the company's performance is expected to grow steadily. In 2023, the company's revenue will be 16.29 billion yuan, a year-on-year increase of 46.52%, which is the highest revenue growth rate among the three gold leaders.
In addition, the company's capital expenditure is very low, does not require high R&D investment, and there is no large depreciation expenditure based on franchise, and all the money earned is leftover, with a good foundation for high dividends.
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