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【Introduction】Lexen Tongling suffered a net loss of 37.0652 million yuan in the first half of the year, and the increase in gold business led to a decline in the overall gross profit margin

China Fund News reporter Qiu Dekun

On the evening of August 26, Laisen Tongling, the "No. 1 jewelry stock in the Shanghai Stock Exchange", handed in its "report card" for the first half of 2024, showing the characteristics of increased revenue but not increased profits.

Laisen Tongling increased its gold business in the first half of 2024, but its net profit attributable to the parent was -37.0652 million yuan, a year-on-year decrease of 714.46%, and it turned from profit to loss year-on-year.

Industry insiders pointed out that the performance of Laisen Tongling in recent years has been less than ideal. In addition to some problems of its own, the reason also includes the fact that all jewelry listed companies are experiencing a period of transformation pain.

Laisen Tongling was once considered a gold concept stock, and its share price once rose to 10.82 yuan per share in the first half of this year. However, the closing price on August 26 was only 5.24 yuan per share, and the cumulative decline since the peak has exceeded 50%.

Increased investment in gold business leads to a decline in gross profit margin

Regarding the net loss in the first half of 2024, Laisen Tongling attributed the reason to changes in sales structure, which led to a significant decline in the overall gross profit margin.

In the first half of 2024, Laisen Tongling significantly increased the sales proportion of its gold business, resulting in an increase in operating costs exceeding operating income and seriously affecting cash flow.

In the first half of 2024, Laisen Tongling's operating income increased by 48.66% year-on-year, but its operating costs increased by 128.84% year-on-year. The net cash flow generated by operating activities turned from positive to negative year-on-year, and decreased by 397.44% year-on-year.

However, the low gross profit margin of gold products has led to a downward trend in the overall gross profit margin of Lesen Tongling. Public data shows that Lesen Tongling's overall gross profit margin was above 50% in 2023, but fell to 32.87% in the first half of 2024.

Laisen Tongling is mainly engaged in brand operation management, product design, development and retail of jewelry. The reason why it has stepped up its efforts to transform its gold business is mainly because the overall demand in the diamond industry has been relatively weak since 2023.

Laisen Tongling stated that the company increased its innovation and research and development of gold products in the first half of 2024, focusing on expanding the "heirloom gold" European gold track. The sales share of gold business increased significantly, and the efficiency of gold stores increased significantly.

Industry insiders pointed out that the consumption trend of China's jewelry and jade jewelry industry has been dominated by the gold category, and the proportion of the gold category continues to increase, while the proportion of the diamond category continues to shrink.

According to the data from the China Jewelry and Jade Association, the market size of my country's jewelry and jade jewelry industry will be about 820 billion yuan in 2023, a year-on-year increase of 14%. Among them, the market size of gold products is about 518 billion yuan, a year-on-year increase of 26.34%; the market size of diamond products is about 60 billion yuan, a year-on-year decrease of 26.83%.

In the 2024 semi-annual report, Laisen Tongling did not disclose the gross profit margin of its gold business, the proportion of gold business revenue to overall operating revenue, etc. The gross profit margin of its gold business in 2023 was 26.23%, accounting for 10.43% of operating revenue.

In comparison, the operating income and net profit attributable to shareholders of Laisen Tongling both showed a downward trend in 2023, but after increasing the sales revenue of the gold business in the first half of 2024, the situation of increased revenue but not increased profit appeared again.

Pictured: Some financial data disclosed in the 2023 annual report of Laisen Tongling

Founder Shen Dongjun reduced his holdings and left the market

Laisen Tongling was listed on the Shanghai Stock Exchange in 2016 and was known as the No. 1 jewelry stock in the Shanghai Stock Exchange. However, it has been plagued by turmoil since its listing due to the influence of its founder.

Public information shows that the founders of Laisen Tongling are Shen Dongjun and Ma Jun. Shen Dongjun was previously Ma Jun's brother-in-law, but in November 2019, Shen Dongjun's wife Ma Qiao filed for divorce and requested property division.

Finally, the court ruled that Shen Dongjun had to split half of his 31.16% stake in Laisen Tongling to Ma Qiao, resulting in Shen Dongjun only holding 15.58% of Laisen Tongling's shares and losing his controlling position in Laisen Tongling.

At the beginning of 2022, Shen Dongjun resigned from his positions as Chairman of Laisen Tongling and other positions. After his resignation, he no longer held any position in the company and began to reduce his holdings in Laisen Tongling.

As of the end of June 2024, Shen Dongjun held a 10.61% stake in Laisen Tongling.

At present, Shen Dongjun is still pushing forward his plan to reduce holdings. Previously, he transferred his 5.31% stake in Laisen Tongling to Ningbo Ningju Asset Management Center (Limited Partnership) - Ningju Quantitative Multi-Strategy Securities Investment Fund through an agreement transfer. The transfer was completed on August 14 and the transfer price was 77.5882 million yuan.

On July 29, Laisen Tongling received a notice from Shen Dongjun that Shen Dongjun transferred his 5.3068% stake in Laisen Tongling to Shanghai Tuopai Private Equity Fund Management Co., Ltd. - Tuopai Xingfeng No. 7 Private Securities Investment Fund through an agreement transfer, and the transfer price was 73.9454 million yuan.

After the above-mentioned transfer agreement is completed, Shen Dongjun no longer holds shares in Laisen Tongling.

Ma Jun, chairman of Laisen Tongling, previously stated that Shen Dongjun's reduction of holdings was a normal reduction of holdings. Since resigning from the positions of chairman and other positions in early 2022, Shen Dongjun no longer participates in the company's business activities, and his reduction of holdings will not affect the company's operations.

Editor: Captain

Review: Xu Wen

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