Established in 2002 and listed in 2012, China Silver (815) is currently the only private silver producer listed in Hong Kong. The group began to enter online silverware and jewelry sales in 2014, further expanded to an integrated online and offline sales strategy in 2015, then developed silver trading business through the acquisition of a comprehensive silver trading platform in February 16. Currently, the business covers fields such as silver manufacturing, silver trading, and new jewelry retail. The group is planning to split the Internet concept retail business and go public separately. This spin-off will provide the Group with considerable cash flow, and Golden Cat Silver Cat will also become the Group's new financing platform.
Spin-off Golden Cat Silver Cat to release value. Since entering the downstream retail business in 2014, the Group has continuously optimized its business philosophy and expanded sales channels, and sector revenue has recorded high growth in 15/16. After the initial growth phase is over, the group may pay more attention to R&D investment and marketing strategies, using product design and brand promotion to raise interest rates. The group's current spin-off of Golden Cat and Silver Cat will help to separate the Internet concept retail business from traditional manufacturing business, which will facilitate the release of asset value and increase the valuation level of the retail business.
Business diversification. Currently, the group's business covers upstream manufacturing, downstream trading platforms and retail. The revenue share of the manufacturing business has declined steadily from 82% in 2014 to 36% in 2016; at the same time, the share of the jewelry retail business has continued to rise, currently contributing more than 60% of total revenue; with the completion of the acquisition and integration, it is expected that the revenue contribution of silver trading platforms will increase. The revenue structure of the sector is continuously optimized, and synergies between various sectors may be further enhanced.
Low debt, low leverage, and abundant cash flow. The Group's debt in the first half of '17 was 110 million yuan, and cash on hand recorded about 760 million yuan. The quick/cash ratio was about 132.5%/95.2% respectively, and the debt-to-equity ratio was 51.5%. Asset liquidity was good. The Group's current spin-off of Golden Cat and Silver Mao's separate listing will raise about 946 million dollars in net proceeds, further enhance cash flow and provide the Group with new financing channels.
Downside risks
Insufficient investment in R&D and marketing, optimization and upgrading of retail product sales portfolios and interest rate levels falling short of expectations, leading to a sharp decline in manufacturing revenue
Risk of backlog price decline due to improper inventory management