LFX(600612) Soochow Securities·2024-10-18 09:30Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The performance of the gold jewelry industry is closely tied to gold prices, with long-term trends showing a positive correlation, although short-term fluctuations can significantly impact performance [2][38] - The company has a strong brand presence and recognition, which contributes to its resilience during market fluctuations [2][27] - The company has maintained a stable dividend policy, providing consistent returns to shareholders [2][36] Summary by Sections 1. Gold Price Trends - The gold price experienced a rapid increase from March to mid-April 2024, leading to consumer hesitation and a decline in jewelry sales growth from May to July [2][10] - In contrast, the gold price in 2023 showed a slower increase, positively impacting consumer demand and sales growth [10] 2. Industry Characteristics - The gold jewelry industry has high brand barriers and a stable market structure, with brand strength being a key factor in store expansion and market presence [2][15] - The business model primarily relies on a franchise system, minimizing inventory risk and allowing for quicker capital turnover [15] 3. Company Performance Review - The company has achieved an impressive cumulative stock return of approximately 862% over the past 15 years, driven by strong brand recognition and effective franchise partnerships [2][18] - Revenue growth has been significantly influenced by both gold price increases and aggressive store expansion strategies [22][24] 4. Financial Forecast and Valuation - The company is projected to achieve net profits of 2.34 billion, 2.62 billion, and 2.86 billion yuan for 2024, 2025, and 2026 respectively, with corresponding P/E ratios of 12, 11, and 10 [1][38] - The current P/E ratio is at a historically low level, suggesting potential for valuation recovery [2][20] 5. Market Position - The company has a strong market position, with a significant number of franchise stores and a well-established brand, which enhances its competitive edge [2][30][32] - The company’s ability to manage franchise relationships effectively contributes to its stable revenue growth [30]