Jade Art Group Inc. (OTCBB: JADA) is a Chinese company engaged in the wholesaling and distribution of raw jade, currently used in high-end jewelry and sculptures with future applications in markets ranging from construction material to home furnishings. We are initiating coverage on Jade Art with an ACCUMULATE recommendation and a target price of $7.49.
Key Points
Jade Art has an ‘08 order backlog of 12,830 tons totaling approximately $42 million. The backlog looks strong and impressive considering the company’s related operational history of just four months.
The Chinese jade market is expected to grow at a compound annual rate of 15% until 2013. Rising jade demand and the depletion of competitor’s mines presents Jade Art with a significant opportunity to grow.
Securing the distribution rights of the SheTai mine for a tenure of 50 years has ensured steady input supply. An independent survey estimated the mine contains 6.1 million tons of jade reserves, currently equivalent to approximately $16 billion.
Jade Art’s vigorous pricing power and high gross margins of nearly 85% aid in enhancing company profitability on
a substantially lower revenue and capital base.
Jade applications ranging from jewelry and sculptures to furniture and construction material gives the company a much wider target market than any other gemstone.
The company’s development strategy to vertically integrate and expand into the processed jade industry will aid in widening its reach and further improve its pricing power.
Jade Culture in China
1. Jade culture has been in China for 8,000 years. Traditionally, Chinese believe that jade can bring them good luck, health, morality, religious affection, and also as a status symbol
2. Jade was a royal article of tribute. SheTai jade was used as a burial suit sewn with fine gold wire for the deceased emperor and top officials during the Western Han Dynasty (206 BC-24 AD) .
3. Due to the difficulty of jade excavation, it wasn't prevalent in the market.
4. Now with the excavation of the SheTai jade, Jade Art Group will open another new page in the jade culture resurrection.
Jade Art Group Mine Characteristics:
1. Raw jade in big chucks
2. High degree of hardness (a hardness factor of 7.1 - 7.5)
3. Condense texture (a density factor of 2.65 - 3.0)
4. Abrasion resistance/wearing strength factor of 2.2
5. Index of refraction of 1.54
6. Smooth finish factor of 85-90 degree
7. Acid and alkaline resistant factor of 100%
8. Fire-resisting: 1,730 - 1,770 Celsius degree
9. Non-discoloring, non-weathering
10. Semi translucent with a glassy luster
Jade Art Group SheTai Jade Mine Authentication
1. January 18, 2008, Inner Mongolia SheTai Jade Authentication & Applications Conference was held in Beijing to appraise SheTai Jade and its application.
2. As a newly discovered jade genre, SheTai jade has similar physical characteristic as HeTian Jade and emeralds from Myanmar.
3. Discovery of the Jade Art Group SheTai Jade Mine is such a pleasant surprise as the world jade reserves are depleting.
4. SheTai jade has a wide application range, from decorative construction material, sculptures, large-scale statues, furniture, to high-end jewelry.
Pictures at the end of the video includes:
1. Chairman, Mr. Guoxi Zhang
2. SheTai mine onsite in Inner Mongolia
3. 41-ton raw jade
4. SheTai jade Authentication Certificates
5. SheTai jade various applications
6. SheTai jade burial suit for the deceased emperor
7. SheTai jade Authentication and Appraisal Conference
