Summary of the report
Company overview
Golden Cat and Silver Cat is the largest online and offline integrated Internet jewelry retailer in China. The company mainly sells a wide variety of self-brand and third-party brand jewelry products, including gold bars, silver bars, wearable jewelry, silverware and other collectibles, through its own online platforms (including www.csmall.com, m.csmall.com and the mobile app Golden and Silver Meat CSmall), third-party online sales channels and offline retail and experience networks (there are 115 CSma experience stores in the country by the end of 2017).
According to Frost & Sullivan, the company is the largest online jewelry retailer and integrated online and offline jewelry retailer in China by 2016 sales revenue, accounting for 5.3 per cent and 7.3 per cent respectively.
The company's income / net profit CAGR in 2014-16 reached 191%, 15.8%, respectively, to 2.47 billion / 50.26 million yuan in 2016. 10M2017 revenue / net profit increased by 73.3% to 3.15 billion / 67.64 million yuan.
Industry status and prospects
Frost & Sullivan expects the size of China's online jewelry retail market in 2016-2021E to reach 24% CAGR 2021E will reach 135.9 billion yuan.
The integration of online sales channels and offline retail outlets can produce synergy and provide consumers with a better shopping experience.
Using big data technology to analyze a large number of customer and transaction data will help to better understand market trends and changes in customer preferences.
Advantages and opportunities
The company has been in a leading position in the new jewelry retail industry.
The company's brand "Golden Cat Silver Cat CSmall" has been recognized by the market.
In the future, it is expected to further strengthen business growth by strengthening data mining and analysis capabilities.
Weakness and risk
Industry growth is slower than expected.
Fierce competition in the industry is a drag on the decline in market share.
The company has a short operating history.
Valuation
Based on the prospectus disclosure exam forecast 2017E profit of 96.9 million yuan and the share price range of 2.28-3.28 Hong Kong dollars, the company 2017E PER is about 20.0-28.8 times. We take it into consideration that I) the competition in the jewelry retail industry is relatively scattered; ii) the company has a short operating history; and iii) has a high listing valuation and has an IPO rating of 6.