Investment Rating - The investment rating for the company is "Buy" (maintained) [7] Core Insights - The company is experiencing revenue pressure in H1 2025, primarily due to high gold prices leading to conservative inventory purchases by franchisees and store closures. However, the company is actively adjusting its product category structure, increasing the proportion of high-margin products such as IP series, fixed-price gold, embedded products, and bracelets, resulting in a net profit growth of over 30% in Q2 2025 [5][12] - The comprehensive gross profit margin for H1 2025 is 30.3%, an increase of 11.96 percentage points year-on-year. The sales expense ratio is 10.8%, up by 4.34 percentage points year-on-year, and the net profit margin attributable to the parent company is 12.92%, an increase of 5.58 percentage points year-on-year [5][12] Financial Performance Summary - H1 2025 revenue is reported at 4.597 billion, a year-on-year decrease of 43.9%. The net profit attributable to the parent company is 594 million, a decrease of 1.3% year-on-year. In Q2 2025, revenue is 1.924 billion, down 38.5% year-on-year, while net profit is 342 million, up 31.3% year-on-year [11][12] - The company has outlined five strategic directions for the future: brand matrix development, new retail transformation, organizational change, deep digitalization, and brand expansion overseas. Significant investments will be made in these areas over the next two to three years [13] - Revenue forecasts for 2025-2027 are 11.738 billion, 12.971 billion, and 13.943 billion, with corresponding growth rates of -15.5%, 10.5%, and 7.5%. Net profit attributable to the parent company is projected at 1.110 billion, 1.213 billion, and 1.269 billion, with growth rates of 9.9%, 9.3%, and 4.6% respectively [14]

Core Viewpoint - The company reported strong profit growth in the first half of 2025, with revenue growth slower than profit due to adjustments in direct sales channels and accelerated franchise expansion [1][5]. Revenue and Profit Performance - In Q2 2025, the company achieved revenue of 1.85 billion yuan, a year-on-year increase of 13.1%, and a net profit attributable to shareholders of 140 million yuan, up 44.3% year-on-year [1]. - For the first half of 2025, total revenue reached 4.1 billion yuan, reflecting a year-on-year growth of 19.5%, while net profit attributable to shareholders was 330 million yuan, also up 44.3% year-on-year [1]. Channel Performance - Franchise revenue in H1 2025 was 2.24 billion yuan, a year-on-year increase of 36.2%, with a net increase of 68 stores, bringing the total to 1,340 [2]. - Direct sales revenue was 1.17 billion yuan, a year-on-year increase of 4.8%, with a net decrease of 37 stores, resulting in a total of 202 stores [2]. - E-commerce revenue was 570 million yuan, down 5.8% year-on-year, attributed to tightened discounts and reduced online exclusive products [2]. Profitability and Cost Management - In Q2 2025, the gross margin improved to 24.9%, up 1.6 percentage points year-on-year, despite a higher proportion of lower-margin franchise revenue [3]. - The company experienced a decrease in expense ratios, with sales expense ratio at 9.9% (down 1.5 percentage points), management expense ratio at 1.9% (down 0.2 percentage points), and financial expense ratio at 0.4% (down 0.1 percentage points) [3]. - The net profit margin attributable to shareholders increased to 7.7%, up 1.7 percentage points year-on-year, indicating improved profitability [3]. Product Development and Brand Strategy - The company continues to focus on its brand series and IP series, integrating Eastern aesthetics into product design, and has launched several new IP products in H1 2025 [4]. - The R&D expense ratio increased to 1.5%, up 0.5 percentage points year-on-year, reflecting ongoing investment in product innovation [4]. Future Outlook and Valuation - The company is expected to maintain strong growth due to its differentiated product strength and strong channel expansion potential [5]. - Revenue forecasts for 2025, 2026, and 2027 are set at 8 billion, 9.4 billion, and 10.8 billion yuan, respectively, with year-on-year growth rates of 22%, 18%, and 15% [5]. - Net profit forecasts for the same years are 550 million, 650 million, and 760 million yuan, with year-on-year growth rates of 185%, 18%, and 17% [5].