The Profitability Of The Gem Is Still Much Larger Than That Of The Main Board In The Long Term.

The first quarter profits of gem are in line with seasonality, and the year-on-year growth rate has been greatly improved, which is related to the low base last year.

The first quarter profit of gem fell by 32% over the fourth quarter of last year, which is a normal historical level.

But from figure 27, we can see that the profit in the first quarter of 2015 is only -46.5%, which is obviously lower than the seasonality. It is precisely because of the abnormal profit level in the same period last year that the base is very low.

In addition, in the three or four quarter of last year, the scale of the gem was larger, and the accounting of the acquired assets also contributed positively to the performance of the gem in the first quarter of this year.

According to Bloomberg database statistics, the scale of the acquisition of assets by GEM companies last year was 83 billion 900 million yuan, up 100% compared to the same period last year.

In particular, last year's three and fourth quarter expansion of the scale of mergers and acquisitions significantly increased, as the general purchase or acquisition in the current quarter or the next quarter of assets will be accounted for, so the fourth quarter of last year's extension of mergers and acquisitions in the first quarter of this year's profits will also have a significant positive impact.

But the latest quarter

There has been a marked decline, so the profit contribution for the two quarter is expected to be no longer significant.

The annual ROE of gem is the first time to surpass the motherboard (excluding finance). After its scale economy is realized, there will still be a lot of room for ROE in the future.

Since its inception, its ROE has always been lower than the motherboard (excluding financial) ROE, while in 2015, the ROE of gem was slightly lower than that of 2014. However, because of the sharp decline of the motherboard (excluding finance) ROE, the ROE of GEM has surpassed the level of the motherboard after the first time.

From DuPont's dismantling,

The reason why ROE can be higher than the motherboard is all depend on it.

The advantage is that the profit margin of the gem is 10.3%, much higher than that of the main board 3.9%, while the asset liability ratio and asset turnover rate of the gem are much lower than that of the motherboard.

From another perspective, this also means that the gem is far from achieving the "economies of scale" (hence the asset turnover ratio is lower than the overcapacity of the motherboard), and there is room for further leverage.

Once the scale economy is realized in the future, the ROE of gem will have a large upward space.

The growth rate of gem in 2016 is expected to be 20.1%. The first quarter profit growth will be a year-round high.

As the base for the two quarter of this year will return to normal after the first quarter of this year, and the scale of extension and merger also declined in the first quarter of this year, it is estimated that the growth rate of gem will be lower than the first quarter after the two quarter of this year. The annual profit growth rate is expected to be around 20%, and the trend will be downward by quarter.

In 2015, GEM companies suffered a total impairment of goodwill of 1 billion 240 million yuan, and the scale of impairment really increased significantly compared with the previous years.

But this absolute amount is not very high. The value of impairment accounts for only 1.1% of the scale of goodwill, and the value of impairment accounts for only 2.7% of the total profit of the gem. Therefore, the impact of goodwill impairment on the growth enterprise market is still not large.

Looking forward to 2016, under the pessimistic hypothesis, if the gem's reputation impairment rate (that is, the impairment of goodwill is divided by goodwill scale) from 1.1% in 2015 to 5%, it will reduce the profit growth rate of nearly 8 percentage points of the gem (without considering the impairment of goodwill, we predict 20.1% of the growth rate of the gem. If we consider the impairment of Goodwill under the pessimistic assumptions, then the growth rate of gem will drop to 12.2%).