The company's gold product sales volume increased and fell in the first half of the year (revenue was flat), and the non-gold category continued to grow rapidly (+30%), driving the jewelry business to grow 4%. The increase in total revenue (+14%) was mainly due to other businesses such as gold trading; although falling gold prices and other business share increases dragged down the gross profit margin, the net profit increase (+27%) was clearly better than the revenue side. The company currently has a total market value of 18 billion dollars, corresponding to 15PE20X; as the best jewelry brand in China, the company's long-term strategic allocation value is outstanding. The current valuation level already has a certain margin of safety, and in the second half of the year, it will face continuous stimulus from catalysts such as state-owned enterprise reform, Shanghai Disney, and safe-haven demand for gold prices, maintaining a “highly recommended-A” investment rating. Revenue/net profit for the first half of the year increased 14%/27% respectively, which is basically in line with expectations. The company's revenue/operating profit/net profit attributable to listed companies for the first half of the year was $210/8.9/540 million, up 14%/25% 27% from the previous year respectively. Overall performance was basically in line with expectations; on a quarterly basis, 15Q2 increased 9%/29%/33% year on year, respectively. Revenue growth for the quarter slowed, but gross margin and investment income boosted profit performance. The increase in sales volume and price of gold products fell, and the non-gold category continued to grow rapidly, driving the jewelry business to grow by 4%. The increase in total revenue was mainly due to other businesses. The company opened steady stores in the first half of the year (the number of outlets increased by 116 to 2,852, of which 64 to 1,168 new stores). Thanks to strong wholesale strength and leading brand advantages, sales of gold products increased 6% to 48 tons year on year, but the fluctuating decline in gold prices (the average price fell 7% year on year) caused revenue to remain only about the same; the company continued to optimize its product structure in the first half of the year, and sales of non-products such as the “new seven categories” increased 30% year on year, driving the jewelry industry to achieve revenue of 15 billion dollars, an increase of 4% year on year. However, the increase in total revenue was mainly due to other businesses (revenue other than the main jewelry business was 6 billion dollars, up 50% year on year), of which gold trading revenue was 2.1 billion, up 50% year on year. The decline in gold prices dragged down the gross profit margin, but the profit growth driven by cost control and investment income was clearly better than that on the revenue side. Dragged down by falling gold prices, the company's jewelry gross margin fell 0.16 PCT year on year in the first half of the year, and the increase in the share of other business revenue further led to a decrease of 0.6 PCT to 7.4%; however, the cost control effect was remarkable (the cost rate fell 0.7 PCT to 2.8% year on year during the first half of the year, and the sales rate fell 0.5 PCT due to a decrease in advertising investment and decoration costs), and investment income increased a lot (revenue from changes in fair value increased by 29 million, investment income increased by 24 million), driving profit growth clearly better than the revenue side. Under the rapid turnover model, there are few inventories and receivables, net operating cash flow has declined to a certain extent over the same period, and the overall growth quality index is still relatively healthy. As of the end of the first half of the year, the company's inventory was 4.41 billion yuan, down 14% from the beginning of the year. Among them, the inventory of raw materials was 1.36 billion, an increase of 158% from the beginning of the year, and the inventory of finished products was 2.74 billion, down 37% from the beginning of the year. There was not much stock in stock in the context of fluctuating gold prices and rapid turnover. The original value of accounts receivable was 540 million yuan, up 80% from the beginning of the year, but the structure has improved. Accounts for less than 1 year account accounts account for 91% (up 7% from the end of last year). Under the rapid turnover model, receivables as a whole are not high. Net operating cash flow for the first half of the year was 770 million yuan, down 50% from the previous year. Profit forecast and investment rating: The company is the enterprise with the most comprehensive competitiveness in the domestic jewelry industry. Strong wholesale channel advantages (mainly based on the number of sales outlets and market coverage), increasing brand influence (especially in the third and fourth tier markets), and a full product base are its most obvious advantages over domestic competitors. Through continuous expansion in the number of stores and quality improvement (especially the share of specialty stores, the continuous increase in the share of specialty stores), the improvement of refined management capabilities, and the expansion of all categories and product structure improvements, it is expected that the company can further strengthen its dominant position in the jewelry industry in the future; The short-term economic downturn has dragged down the revenue side to a certain extent, but it has also provided the company with an opportunity to consolidate contracts and seize share, and the company is also actively experimenting and promoting channel optimization strategies (including the Henan model, increasing franchise store expansion, etc.) and “going global” strategies. Although there has been no significant improvement in terminal retail, thanks to strong wholesale strength and cost control, the company's performance is expected to continue to grow by double digits this year, with a current total market value of 18 billion yuan, corresponding to 15PE20X; as the best jewelry brand in China, the company's long-term strategic allocation value is outstanding. The current valuation level has a certain margin of safety, and the second half of the year will face continuous stimulation from catalysts such as state-owned enterprise reform, Shanghai Disney, and gold price hedging demand. Maintaining a “highly recommended-A” investment rating; the short-term target price is 54 yuan/share (15PEX). Risk warning: Economic recovery is lower than expected and affects consumer demand for jewellery; fluctuations in gold prices affect dealer delivery and reported gross profit margin; infrequent changes in profit and loss; progress in state-owned enterprise reform falls short of expectations.