Zhang Sufen has gained significant attention this year, having identified a number of low-priced stocks, such as Liugang and the recent Shanghai Construction.
However, in reality, Zhang Sufen is not an investment guru, and there have been many instances where her investments have resulted in losses over several years.
This is because Zhang Sufen primarily focuses on low-priced stocks, which, while containing opportunities, also carry considerable risks. After all, there are reasons why stocks are low-priced, and it is very likely that the company’s performance is poor.
For instance, Zhang Sufen has recently invested in a company whose stock price is only 4 yuan, and it has several concepts, including the Internet of Things, IP economy, new materials, and chips.
However, the performance has been quite disappointing, and it can even be said that there has been a dramatic decline.
This company is Jinjia Co., Ltd. Its net profit has plummeted from a peak of 1 billion to only a few tens of millions in 2024. Moreover, the downward trend has not stopped this year.
In the second quarter, however, Zhang Sufen, along with Northbound investors and Morgan Stanley, heavily invested in the company. So, why has the company experienced such a dramatic decline in performance?
Firstly, the company mainly engages in the production and sales of high-quality paper packaging, laser paper/film, electronic materials, and new tobacco products.
Among these, the high-quality paper packaging business accounts for 51% of revenue, with a gross margin of 28%, contributing as much as 90% of the company’s profits, making it the core source of profit.
On the other hand, laser materials and tobacco film account for 24% of revenue, but the gross margin is only 0.36%, contributing less than 1% of profits.
The new tobacco business, although also referred to as tobacco, has a gross margin of less than 10%.
The company has completed its transformation from a single printing manufacturer to a provider of intelligent packaging solutions. Through technology reuse and resource sharing, it has built a complete industrial chain ecosystem covering paper packaging design, production, and services.
In terms of chips, the company has a stake in Huada Beidou, focusing on the independent design, research and development, sales, and related businesses of navigation and positioning chips and algorithms.
The significant decline in the company’s performance over the past two years is mainly due to macroeconomic impacts and intensified industry competition.
So, what is the current financial and operational status of the company?
From the perspective of net profit excluding non-recurring items, the company has not yet reversed the downward trend, with last year’s mid-year report showing a profit of 200 million, while this year it has dropped to just over 100 million.
From the scale of the company’s business, revenue continues to decline.
The company’s operations can be described as being in a state of falling prices and reduced volumes.
Fortunately, the company’s debt ratio has also been decreasing over the past two years, with the current debt ratio at only 16%. Although performance is poor, the financial situation is still acceptable.
However, it is important to note that the company’s operating cash flow is also rapidly declining along with profits. This means that it is becoming increasingly difficult for the company to make money, and the actual cash inflow is decreasing.
Moreover, in the past three years, the company’s executives have faced investigations four times and are also facing claims from shareholders amounting to 40 million due to violations of information disclosure regulations.
With so many negative factors, it is no wonder that the company’s stock price has fallen from 17 yuan to just over 3 yuan, which is quite tragic.