Demand for optional consumption is slowing, and spending on high-end luxury goods is becoming more cautious. The popularity of nurturing diamonds, the slump in the luxury market, and the decline in marriage rates are putting multiple pressures on the diamond industry. As the world's second-largest consumer market for diamonds, China's demand has declined in recent years. Under many challenges, enterprises in the industry need to actively respond to market changes and the uncertainty of the economic environment through innovation, brand building, and market diversification strategies.

Optimize resource allocation and continue to focus on the “true love” brand concept. The company achieved revenue of 1.112 billion yuan in the first three quarters of 2024, a year-on-year decrease of 36.19%. In recent years, the company has made strategic adjustments to its stores. As of September 2024, the company had about 401 stores. By shutting down inefficient stores, the company has further improved the profitability and customer experience of individual stores, and sales in some stores have gradually picked up. In the field of wedding jewelry, the company continues to focus on the “wedding ring” core product line and strengthens the brand's differentiated position in the high-end market by launching the KING & QUEEN fine jewelry series. Despite the pressure on the overall demand for the wedding scene, the company relied on the “lifetime, one, true love” brand concept and deep membership system to maintain the stickiness of target users, and the order volume remained stable. At the same time, in the gold category, the company deepens customer life cycle services through the innovative model of “member benefits+benefits” and enhances user satisfaction and loyalty.

Initial results of brand globalization testing, long-term strategic asset layout. The company plans to invest more resources in the European and American markets, reuse the mature experience of domestic online communication, explore offline experience store models, and cooperate with local brands or teams. At present, the overseas business has achieved initial results. Online communication in the European and American markets has attracted more than 0.74 million fans, and the number of impressions is close to 0.4 billion. In the future, the company plans to open experience stores in the US to speed up the globalization process. Furthermore, through measures such as purchasing the Houhai headquarters base and optimizing the asset structure, the company provides strong support for future brand asset accumulation and industrial chain integration, reflecting the company's long-term development business philosophy. Facing changes in the wedding jewelry market, with clear brand positioning and accurate market strategies, the company is expected to maintain a leading position in the high-end wedding jewelry market and open up new growth space through global expansion and diversified product layout. The company's EPS is expected to be 0.09/0.15/0.17 yuan from 2024 to 2026, maintaining the “gain” rating.

Risk warning: Competition in the industry intensifies; diamond wedding demand recovery falls short of expectations; brand expansion falls short of expectations.