Core Viewpoint - Zhou Li Fu's long-awaited IPO is set to launch on June 26, 2025, with a global offering of 46.808 million shares at a price of HKD 24.00 per share, aiming to raise approximately HKD 1.024 billion [1] Company Overview - Zhou Li Fu, established in 2004, is a well-known jewelry brand in China, primarily engaged in the design, production, and sales of jewelry through both offline and online channels [2] - As of the end of 2024, Zhou Li Fu had 4,129 stores, ranking fifth among Chinese jewelry brands, with 4,125 located in China and 4 overseas [2] Financial Performance - In 2024, Zhou Li Fu's revenue reached RMB 5.718 billion, but the growth rate plummeted to 11% from 66% the previous year, indicating a significant slowdown [2] - The company's net profit for the year was RMB 706 million, with a net profit margin dropping from 18.5% in 2022 to 12.4% in 2024, a decline of 6.1 percentage points [2] Market Position and Challenges - Zhou Li Fu faces a differentiation dilemma, lacking a unique brand identity compared to competitors like Lao Pu Gold and Chow Tai Fook, leading to severe product homogeneity [3] - Despite rising gold prices, the jewelry industry is experiencing a "volume-price divergence," with many companies, including Zhou Li Fu, reporting declining profits [3][4] Inventory and Sales Issues - Zhou Li Fu's inventory reached RMB 2.59 billion as of April 30, 2025, posing a risk of inventory impairment if gold prices decline [4] - The total order volume for self-operated stores decreased from 122,000 in 2023 to 117,000 in 2024, with same-store sales revenue dropping from RMB 369 million to RMB 291 million [4] Franchise Model and Management Challenges - Zhou Li Fu's rapid expansion relies heavily on a franchise model, with 97.8% of its stores being franchisee-operated, which has led to quality control issues and management challenges [5][6] - In 2024, the number of closed franchise stores (674) exceeded new openings (424), indicating instability in the franchise system [5] Legal and Brand Issues - Zhou Li Fu has faced multiple legal challenges regarding trademark infringement, with 95 ongoing cases, raising concerns about its brand strategy [7] - The company's name has been criticized for being misleading and similar to established brands, which could hinder long-term growth [7] Dividend Distribution and Ownership Structure - Zhou Li Fu has distributed over RMB 944 million in dividends over two years, primarily benefiting the controlling Li family, which holds approximately 93.7% of the company's shares [8] Conclusion - While the IPO may represent a significant moment for Zhou Li Fu, underlying issues such as a fragile franchise model, brand controversies, and product homogeneity remain critical challenges [9][10]