Core Viewpoint - The chairman of the company, Xia Guoxin, stated that the inventory impairment will be fully accounted for within two years, alleviating concerns about potential risks [2][4]. Group 1: Financial Performance - The company has experienced a consistent increase in revenue over the past decade, but its market value has not kept pace, leading to questions from shareholders [4]. - The company faced a significant decline in profitability due to the underperformance of the acquired French brand IRO, resulting in substantial asset impairment [5]. - As of the end of the 2024 fiscal year, the company's inventory impairment provision stood at 440 million yuan, with finished goods accounting for 351 million yuan [5][6]. Group 2: Strategic Direction - The company aims to become a globally competitive high-end fashion brand group, a goal established in 2015 that remains unchanged [7]. - The company focuses on high-end fashion rather than luxury brands, believing that the overall development of Chinese fashion is progressing positively [7]. - The company is committed to balancing online and offline sales, with offline sales currently accounting for 80% of total revenue, while online sales are growing at a faster rate [8]. Group 3: Brand Portfolio - The company has expanded its brand portfolio to include six brands, with some already in the harvest phase while others are still being nurtured [5][8]. - The brands under the company include ELLASSAY, Laurèl, Ed Hardy, IRO, self-portrait, and nobus, showcasing a diverse range of high-end fashion offerings [8]. Group 4: Market Trends - The company recognizes a K-shaped structure in consumer behavior, with both consumption upgrades and downgrades occurring simultaneously [7]. - The company believes that high-end consumption will continue to expand, driven by emotional value and brand premium [7].

Core Viewpoint - The company is currently experiencing a situation of increasing revenue but not increasing profit, primarily due to the underperformance of the acquired French brand IRO, which has led to significant asset impairment [5][6]. Group 1: Financial Performance - The company has maintained a growth trend in operating revenue over the past ten years, but its market value has not increased and has even declined [5]. - The acquisition of IRO in 2019 has not met expectations, resulting in a large impairment of goodwill due to performance issues exacerbated by the pandemic and geopolitical conflicts [5][6]. - As of the end of 2024, the company's inventory impairment provision stands at 440 million yuan, with finished goods accounting for 351 million yuan [6][7]. Group 2: Brand Strategy and Market Position - The company has expanded its brand portfolio from a single brand to six brands, with some already entering a harvest phase while others are still in cultivation [6]. - The long-term goal of the company is to become an internationally competitive high-end fashion brand group, focusing on high-end and fashion elements [8][9]. - The company believes that high-end consumption will continue to expand, despite the presence of both upward and downward trends in consumer behavior [8][9]. Group 3: Online and Offline Sales Strategy - Currently, offline sales account for over 80% of total sales, but the company is increasing its online investment as online growth is significantly faster [9][10]. - The company plans to continue expanding its offline presence but will be more selective about store locations and sizes to ensure better performance [9].

Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The company's revenue for 2024 was 3.036 billion, with a year-on-year growth of 4.1%, but it reported a net loss of 310 million due to impairment losses and one-time expenses totaling approximately 383 million [2][4] - The company plans to optimize its overseas business and has already taken steps to divest from the Ed Hardy brand, which will no longer be included in the consolidated financial statements [3][4] - The domestic business showed resilience with a revenue increase of 14% in the first half of 2024, despite challenges in the overseas market [4][5] Summary by Sections Financial Performance - In 2024, the company achieved a revenue of 3.036 billion, with a net loss of 310 million, primarily due to impairment losses [2] - The operating cash flow was positive at 417 million, indicating better cash management despite the net loss [2] - For Q1 2025, the company reported a revenue of 690 million, a decrease of 7.82% year-on-year, but the net profit increased by 40.24% due to reduced expenses [3][6] Brand Performance - The brands LAUREL and Self-Portrait showed the highest growth rates in 2024, while IRO faced challenges in Europe but grew by 17% in China [5] - The online sales strategy has been effective, with significant growth in e-commerce channels, particularly on platforms like Douyin and Tmall [5][9] Operational Efficiency - The company has been focusing on cost reduction and efficiency improvements, especially in its overseas operations, to mitigate losses [4][9] - Inventory levels decreased by 12% year-on-year, and inventory turnover days improved, indicating better inventory management [8] Future Outlook - The company maintains a positive outlook for revenue growth, projecting 3.263 billion for 2025 and 3.536 billion for 2026, with a gradual recovery in net profit expected [9][11] - The EPS is projected to improve from -0.84 in 2024 to 0.59 in 2025, reflecting a recovery in profitability [11]