Investment Rating - The report assigns a "Buy" rating for the company, indicating a positive outlook for the stock price in the next six months [6]. Core Views - The company's performance continues to reflect a turning point, with a significant increase in revenue and profit margins, driven by the successful introduction of high-margin products and effective cost control measures [1][2][4]. - The transition from traditional diamond jewelry to "embedded gold" products has shown substantial results, with revenue from embedded diamonds increasing by 68% [4]. - The company is expected to benefit from ongoing store upgrades and the expansion of franchise operations, which are anticipated to enhance profitability in the coming years [4]. Financial Performance - For the first half of 2025, the company reported revenue of 870 million yuan, a year-on-year increase of 37%, and a net profit of 60.61 million yuan, compared to a loss in the same period last year [1]. - The gross margin improved to 36.04%, up by 3.2 percentage points, primarily due to the higher proportion of high-margin embedded gold products [2]. - Operating cash flow showed a significant improvement, with a net cash flow of 36.89 million yuan, an increase of 199 million yuan year-on-year [2]. Channel Strategy - The company is focusing on a dual-channel strategy, combining direct sales and franchise operations, with franchise revenue growing by 109% [3]. - The number of franchise stores is entering a positive growth trend, indicating a shift towards a more diversified store network [3]. - The company aims to establish 50 benchmark direct stores and 15 franchise stores with annual sales exceeding 10 million yuan, with some stores already achieving this target [3]. Product Transformation - The shift towards high-value-added products, particularly embedded gold, has resulted in a notable increase in sales and profitability [4]. - New product lines inspired by Western art styles are being introduced, enhancing the brand's appeal and market presence [4]. Future Projections - Revenue projections for 2025-2027 are estimated at 1.77 billion, 2.30 billion, and 2.85 billion yuan, respectively, with corresponding net profits of 87 million, 136 million, and 198 million yuan [4]. - The report anticipates a significant improvement in the company's price-to-earnings ratio, indicating a favorable valuation outlook as profitability increases [4].