Key takeaway

In 2025, the company's revenue and net profit attributable to shareholders of the parent company rose +43% and +157% YoY, respectively. Excluding impairment losses and one-off equity incentive expenses, profit grew +79% YoY, driven by strong growth in fixed-price products, accelerated franchise expansion and improved expense ratios. In 1Q26, strong growth in fashion jewelry boosted earnings, and the company's stores successfully entered core commercial districts such as Shanghai IFC. As of end-2025 and end-March 2026, the company's jewelry store count stood at 1,670 (net increase of 163 for the full year; franchise stores: 1,486 / net increase of 214) and 1,669 (franchise stores: 1,495 / net increase of 9 in the single quarter), respectively. The company is accelerating its expansion in Southeast Asia, entering Cambodia and Singapore in 2025. By end-2025, it had 11 overseas stores, representing a net increase of 9 stores.

Looking ahead, the company will continue to focus on its core product matrix: intangible cultural heritage filigree, fashion beaded jewelry, IP co-branded collections, and traditional gold inlay and fine gold jewelry. On the channel front, the franchise network will continue to expand and increase the proportion of high-end stores in higher-tier cities. The company will continue to deepen its presence in Southeast Asia and actively explore emerging markets such as Japan and Australia.

Event

The company released its 2025 annual report: In 2025, the company achieved revenue of RMB9.318bn, up +42.96% YoY. Net profit attributable to shareholders of the parent company was RMB497mn, up +156.66% YoY. Net profit attributable to shareholders of the parent company after deducting nonrecurring items was RMB518mn, up +176.84% YoY. Basic EPS was RMB0.56, up +154.55% YoY. Weighted ROE was 13.73%, up 8.28pcts YoY. The company plans to distribute a cash dividend of RMB3.5 per 10 shares (tax inclusive), representing a payout ratio of 80.45%.

The company released its 1Q26 financial results: In 1Q26, revenue was RMB2.498bn, up 10.93% YoY. Net profit attributable to shareholders of the parent company was RMB264mn, up 39.52% YoY. Net profit attributable to shareholders of the parent company after deducting non-recurring items was RMB263mn, up 39.94% YoY. Basic EPS was RMB0.30, up 42.86% YoY. Weighted ROE was 6.77%, up 1.56pcts YoY.

Quick Take

In 1Q26, strong growth in fashion jewelry boosted earnings, and the company's stores successfully entered core commercial districts such as IFC and Hang Lung. In 1Q26, the company's revenue rose +10.9% YoY. Revenue from fashion jewelry, which carries a higher gross margin (accounting for 72% of 2025 revenue), increased over 30% YoY. Net profit attributable to shareholders of the parent company rose +39.5% YoY in 1Q26. In 1Q26, gross margin was 26.92%, /up 3.99pcts, benefiting from product mix optimization and higher gold prices. In 1Q26, selling, administrative, R&D, and financing expense ratios were 9.1%, 1.1%, 0.6%, and 0.5%, respectively, representing changes of +0.3, -0.2, -0.5, and +0.1pcts YoY. In terms of channels, as of end-March 2026, CHJ jewelry stores totaled 1,669 / a net decrease of 1 from the beginning of the year, of which franchised stores numbered 1,495/with a net opening of 9 stores in 1Q26. The company in 1Q26 successfully entered high-end commercial systems such as Shanghai IFC, Kunming Henglong and Zhengzhou Grand Emporium, further enhancing the brand's momentum and influence in core commercial districts.

By category, fashion jewelry posted high growth and volume expansion in 2025. In 2025, the company's fashion jewelry, traditional gold jewelry and other businesses (mainly leather goods) recorded revenue of RMB5.10bn/+71.8%, RMB3.61bn/+22.4% and RMB274mn/-9.7%, respectively. In 2025, the company's brand licensing revenue was RMB290mn/+11%. The high growth of fashion jewelry was driven by the company's strengthening of categories such as intangible cultural heritage filigree, fashion beaded bracelets, and IP collaborations. In 2025, the company partnered with emerging designers to launch the "Filigree Crescent Moon", "Filigree Begonia", and "Filigree Frog Button" series; consolidated the advantage of its specialty "beaded bracelet and cord braiding" counters; and successfully launched five major IP-licensed series featuring Pompompurin, Hangyodon, Mofusand, Butter Bear and Cinnamoroll. In 2025, the company's fashion jewelry gross margin was 20.7%/-8.3pcts, estimated to be mainly due to changes in channel mix; traditional gold product gross margin was 12.6%/+4.2pcts, mainly benefiting from rising gold prices and a higher proportion of high-craftsmanship products; brand licensing revenue is estimated to have a relatively low cost. In 2025, the gross profit mix of fashion jewelry, traditional gold, franchise and agency, and other revenue was 57.92%, 22.28%, 12.0% and 7.36%, respectively.

