Bright Jewelry: Inflated Operating Income &Nbsp; Information Disclosure Misleading Investors

April 6th, the first after Qingming's long vacation.

Inflate business income and evade consumption tax

The cash flow of the company's prospectus financial data shows that the net cash outflow of all taxes and fees in 2010 was 158 million 681 thousand and 100 yuan, while the balance sheet showed that the balance of tax payable at the end of 2010 was 3 million 833 thousand and 800 yuan, which was reduced by 9 million 498 thousand yuan compared with the net income of 13 million 331 thousand and 800 yuan at the beginning of 2010, which means that the actual cost of tax and fees in 2010 was 149 million 183 thousand and 100 yuan (15868.11-949.8).

According to the Provisional Regulations of the People's Republic of China on consumption tax, the consumption tax rate of "gold and silver jewelry, platinum jewelry and diamond and diamond products" corresponds to 5%, and the consumption tax rate of other precious jewels and jewels is 10%. Meanwhile, the consumption tax is no longer paid for the "direct sale of taxable consumer goods commissioned processing".

There are two ways to produce the jewelry, namely, the production and the outsourcing processing of the factory. Among them, the way of dealing with the external processing parts is "to return the goods to the companies that fail to meet the standards."

The process of printing is very important. Judging from the fact that the processing products of the company must go through the reprocessing procedure, it should not be included in the category of taxable consumer goods that are directly sold. So, the jewelry should be calculated and paid on the basis of all business income.

In the 2010 year of the year, the total revenue of Ming jewelry was 4 billion 29 million yuan. If all the consumption tax was assessed according to the 5% tax rate, the corresponding consumption tax would be 201 million yuan. Even if the company's tax on urban construction, business tax and income tax had not been paid up to 15 other kinds of taxes and fees, it would be significantly higher than the actual tax and fee disclosed in the company's financial statements.

For this reporter, there are two possibilities: 1, the company's financial statements have increased revenue indirectly; 2, the company will need to re processed products as a "direct sale", thereby evading consumption tax.

Overestimate the gross margin of products and falsification of raw material purchase prices

The prospectus disclosed that the sales of gold jewelry in 2010 amounted to 3 billion 41 million yuan, corresponding to 12719.46 kilograms of non commissioned gold jewelry sales, thus calculating the average sales price of gold jewelry in the 2010 year of the company was 239.08 yuan / gram, not only significantly lower than the general market price of gold ornaments on the market, but also based on this price, the unit cost calculated by the gross margin of products disclosed in the prospectus was 218.9 yuan / gram, or even lower than the average price of gold raw material purchased by the company in 2010, 226.61 yuan / gram, which does not contain the inevitable processing cost and reasonable material loss, which is obviously contrary to logic.

If the sales amount and sales volume disclosed by the company are correct, it is either overestimated the gross margin of the product or falsified the purchase price of raw materials, otherwise it will be unable to explain the price difference.

Moreover, the reporter noted that in 2009, the sales price of gold ornaments disclosed in the prospectus was also significantly lower than the average price of the gold market and the average purchasing price of the company. In 2009, the gross margin of gold jewelry in 2010 and 2009 was significantly higher than that in 2008.

The average price of raw material procurement is lower than the market price.

According to the information disclosed in the prospectus, the average price of gold jewelry in 2010 is 226.61 yuan / gram, which is lower than the lowest price in February 2010, which is 239.08 yuan / gram, and the discount rate is 5.22%. However, it can not be effectively explained by the company's purchasing mode.

There are three main modes of gold raw material procurement for Ming Jewellery: gold spot trading, which accounts for about 55.5%, accounts for about 26% of the gold T+D, the delayed delivery mode and the gold lease with a ratio of about 18.5%.

Referring to the paction data of the 1 quarter of the Shanghai gold exchange in the 2011, the price difference between gold T+D trading price and spot price at the same time point is very small, and the average price difference in the first three months is only 0.24% (see Table 2). Therefore, for the company, the main advantage of T+D business lies in the capital cost of margin lever exchange, which can not directly reduce the procurement cost of raw materials.

However, based on the data related to the purchase of gold raw materials disclosed in the prospectus, it is found that the difference between the spot gold purchase price and the T+D purchase price is very different, and the difference is as high as 27.7%.

The purchase price of gold lease in 2010 was 226.93 yuan / gram, which was basically the same as the average purchase price, but this part accounted for 18.53% of the total purchase volume, and the contribution to the average procurement cost was very limited.

At the same time, gold leasing is essentially a "buy first and buy later" mode, which will also lead to higher purchasing prices in the market where gold spot prices continue to rise.

What causes the average purchasing price of the company to be lower than the market price?

This can not be explained logically.

The amount of merchandise in stock increases dramatically.

The sale of the gold jewelry, which accounted for more than 75% of the operating income, was higher than the output (including the processing part of outsourcing) in 2009 and 2010. This inevitably led to a marked decline in the number of goods in stock.

In 2010, a small reduction in gold jewelry inventories was equivalent to 32.35% of the annual output and 24.44% of the annual sales volume.

At the same time, the sales and sales rates of platinum jewelry and inlaid ornaments in the 2010 year are all greater than 100%. Therefore, such products will not contribute to the increase in the number of goods in stock.

Even with the average production cost of 173.97 yuan / gram of gold jewelry in 2009, the net decrease of 3108.92 kilograms is 541 million yuan, which is equivalent to 53.83% of the balance of 1 billion 5 million yuan of inventory merchandise at the end of 2009.

It is concluded that the net reduction of 3108.92 kilograms of gold jewelry finished products occupies a considerable proportion in the number of goods in stock.

The sales price of gold ornaments sold by the company increased by 25.3% in 2010 compared with the same period in 2009, while the gross profit margin of the 2010 sales did not change much compared with that in 2009.

Without considering the provision for the depreciation of stock commodities (the overall price of gold jewelry is rising, and there is no ready for sale condition that the net realizable value is below the cost), the balance of inventory merchandise also reflects the changes in the quantity of goods and the price of goods, while the goods stored by the company at the end of 2010 are about 1 billion 248 million yuan, which is 24.18% higher than the 1 billion 5 million yuan at the end of 2009. Therefore, the reduction in the number of goods in stock should be -0.89% ((1+24.18%) / (1+25.3%) -1), which is obviously not consistent with the previous inference.

Concealing competitors, misleading investors by disclosing information

In fact, in the prospectus, the description of the company's "2010 pioneer enterprises in jewelry manufacturing and related articles manufacturing industry" is misleading. The main advantage of the jewelry industry is platinum products, but this product accounts for only 16.42% of the company's revenue and 23.16% of gross profit contribution, but 6.45 percentage points lower than that of 29.61% gross profit in 2009.

At the same time, the gold jewelry of 75% revenue sources is still the main product of the company, while the gross profit margin increased from 44.19% in 2009 to 51.21% in 2010. It also proves that gold jewelry is the real profit growth point, but it does not occupy the leading edge in the Domain company. This can also be confirmed from other channels. In the ranking of the top ten gold jewelry brands, brand name is only ninth, lagging behind brands such as "green jade", "bait Thai jewelry", "Long Jin", "old temple" and "ADK". However, the 5 brands mentioned above do not show the list of the main competitors or key enterprises in the prospectus.