The company announced 2024 and 2025Q1 results: the company's 2024 revenue was 56.793 billion yuan, -20.5% year over year; net profit to mother 1.95 billion yuan, -11.95% year over year; deducted non-net profit of 1.803 billion yuan, -16.34% year over year. 2025Q1's revenue was 17.52 billion yuan, -31.64% YoY, net profit to mother 0.613 billion yuan, -23.55% YoY, net profit before deducting non-return to mother 0.644 billion yuan, or -22.88% YoY, mainly due to continued rise in gold prices which curtailed consumption of gold and jewellery.
Gross margin increased slightly, and profitability improved. ① Gross profit margin: The company's gross profit margin in 2024 was 8.93%, +0.63pct year-on-year. Among them, the gross margin of jewelry/gold/handicraft sales categories increased by 0.32/0.92/3.06 pct, respectively. 2025Q1 gross profit margin was 9.06%, +0.69pct year over year. ② Period expense rate: The company's expense rate for the 2024 period was 2.93%, +0.53 pct year-on-year. The cost rate during 2025Q1 was 2.2%, +0.19pct year over year. ③ Net interest rate to mother: The company's net interest rate to mother in 2024 was 3.43%, +0.33pct year-on-year. The net interest rate of 2025Q1 was 3.5%, +0.37pct year on year, and overall profitability improved.
Core categories are under pressure, and overseas sales are growing. ① By category: The company's jewellery revenue in 2024 was 46.908 billion yuan (-19.31% YoY); gold transaction revenue was 9.381 billion yuan (YoY -26.42%); pen revenue grew steadily at 2.269 billion yuan (+1.09% YoY), and handicraft sales were 0.545 billion yuan (-5.60% YoY). ② By region: Domestic sales revenue in 2024 was 56.011 billion yuan (YoY -20.80%), overseas sales revenue 5.76 billion yuan (+12.83% YoY).
Network development was slightly lower than expected due to demand for gold and jewelry, and the company actively promoted market expansion. The company actively promoted the market layout of “Treasure Gold” and “Fengxiang Lucky” theme stores and upgraded the theme image of retail stores. By the end of 2025Q1, the company had a total of 5,541 domestic and overseas marketing outlets and 188 direct-run stores (including 16 overseas direct-run stores), a net of +1 at the end of 24; 5,352 franchise stores, net of 288 at the end of 24.
Profit forecasting and investment ratings: Demand suppression brought about by the sharp rise in gold prices in 24H2 was a direct response. We expect the low 25H2 inflection point is worth looking forward to. As a brand with strong cash flow and high barriers, the current valuation of the Lao Fengxiang brand is at an attractive stage. Considering that the sharp rise in gold prices suppresses consumer demand in the short term, we lowered the company's 2025-26 net profit forecast from 2.13/2.28 billion yuan to 1.64/1.83 billion yuan, and added the 2027 net profit forecast of 1.96 billion yuan, compared to -15%/+12%/+7%, respectively. The corresponding PE was 16/14/13X, respectively, maintaining a “buy” rating.
Risk warning: Risk of gold price fluctuations, opening a store less than expected, terminal demand falling short of expectations, etc.
