Yintech on sale

Has anyone checked out Yintech (YIN)? It looks like it is on sale right now. The company looks like a growth company valued at a huge discount for some reason and I cannot figure out why. The financials look pretty good and a couple months back the company authorized a 30 Mil share buyback over a 12 month period. I think it may have to do with the company was removed from two trading exchanges this year. However it looks as tho they are branching out and expanding their business by buying Forthright Securities and partnering with SINA to create SINA Caidao.

I will be reading the annual reports soon.

Comments

  • @danweller18

    Just digging into the company now;

    Looking at their latest 6-K it appears revenues are down 48% YoY and 39.1% QoQ, the market is likely pricing the company with a much lower future growth in mind.


    Also if you look back through their 6-K's you'll find one from the 24th of April that contains the following;

    'On April 24, 2017, we were notified by Guangdong Precious Metals Exchange that it has adjusted its spot commodity trading business in light of new market development, and in particular, it will terminate the trading of all the current products on the exchange on May 6, 2017. As a result, we will no longer be able to generate revenue from our business carried out on the Guangdong Precious Metals Exchange after May 6, 2017. Our business carried out on the Guangdong Precious Metals Exchange accounted for approximately 41% of our commissions and fees in 2016 and approximately 26% of our commissions and fees in March 2017. It is unclear whether or when the Guangdong Precious Metals Exchange will introduce trading of new products in the future or, if so, what the new products will be. It also remains uncertain how the trading rules of the Guangdong Precious Metals Exchange will be changed. Our business carried out on the Shanghai Gold Exchange and Tianjin Precious Metals Exchange are not affected. At the same time, we plan to divert our resources used in our business carried out on the Guangdong Precious Metals Exchange to our other businesses.'

    http://ir.yintech.net/phoenix.zhtml?c=254362&p=irol-SECText&TEXT=aHR0cDovL2FwaS50ZW5rd2l6YXJkLmNvbS9maWxpbmcueG1sP2lwYWdlPTExNTQxMTA2JkRTRVE9MCZTRVE9MCZTUURFU0M9U0VDVElPTl9FTlRJUkUmc3Vic2lkPTU3


    This explains why the company is being priced at this level by the market. There is uncertainty as to whether the the firm will be able to compensate for the loss of revenues through other channels, maybe they will and maybe they won't. If you decide to take a position I advise not to put much capital into it as there is a large credit bubble in China (The largest in history in fact) and the Chinese Goverment has a track record of meddling in the markets so it's very tricky to figure what might happen here. Also, I would value the company with the appropriate adjustments made to revenues and earnings to compensate for the recent news.

    On the plus side the company doesn't appear to be carrying any debt and I don't see any obvious signs of eanings manipulation or fraud (doesn't mean there is none though, be very vigilant with Chinese companies!)

    I recommend that you proceed with caution here and don't go in heavy if you decide to initiate a position.

    These are just my thoughts after a brief look

    Regards,

    David
  • Thanks for spending some time and looking into YIN. I find it an interesting option however there are a couple things that keep me from investing in it right now. You have a good point about the market pricing in future growth.

    I read in the annual report: " As of December 31, 2015, there were over 1,000 active trading service providers that operate on over 350 exchanges nationwide."

    It is hard for me to find a real moat because of the number of competitors they have. However on the other side they have a lot more exchanges they can trade on.

    The price it is at now is too high for my liking especially with all of the competitors in their market.

    Thanks for checking this out.
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