The company released its 2024 three-quarter report. In the 24Q3 single quarter, the company achieved revenue of 2.612 billion/ -40.91%, net profit attributable to mother 0.253 billion yuan/ -28.70%, after deducting 0.252 billions/ -27.23% of non-return net profit. In the first three quarters of 2024, the company achieved revenue of 10.809 billions/ -13.49%, net profit attributable to mother of 0.855 billions/ -21.95%, after deducting non-attributable net profit of 0.837 billions/ -20.55%. The company's channel side continues to expand stores, the product side increases R&D and promotion of gold products, continuously improves the company's operating efficiency and actively seizes growth opportunities. Maintain a “Highly Recommended” rating.

Due to high fluctuations in gold prices, Q3 revenue and profit were under pressure. In the 24Q3 quarter, the company achieved revenue of 2.612 billion yuan/ -40.91%, net profit due to mother 0.253 billion yuan/ -28.70%, after deducting non-return net profit of 0.252 billions/ -27.23%. In the first three quarters of 2024, the company achieved revenue of 10.809 billions/ -13.49%, net profit attributable to mother of 0.855 billions/ -21.95%, after deducting non-attributable net profit of 0.837 billions/ -20.55%. During the reporting period, due to external economic environmental factors and the rapid rise in gold prices, gold jewellery consumers had a strong wait-and-see attitude, downstream customer enthusiasm for restocking declined, and the company's revenue and profit growth were affected.

Revenue split: By product category, 24Q1-Q3 achieved revenue of 0.585 billion/ -22.46% for mosaic products and 8.896 billions/ -15.04% for plain gold products. By channel, the company's Q1-Q3 self-operated offline business revenue was 1.354 billions/ +9.77%, of which mosaic revenue was 63.68 million/ -24.49%, and gold product revenue was 1.262 billion/ +12.85%. The franchise business achieved revenue of 7.66 billions/ -19.75%, of which wholesale revenue from mosaic products was 0.399 billion/ -28.16%, and wholesale revenue from gold products was 6.525 billions/ -19.92%. E-commerce business revenue 1.653 billions/ +5.94%, including revenue from mosaic products 0.122 billion/ +6.73%, revenue from gold products 1.022 billion/ -7.44%, and revenue from other products such as silverware 0.499 billion/ +46.25%

In the first three quarters, 129 net stores were opened, and channel expansion continued to advance. In the first three quarters of 2024, the company opened 421 new franchisees, a decrease of 310, a net opening of 111 stores, and the number of franchisees at the end of the period was 4886; 53 new self-operated stores were opened, a decrease of 35, a net increase of 18, and the number of self-operated stores at the end of the reporting period was 349. Overall, there was a net increase of 129 stores in Q1-Q3, and the total number of stores at the end of the reporting period was 5235.

Gross margin increased markedly, and net profit margin improved. The 24Q3 gross margin of the company was 27.48% /+9.70 pct. 24Q3's sales/management/finance/R&D expense rates were 11.29%/0.94%/0.28%/0.11%, respectively, +6.31/+0.38/+0.29/+0.05pct, respectively. 2024Q3 Company's net sales margin was 9.67% /+1.65pct.

Investment advice. The company continues to expand its stores on the channel side, and the product side has increased R&D and promotion of gold products, and management and operation efficiency have improved. The company's net profit for 2024/2025/2026 is expected to be 1.114/1.247/1.347 billion, respectively, maintaining the “Highly Recommended” rating.

Risk warning: Consumer demand falls short of expectations, industry competition intensifies, store expansion falls short of expectations, and gold prices fluctuate.