By channel, in 2025, the franchise and agency channel posted high growth, with continued expansion of franchised stores and active overseas deployment . In 2025, the company's franchise and agency, selfoperated jewelry, e-commerce and other revenue were RMB5.80bn, RMB1.98bn, RMB1.00bn and RMB270mn, up +79.8%, +8.4%, +2.8% and +40.4%, respectively. The high growth in the franchise model was mainly driven by the company's store expansion. At end-2025, the company had 1,486 stores/a net increase of 214 stores. The slower growth in the self-operated channel was mainly due to the company's push to convert self-operated stores to franchised ones. At end-2025, self-operated stores numbered 184 / a decrease of 55 stores. In addition, the company accelerated its expansion into the Southeast Asian market. In 2025, it entered theCambodian and Singapore markets. At end-2025, it had 11 overseas stores/with a total of 9 new stores added across four countries: Malaysia, Thailand, Cambodia and Singapore.

Driven by strong revenue growth and positive operating leverage, the net profit margin of the core jewelry business will increase significantly in 2025. Gross margin in 2025 was 22.1%/-1.5pcts, mainly due to a substantial increase in the proportion of revenue from the franchised business, which has a lower gross margin. In 2025, the company's selling, administrative, R&D, and financing expense ratios were 8.50%/-3.18pcts, 1.88%/- 0.19pcts, 1.01%/-0.04pcts, and 0.36%/-0.13pcts, respectively, benefiting from economies of scale. In 2025, the company's asset impairment was RMB210mn, mainly from a goodwill impairment loss of RMB170mn/-3.2%, which was due to the impairment of the women's bag business. The book goodwill at year-end was RMB340mn. In 2025, the company's net profit margin was 5.06%/+2.47pcts, and if the goodwill impairment impact is excluded, the company's 2025 adjusted net profit attributable to shareholders of the parent company was RMB670mn/+ 80.4%, and after further excluding the impairment and one-time equity incentive expenses, the adjusted net profit attributable to shareholders of the parent company was RMB743mn/+79.2%.

The gold price risk hedging system is well-established, using a combination of hedging and gold leasing to smooth the impact of gold price fluctuations on performance. The company simultaneously adopts a combination of physical gold leasing and gold forward hedging as its hedging instruments. Specifically: ① Gold leasing: The company borrows physical gold from banks through gold leasing business. Trading financial liabilities are mainly derivative financial instruments related to the gold business. At the end of 2025, the company's trading financial liabilities were RMB1.558bn (corresponding to approximately 1,598 kilograms of gold), compared to RMB940mn (corresponding to 1,525 kilograms of gold) in the same period of 2024; In addition, ② the company conducts gold inventory hedging business, mainly through tools such as the Shanghai Gold Exchange's gold deferred delivery business and gold futures trading wi th futures companies, to avoid inventory write-down losses and profit fluctuations caused by significant gold price swings. At the end of 2025, the book value related to the company's hedged items and hedging instruments was RMB1.608bn (the cumulative fair value hedge adjustment included in the book value of the recognized hedged items was RMB82mn). Under the combined effect of the two, the company's gain from changes in fair value at the end of 2025 was -RMB565,000 (compared to RMB374,000 at the end of 2024).

Outlook: The franchised channel will continue to expand, product design will see ongoing innovation, and overseas markets are expected to contribute incremental growth. The company will continue to focus on four core product matrices: intangible cultural heritage filigree, fashionable beaded jewelry, IP collaborations, and ancient-method gold inlay and fine gold, to continuously enhance product competitiveness. On the channel side, the company is expected to continue expanding its franchise network, further penetrating core commercial districts in third- and fourth-tier cities while increasing the share of high-end stores in higher-tier cities. On the internationalization front, the company will continue to deepen its presence in Southeast Asian markets, actively expand into emerging markets such as Japan and Australia, and at the same time increase the proportion of non-Chinese customers through various initiatives, thereby laying a solid foundation for global development.

Investment recommendation: We estimate the company's revenue for 2026-2028 will be RMB10.81bn,RMB12.19bn, and RMB13.53bn, representing YoY growth of +16.0%, +12.8%, and +11.0%, respectively. Net profit attributable to shareholders of the parent company is estimated at RMB777mn, RMB891mn, and RMB1,001mn, representing YoY growth of +56.2%, +14.7%, and +12.4%, respectively, corresponding to P/E ratios of 11.4x, 9.9x, and 8.8x. Given the company's ongoing channel expansion and product innovation, we assign a "Buy" rating.

Risks:

1) Risk of weaker-than-expected consumption demand: The company's products are mainly gold and gemstone-inlaid jewelry, with a relatively high average ticket price. If residents' income levels remain low or the macroeconomy stays weak, demand may decline. In addition, a rapid shortterm rise in gold prices may suppress endconsumer demand and reduce distributors’ willingness to stock inventory, affecting the company’ s sales. 2) Franchise management risk:The company implements standardized management of franchisee s in areas such as product pricing, store location and image, product quality supervision, marketing, and aftersales service. It has also established a supervision system to ensure franchise operations comply with company requirements. If franchisees’ business activities deviate from the company’s brand management principles and the company fails to exercise timely control, it may adversely affect the company’s brand image and future development. 3) Product quality control risk: The company has a certain proportion of gold products supplied through designated suppliers. If the company fails to effectively implement product quality control measures and quality issues or disputes arise, this may negatively affect the company's brand and operations.