Key takeaway

In 2025, the company recorded operating revenue of 36.4 billion yuan, a 22% year-on-year decline. Adopting a prudent approach, the company recognized impairment losses in its real estate segment to mitigate risks. The company continues to drive organizational restructuring to achieve sustained cost optimization and operational efficiency, actively navigating a volatile macroeconomic environment. The jewelry business continues to cultivate brand identity and strengthen management, with forward-looking deployments in overseas and duty-f ree channels. Leveraging a solid foundation in cultivating an oriental aesthetic across its portfolio—including cosmetics, watches, and food & beverage—the company continues to accelerate its domestic and international expansion.

Event

For the full year 2025, the company achieved operating revenue of 36.373 billion yuan, representing a year-on-year decline of 22.49%; the fourth quarter accounted for 7.973 billion yuan, a year-on-year decline of 26.33%.

For the full year 2025, the company reported a net loss attributable to shareholders of 4.897 billion yuan and a net loss after non-recurring items of 4.099 billion yuan. In the fourth quarter of 2025, the net loss attributable to shareholders was 4.409 billion yuan, with a net loss after non-recurring items of 3.146 billion yuan.

Brief Analysis

Continued expansion of jewelry brands with diversified domestic and international positioning

The company continues to optimize its product mix, shifting toward higher gross margin offerings. Star products such as 'Yi Chuan Hao Yun' and 'G u Yun Jin · Zuo' demonstrated strong market performance, while the sales proportion of fixed-price products continued to rise. Gross margin increased by 0.66 percentage points year-on-year in the first three quarters, with a further expansion of 3.2 percentage points in the fourth quarter relative to the first three quarters; over 179 new products were launched throughout the year. The company adjusted its store footprint, reducing the number of stores by over 600 during the year to approximately 4,000. Meanwhile, it actively executed a multi-channel strategy, opening inaugural locations in The Venetian Macao and Kuala Lumpur, Malaysia, and establishing 8 offshore duty-free stores in Hainan to leverage unique competitive advantages.

Streamlining the cultural catering footprint and upgrading the beauty and health brand portfolio The catering business focuses on time-honored brands such as Songhelou, Nanxiang, and Songyuelou, accelerating its asset-light store expansion capabilities. The timepiece business is actively expanding into duty-f ree and overseas channels, launching a series of activities to strengthen brand influence. In the beauty segment, the WEI Beauty brand was added to the portfolio; AHAVA focuses on building its identity as a Dead Se a healing brand, while WEI Beauty concentrates on the concept of Oriental herbal skincare. The real estate business took proactive impairments to mitigate risks, achieving total annual sales of RMB 4.773 billion with a sales area of 366,900 square meters, as it continues to revitalize projects and enhance cash recovery.

Deepening the development of the Greater Yuyuan area, with the jewelry and fashion district poised for promising growth. The core Yuyuan Mall Phase I achieved a GMV of 4.29 billion RMB and recorded 41.12 million visitors, with occupancy rates showing a year-over-year increase. Piling work for Yuyuan Phase II (Nanli) commenced within the year, while the planning scheme for Beili is currently in the approval process. As the core hub of Shanghai's international jewelry and fashion district, the Great Yuyuan commercial area will continue to reinforce its regional cluster effect. Beyond the current leading traditional gold brands, it is set to introduce several 'Shanghai first' stores, including Junpei and CHJ.

Investment Recommendation: The company has sufficiently recognized real estate-related impairments in 2025, which impacted profitability and balance sheet quality; however, these pressures are expected to moderate. We project net profit attributable to the parent for 2026-2028 at RMB 6 million, RMB 441 million, and RMB 558 million, respectively. Given the company's diversified business lines, the P/B ratios of 0.60X/0.61X/0.63X already reflect a risk discount. We maintain our 'Overweight' rating.

Risks

1. Gold price volatility; The international gold market has exhibited high volatility driven by macroeconomic factors, which impacts the cost of the company's core business operations. Furthermore, fluctuations in gold prices exert a notable influence on short-term demand within the gold jewelry market, representing an uncontrollable exogenous factor.

2. Policy risk: The real estate sector is highly sensitive to policy shifts, which introduces uncertainties regarding the development of the company’s real estate business. The company carries a significant volume of inventory, and there remains uncertainty concerning future sales and delivery execution.

3. Intensifie d market competition: The company’s core busine ss se gments, including consumption upgrades and commercial retail, are highly market-driven with intense competition. The gold and jewelry industry exhibits low market concentration and severe homogenization of competitive strategies; The real estate market is contracting, with intensifying industry competition and continued risk of asset impairment.