Mengjinyuan IPO analysis and subscription plan
Mengjinyuan Gold & Jewelry Group Co., Ltd. (hereinafter referred to as "Mengjinyuan") is a gold and jewelry manufacturer focusing on China's third-tier and lower-tier city markets. The company sells products through a franchise network and self-operated stores, and actively expands e-commerce channels. With high-purity gold as its core, Mengjinyuan is committed to providing high-quality gold jewelry products and occupies an important position in China's gold jewelry market with strong R&D capabilities and an extensive sales network.
1. Segment Revenue
Revenue Breakdown by Business Type
Gold Jewelry & Other Gold Products: Revenue in 2021 was RMB 16,457.3 million, accounting for 97.5% of total revenue; in 2022, it was RMB 15,392.8 million (97.9%); in 2023, RMB 19,877.4 million (98.4%); and for the six months ended June 30, 2024, RMB 9,834.9 million (98.5%).
K-Gold Jewelry, Diamond Jewelry & Other Products: Revenue in 2021 was RMB 296.6 million (1.8%); in 2022, RMB 226.2 million (1.4%); in 2023, RMB 225.5 million (1.1%); and for the six months ended June 30, 2024, RMB 99.9 million (1.0%).
Services: Revenue in 2021 was RMB 117.1 million (0.7%); in 2022, RMB 105.2 million (0.7%); in 2023, RMB 50.7 million (0.5%); and for the six months ended June 30, 2024, RMB 44.9 million (0.5%).
Revenue Breakdown by Sales Channel
Franchise Network: Revenue in 2021 was RMB 14,772.6 million (87.6%); in 2022, RMB 14,836.3 million (94.4%); in 2023, RMB 18,923.2 million (93.7%); and for the six months ended June 30, 2024, RMB 8,851.4 million (95.1%).
E-commerce Platforms: Revenue in 2021 was RMB 1,608.3 million (9.5%); in 2022, RMB 364.5 million (2.3%); in 2023, RMB 750.7 million (3.7%); and for the six months ended June 30, 2024, RMB 1,318.7 million (13.2%).
Self-operated Stores: Revenue in 2021 was RMB 356.1 million (2.1%); in 2022, RMB 366.5 million (2.3%); in 2023, RMB 412.2 million (2.0%); and for the six months ended June 30, 2024, RMB 200.1 million (2.0%).
Platform Sales: Revenue in 2021 was RMB 1,529.2 million (9.0%); in 2022, RMB 130.8 million (0.8%); in 2023, RMB 99.3 million (0.5%); and for the six months ended June 30, 2024, RMB 146.9 million (1.6%).
2. Cash Flow
Debt-to-Asset Ratio: 86.8% in 2021, 49.1% in 2022, 41.1% in 2023, and 56.8% as of June 30, 2024.
Current Ratio: 1.5x in 2021, 1.8x in 2022, 1.7x in 2023, and 1.6x as of June 30, 2024.
Working Capital: Net current assets were RMB 1,075.6 million in 2021, RMB 1,162.5 million in 2022, RMB 1,352.9 million in 2023, and RMB 1,310.9 million as of June 30, 2024.
3. Business Overview
Core Business: Mengjinyuan is primarily engaged in the design, R&D, production, and sales of gold jewelry, including high-purity gold jewelry, K-gold jewelry, diamond jewelry, and related products. The company sells through franchise networks, self-operated stores, and e-commerce channels.
Competitive Advantages
R&D Strength: The company has a strong R&D team capable of continuous innovation to meet market demand.
Manufacturing Capability: It controls the full supply chain from raw material procurement to production, ensuring quality and efficiency.
Sales Network: Its extensive franchise and self-operated store network covers China, especially third-tier and lower-tier cities, with strong market penetration.
Brand Influence: The "Mengjinyuan" brand enjoys high recognition and reputation among consumers.
4. Other Key Information
Significant Events
A-Share Listing Attempt: The company previously attempted a mainboard listing on the Shenzhen Stock Exchange but withdrew. It has terminated agreements with GF Securities and Zhongtai Securities and now seeks an H-share listing.
Litigation: The company was involved in a trademark infringement and unfair competition lawsuit with Cartier, ultimately settling the compensation.
Major Guarantees & Litigation
Guarantees: Personal guarantees and mortgages exist between the company and its controlling shareholder for bank loans, acceptances, leases, and gold financing. Post-listing, these will be replaced by corporate guarantees.
5. Use of Proceeds:
1. Upgrade production facilities in Weifang, Shandong:
IPO Details & Lottery Odds:
Global offering: 43.9568 million shares, 200 shares per lot. As of writing, oversubscribed 5.24x, likely triggering a 30% clawback. Expected 5K-9K participants with ~100% allocation rate for one lot.
Pre-IPO & Cornerstone Investors:
Multiple pre-IPO investors participated, with CITIC Securities Investment being the last in August 2022 at RMB 49.99 million (RMB 12/share, 1.83% discount to offer price), subject to a 12-month lockup.
Five cornerstone investors subscribed for HKD 211 million, representing 39.77%/36.15%/33.14% of shares at lower/mid/upper price ranges with 6-month lockups.
Sponsor:
CITIC Securities is the sole sponsor, with CLSA as stabilizing agent. CITIC has sponsored 10 projects in 2024, with only Tiandi Huihe dipping on debut—proving its "CITIC 出品，必属精品" (CITIC delivers excellence) reputation.
Financials:
Revenue:RMB 16.871 billion (2021), RMB 15.724 billion (2022), RMB 20.208 billion (2023), RMB 20.871 billion (LTM as of June 30, 2024).
Gross Profit:RMB 536 million (2021), RMB 759 million (2022), RMB 1.077 billion (2023), RMB 1.166 billion (LTM).
Net Profit:RMB 224 million (2021), RMB 180 million (2022), RMB 233 million (2023), RMB 180 million (LTM).
Comprehensive Review:
Mengjinyuan's primary revenue comes from gold jewelry (98.4% in 2023: RMB 19.877 billion). It ranks fifth in China's gold jewelry market by revenue, focusing on lower-tier cities.
Comparables like Lao Feng Xiang and China Gold are A-share listed with different valuations. Below is a comparison with Hong Kong-listed peers:
Mengjinyuan trails peers in gross margin and net profit. H1 2024 revenue stagnated YoY with halved net profit—closest comparable is Lingbao Gold, which outperforms on all metrics except revenue. The IPO valuation appears expensive.
Raising HKD 527-633 million with HKD 211 million cornerstone lockup leaves HKD 316-422 million float—similar to Lao Pu Gold's HKD 350 million. Fundamentally unattractive; the only appeal is CITIC's sponsorship track record. Not worth subscribing—why chase losses after missing gains?
Seasons change, cycles turn—will Huatai Financials rebound while CITIC stumbles?
Subscription Plan:
I'll pass
$MOKINGRAN(02585.HK)
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