Previously, a couple in Shenzhen hoarded storage and made hundreds of billions with Demingli

Now there is Jiang Bolong hoarding inventory against the cycle, with profits soaring 700 times, earning the money of ten years in half a year

The latest performance forecast released by Jiang Bolong directly made the market explode: it is expected that the net profit attributable to the parent company in the first half of the year will be 9.2 billion - 11 billion yuan, a year-on-year surge of 622 times to 744 times

It is worth noting that last year's profit for Jiang Bolong in the first half was only 14.76 million yuan, note that it was million, not billion, and this year the net profit directly exceeded 10 billion yuan

Jiang Bolong's performance benefited from the global surge in storage prices, but it should be noted that it is not a storage original manufacturer, but a module manufacturer, lacking pricing power

Reviewing Jiang Bolong's history, does the hoarding strategy have sustainability? What secrets lie behind the hundred billion profit report?

"Miracle" in Huaqiangbei

The name "Jiang Bolong" has its origins: founder Cai Huabo and sister Cai Lijiang, combining the "Jiang" from each name and "Bo" from Jia

The brother and sister were both born in the Year of the Dragon, finally adding the character "Long". The English brand Longsys also implies long-lasting storage

The siblings engaged in storage trading in Huaqiangbei in 1996, and in 2002 faced bankruptcy due to unsold inventory, relying on self-developed USB drives to consume stock and survive, thus establishing the self-research route

The company currently maintains the global market with three major brands: Lexar sells cameras and high-end digital storage cards to ordinary consumers;

the proprietary brand FORESEE supplies industrial equipment such as automobiles and servers; Brazil's Zilia deeply penetrates South America, with over 60% of revenue coming from overseas

At the same time, it acquired a packaging plant in Suzhou, taking control of the entire chain of chip research and development, processing, and sales, and also self-developed storage chips compatible with AI computers and domestic servers, with computational power-related businesses continuing to grow rapidly

But as a leading domestic storage module factory, it does not manufacture chip raw materials; it resembles more of a "kitchen processing factory," with 80% of costs spent on purchasing flash memory and memory particles from Samsung and Micron

After obtaining the particles, it produces four types of products: mobile phone embedded storage, server solid-state drives, camera storage cards, and computer memory sticks

Thus, essentially, Jiang Bolong lacks a deep economic moat; the entire product system is heavily influenced by raw material prices, with weak pricing power

The "Truth" of the Financial Report

The surge of 700 times in profits gives the illusion of enormous growth due to a low base

Last year, business was poor, making only 14.76 million in the first half, with hardly any profit; this year it directly made over 10 billion, making the growth seem exaggerated

However, if looking at the annual perspective, the profit for the first half of this year is 6-7 times that of last year’s annual profit

The core source of profit comes from a large stock of low-priced wafers accumulated during the industry's downturn in the past two years, which are sold at the current surging market price according to the first-in, first-out accounting principle, generating massive price difference bonuses, which is essentially not a sudden change in operating capability

Looking at cash flow reveals more significant issues than looking at profit. Although it appears to make hundreds of billions, it has no cash on hand

The reason is simple: module factories have weak bargaining power in the supply chain, and earnings must be excessively invested in procuring a new round of raw materials at higher market prices, turning profit into more expensive inventory

As the previously low-priced inventory is gradually consumed, subsequent profit margins will face significant contraction pressure

Once the industry's supply and demand logic changes—original manufacturers increase production combined with a slowdown in AI capital expenditure growth leading to a downward price trend—high inventory levels will face impairment risks

When prices rise, inventory can amplify profits; once chip prices fall, the 18 billion in warehouse goods will have to be significantly devalued for losses

In 2023, with market conditions declining, the company lost 800 million from inventory devaluation

Don't be misled by Jiang Bolong's forecast of over 10 billion in profit; the company's current operations actually explain everything

While holding a dazzling performance forecast, it is also pushing for a 3.7 billion A-share increased capital for expansion and is busy raising funds for a Hong Kong IPO

If this book profit can genuinely translate into cash on hand, it could be self-sufficient for expansion, needing no fundraising

Management is clear that this wave of high profits is merely a short-term market bonus and is unlikely to last long, so while the market heat is high and stock prices are elevated, they are keen to secure funds

In addition, during the hot market and rising stock prices, many executives chose to reduce holdings and cash out, with internal personnel clearly demonstrating a cautious signal by cashing in at high points

Is the "Centennial Myth" Still There?

Following the rules of cyclical stocks, a high P/E ratio signals a bottom, while a low P/E ratio often indicates a peak

Now Jiang Bolong has a market value of 300 billion, with an estimated annual profit of 20 billion, the P/E has reached over ten times

Many are shocked by the 700 times net profit growth, but such exaggerated data lacks sustainability

What truly determines Jiang Bolong’s future trajectory are two things

First, how much low-priced inventory remains. This hundred billion profit relies entirely on low-cost hoarding from the previous two years; once low-cost inventory is depleted, profit margins will rapidly decline

Second, whether the currently locked in high-priced long-term contract raw materials will become a pressure in the future. Currently in a hot market, the company has signed high-priced chip orders; if the industry cools down, this batch of high-priced inventory can easily drag down profits

The industry is currently prosperous, entirely supported by the crazy procurement of storage hardware for AI servers, but whether future market conditions can be sustained does not look at short-term heat but at two core variables:

Will upstream wafer manufacturers expand production significantly? Will the AI investment pace of cloud vendors slow down?

If these two items weaken, the current super cycle of storage could face a turning point at any time

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