Sustainability Assessment of the Surge in Net Profit of Aurore (600666.SS)

Based on the obtained data and market information, I conduct the following assessment on the sustainability of the 1156.78% surge in net profit of Aurore (600666.SS):

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According to public information, Aurore completed a major asset swap in 2023, divesting businesses related to real estate companies, which were no longer included in the consolidated statements from April 2023 onwards [1]. This structural change led to a significant adjustment in the company’s revenue base, laying the foundation for the 2024 performance surge.

The company’s interest-bearing liabilities decreased significantly compared to the same period of the previous year, and financial expenses decreased by 81.46% year-on-year [1]. The non-recurring gains from debt restructuring are the main contributor to the surge in net profit.

The company has been subject to ST (Special Treatment) multiple times in history. Its 2023 performance base was low, so a slight profit in 2024 could show a substantial growth trend.

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Indicator Category	Indicator Name	Value	Assessment
Valuation Level	Price-to-Earnings Ratio (P/E)	56.56x	High
	Price-to-Book Ratio (P/B)	7.36x	High
Profitability	Return on Equity (ROE)	15.89%	Good
	Net Profit Margin	34.88%	Relatively High
	Operating Profit Margin	-11.46%	Loss-Making State
Liquidity	Current Ratio	1.76	Good
	Quick Ratio	1.55	Healthy

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• Core Issue
  : The operating profit margin of -11.46% indicates that the company’s core business remains in a loss-making state [0]
• The positive net profit mainly relies on non-recurring gains and losses such as debt restructuring and asset disposal
• Once the one-time release of restructuring gains is completed, there will be no endogenous driving force for future performance growth

• The 2025 interim report shows that the company has a large volume of accounts receivable [2]
• This may affect future cash flow recovery and asset quality

• The current P/E ratio reaches 56.56x and P/B ratio reaches 7.36x
• The market has fully reflected restructuring expectations, and there is a risk of a stock price pullback
• The stock price has risen by 58.62% in the past year, with a large short-term increase [0]

• The LED/optoelectronics industry is highly competitive
• Industry cyclical fluctuations may have an impact on the company’s performance

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• With a current ratio of 1.76 and a quick ratio of 1.55, the short-term solvency is strong [0]

• In August 2024, the company successfully had its other risk warning lifted (ST Ruide was renamed Aurore)
• The company’s governance structure has been improved, and risks have been partially released

• The 2025 interim report shows that both revenue and net profit have achieved year-on-year growth [2]
• The business integration after restructuring has initially achieved results

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Assessment Dimension	Conclusion
Drivers of the Surge	Restructuring gains, debt exemption (mainly one-time factors)
Profitability of Core Business	Operating profit margin of -11.46%, has not yet achieved self-sustaining operations
Valuation Rationality	P/E ratio of 56.56x is high, expectations have been fully reflected
Growth Sustainability	Unsustainable , need to focus on the improvement of core business

:
The 1156.78% surge in Aurore’s net profit is mainly driven by , including debt exemption gains from major asset restructuring and the historical low base effect. The company’s (operating profit margin of -11.46%), and once the restructuring gains are fully released, there will be no endogenous driving force for performance growth.

From a valuation perspective, the current P/E ratio reaches 56.56x, and the stock price has fully reflected restructuring expectations. Based on the above analysis, investors are advised to

, focusing on whether the profitability of the company’s core business can truly improve, rather than the short-term impact of one-time restructuring gains.

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[0] Jinling API Financial Data (Company Profile, Financial Analysis, Stock Price Data)

[1] 2024 Annual Report of Guangzhou Zhujiang Development Group Co., Ltd. - Explanation on Restructuring of Aurore’s Related Businesses and Changes in Financial Expenses (https://www.gzzjjf.com/static/upload/2025/04/17/202504175112.pdf)

[2] Sina Finance - Brief Analysis of Aurore (600666)'s 2025 Interim Report: Both Revenue and Net Profit Achieve Year-on-Year Growth, the Company Has a Large Volume of Accounts Receivable (https://finance.sina.com.cn/)

[3] Zhongshan Securities - Announcement on Lifting Other Risk Warnings for ST Ruide (600666) (https://3g.zszq.com/ywgg/noticelist)