The company released a three-quarter report

The company's 24Q3 revenue was 2.6 billion, a decrease of 41%; net profit due to mother was reduced by 29% of 0.25 billion, and net profit of 0.25 billion was reduced by 27%;

24Q1-3's revenue of 10.8 billion decreased by 13.5%, net profit due to mother decreased by 22% from 0.85 billion, and reduced by 21% after deducting 0.84 billion to mother.

24Q1-3's gross profit margin of 20.58% increased by 2.36pct; net profit margin 7.89% decreased by 0.85pct.

The 24Q3 company's gross profit margin increased by 27.48%, with a significant increase in gross margin. ① The self-operated channel benefited from the rise in gold prices and took the lead in optimizing and adjusting the product structure to help increase gross margin; ② the franchise channel increased the share of gold shipments by charging brand usage fees, and the contribution of one-price products to the overall gross profit margin increased; ③ the share of high-gross margin jewelry in e-commerce channels increased, which had a positive effect on the increase in gross margin.

24Q3 full-caliber gold shipments were 13.41 tons, a decrease of 41.7%; the cumulative 24Q1-3 full-caliber gold shipment volume was 48.11 tons, a decrease of 25.87%.

24Q4 is worth looking forward to: striving to narrow the net profit decline in 24Q4 and the whole year; seeking a net increase of more than 200 stores throughout the year; the e-commerce sector continues to gain strength and continue the growth momentum; increasing the proportion of self-employment and radiation boosting overall growth; implementing the strategic layout of the brand matrix; opening up globalization, including opening overseas stores, gold trade, and cross-border e-commerce; maintain positive dividends and generously give back to shareholders.

Comprehensive upgrade of product, marketing and store strategies

On the product side, intervene and adjust the product structure of stores to increase the proportion of one-price gold products and increase the proportion of non-yellow products, such as products in the field of jade, pearls, and fashion; and carry out comprehensive marketing follow-up, shifting from focusing on gold products to marketing of non-yellow products to help stores sell better and improve the product structure; in terms of store traffic, build and enhance the ability to win customers in private and public areas; in terms of policy support, it will give certain cost relief to stores that are more difficult to operate. In terms of store expansion, the company will rely on the following three directions to maintain the number of outlets worth looking forward to: ① further implement the brand matrix layout strategy; ② implement comprehensive digitalization to improve organizational efficiency and retail efficiency; ③ promote globalization.

The “National Treasure” naming fee helps upgrade the brand. Strategic opportunities can be expected in the future. The impact of the National Treasure naming fee on Q2 and Q3 is quite obvious. “National Treasure” is a strategic brand that can elevate brand level and tone. It has rare opportunities in the same industry. It is Chow Dasheng's strategic opportunity brand. It will be a very valuable brand asset. Upfront investment is necessary, and it is expected that the future will have a positive return on the brand's potential and efficiency.

Adjust profit forecasts to maintain “buy” ratings

Based on 24Q1-3 performance, the rapid rise in gold prices suppresses enthusiasm for jewellery consumption; we adjusted our profit forecast, the company's net profit for 24-26 was 10.7, 12.2, and 1.4 billion yuan (original values were 14, 16, and 1.77 billion yuan), EPS was 1.0 yuan, 1.1 yuan, and 1.3 yuan (original values were 1.3, 1.4 and 1.6 yuan), and PE was 11X, 10X, and 9X, respectively.

Risk warning: Single revenue structure; risk of expanding product capacity; increased market competition.