Core Viewpoint - The article discusses the financial performance and strategic challenges faced by the jewelry brand Chao Hong Ji, highlighting its revenue growth, profitability issues, and the impact of goodwill impairment on its financial results [3][5][7]. Financial Performance - In the first three quarters of 2023, Chao Hong Ji reported revenue of 6.237 billion yuan, a year-on-year increase of 28.35%, while net profit attributable to shareholders was 317 million yuan, a slight increase of 0.33% [3]. - The third quarter alone saw revenue of 2.135 billion yuan, a significant year-on-year growth of 49.52%, but the company faced a net loss of 14.2795 million yuan due to a 170 million yuan goodwill impairment [3][4]. Goodwill Impairment - The company has experienced unstable profitability, with net profit growth rates of -43.22%, 67.41%, -41.91%, and 0.33% from 2022 to 2024 [5]. - Goodwill impairment has been a key factor affecting profitability, with cumulative impairments reaching 466 million yuan over the past four years, primarily due to the high goodwill from the acquisition of the handbag brand FION [5][7]. Strategic Initiatives - To capture the rising trend of young consumers, Chao Hong Ji has implemented strategies such as "lightweight gold," "fixed-price gold," and "IP collaborations," which have contributed to revenue growth despite market challenges [4][9]. - The company is also focusing on expanding its overseas market presence, with plans to open 20 self-operated stores abroad by the end of 2028, although its current overseas revenue contribution is less than 1% [4][15]. Challenges and Risks - The expansion of the franchise model has led to a significant increase in the number of franchise stores, with a total of 1,412 stores as of the end of the third quarter of 2023, but this has not effectively translated into profitability [10][11]. - The overall gross margin has been declining for seven consecutive quarters, dropping from 22.6% in 2022 to 16.6% in 2024, primarily due to the increased proportion of lower-margin gold products in the franchise model [12][13].

Core Viewpoint - The submission of an IPO application by Chao Hong Ji for a Hong Kong listing reflects the significant transformation pressures faced by the jewelry industry amid rising gold prices and changing consumer preferences [1][12]. Group 1: Company Background - Chao Hong Ji, founded in 1996, initially focused on jewelry and K-gold, avoiding the traditional gold market dominated by competitors, which allowed it to achieve superior profitability during periods of low gold prices [3]. - The company went public on the Shenzhen Stock Exchange in 2010 and has since maintained a strong position in the industry, ranking first among mainland jewelry companies with a market share of 1.4% as of June 2025 [3]. Group 2: Market Dynamics - Since 2022, international gold prices have reached historical highs, with 2024 marking a record of 40 new highs, leading to an increase in gold consumption in China by 8.78% year-on-year in 2023 [6]. - In contrast, the jewelry market has been declining, with Chao Hong Ji's jewelry product sales stagnating over the past three years, while gold product sales surged from 1.424 billion yuan in 2022 to 2.916 billion yuan in 2024 [6]. Group 3: Business Strategy and Performance - Chao Hong Ji is adapting to market changes by incorporating cultural and youthful elements into its gold products and launching collaborations with popular IPs, which has resulted in a 25.36% year-on-year revenue growth in Q1 2025 [8]. - Despite the growth in gold sales, the profit margins are significantly lower for gold products (8.1%) compared to jewelry products (27.6%), indicating that the company's profit growth still heavily relies on its traditional jewelry segment [8]. Group 4: International Expansion Efforts - The company has attempted to diversify its revenue streams by acquiring the fashion handbag brand FION in 2012, but this segment has not performed as expected, with revenues declining in recent years [10]. - Chao Hong Ji's international strategy includes opening stores in Malaysia, Thailand, and Cambodia, but the overseas revenue remains minimal, accounting for only 0.41% of total revenue in 2024 [10]. Group 5: Future Outlook - The upcoming Hong Kong listing is seen as a step towards enhancing the company's global strategy and brand image, but the challenges of transforming the traditional jewelry business in a high gold price environment remain significant [12].