Lj International Inc. (NASDAQ:JADE)

HONG KONG, July 30, 2013 /PRNewswire/ -- LJ International Inc. ("LJI" or the "Company"; NASDAQ: JADE), a company incorporated in the British Virgin Islands and a leading colored gemstone and diamond jeweler with retail and wholesale businesses, today announced the completion of the merger contemplated by the previously announced agreement and plan of merger dated March 22, 2013, among Flora Bloom Holdings, an exempted company with limited liability incorporated under the laws of the Cayman Islands ("Parent"), Flora Fragrance Holdings Limited, a business company with limited liability incorporated under the laws of the British Virgin Islands and wholly owned by Parent ("Merger Sub"), and the Company (the "Merger Agreement"). As a result of the merger, the Company became a wholly-owned subsidiary of Parent (the "Merger").

Under the terms of the Merger Agreement, which was approved by the Company's shareholders at an extraordinary general meeting on July 9, 2013, each ordinary share of the Company issued and outstanding has been cancelled in exchange for the right to receive US$2.00 in cash without interest (the "Merger Consideration"), except for the ordinary shares beneficially owned by Mr.Yu Chuan Yih, Mr. Peter Au, Ms. Ka Man Au, Mr. Hon Tak Ringo Ng, Mr. Yuin Chiek Lye, Ms. Vicky Chan, Mr. Zhicheng Shi, Primeon Inc., Hillside Financial and Shilin Investments, all of which ordinary shares have been cancelled without the right to receive any consideration thereon from the Company.

Shareholders of record as of the effective time of the Merger who are entitled to the Merger Consideration will soon receive a letter of transmittal and instructions from Computershare, the Company's paying agent, on how to surrender their share certificates in exchange for the Merger Consideration. Shareholders of record should wait to receive the letter of transmittal before surrendering their share certificates.

The Company also announced today that it has requested that trading of its ordinary shares on the Nasdaq Global Market ("Nasdaq") be suspended. The Company requested Nasdaq to file a Form 25 with the Securities and Exchange Commission (the "SEC") to delist the Company's ordinary shares and deregister the Company's registered securities. The deregistration will become effective in 90 days after the filing of Form 25 or such shorter period as may be determined by the SEC. In addition, the Company's obligations to file with the SEC certain reports and forms, including Form 20-F and Form 6-K, were suspended by filing a Form 15 with the SEC and will terminate once the deregistration becomes effective.

HONG KONG, July 9, 2013 /PRNewswire/ -- LJ International Inc. ("LJI" or the "Company"; NASDAQ: JADE), a company incorporated in the British Virgin Islands and a leading colored gemstone and diamond jeweler with retail and wholesale businesses, today announced that at an extraordinary general meeting of shareholders held today (the "EGM"), the Company's shareholders voted in favor of the proposal to approve and authorize the previously announced agreement and plan of merger dated March 22, 2013, among Flora Bloom Holdings, an exempted company with limited liability incorporated under the laws of the Cayman Islands ("Parent"), Flora Fragrance Holdings Limited, a business company with limited liability incorporated under the laws of the British Virgin Islands and wholly owned by Parent ("Merger Sub"), and the Company (the "Merger Agreement"), pursuant to which Merger Sub will be merged with and into the Company, with the Company surviving the merger as a wholly-owned subsidiary of Parent (the "Merger").

Approximately 68.6% of the Company's total outstanding shares were voted in person or by proxy at the EGM. Of these shares voted in person or by proxy at the EGM, more than 83% were voted in favor of the approval and authorization of the Merger Agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger.

The parties expect to complete the Merger later this month, subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement. Upon completion of the Merger, the Company will become a privately-held company and its shares will no longer be listed on the NASDAQ Global Market.

Houlihan Lokey (China) Limited is serving as financial advisor to the Special Committee. Akin Gump Strauss Hauer & Feld LLP is serving as United States legal advisor to the Special Committee and Maples and Calder is serving asBritish Virgin Islands legal advisor to the Special Committee. Andrew N. Bernstein, P.C. and Han Kun Law Offices are serving as United States and PRC legal advisors to the Company, respectively.

Fried, Frank, Harris, Shriver & Jacobson LLP is serving as United States legal advisor to the buyer group. Conyers Dill& Pearman and King & Wood Mallesons are serving as British Virgin Islands and PRC legal advisors to the buyer group, respectively. Sidley Austin LLP is serving as United States legal advisor to Mr. Yu Chuan Yih, Chairman of the Company's Board of Directors, President and Chief Executive Officer.

HONG KONG, May 30, 2013 /PRNewswire/ -- LJ International Inc. ("LJI" or the "Company"; NASDAQ: JADE), a foreign private issuer incorporated in the British Virgin Islands and a leading colored gemstone and diamond jeweler with retail and wholesale businesses, today announced that it has called an extraordinary general meeting of shareholders (the "EGM"), to be held at 10:00 a.m. on July 9, 2013 (Shenzhen time). The meeting will be held at the Company's Shenzhen office, 10th Floor, Block 18, Free Trade Zone, Shatoujiao, Shenzhen, People's Republic of China, to consider and vote on the proposal to approve the previously announced agreement and plan of merger dated March 22, 2013, among Flora Bloom Holdings, an exempted company with limited liability incorporated under the laws of the Cayman Islands ("Parent"), Flora Fragrance Holdings Limited, a business company with limited liability incorporated under the laws of the British Virgin Islands and wholly owned by Parent ("Merger Sub"), and the Company (the "Merger Agreement"), pursuant to which Merger Sub will be merged with and into the Company, with the Company surviving the merger as a wholly-owned subsidiary of Parent (the "Merger"). If completed, the Merger would result in the Company becoming a privately-held company and its shares would no longer be listed on the NASDAQ Global Market. The Company's Board of Directors, acting upon the unanimous recommendation of an independent committee formed by the Board of Directors, approved the Merger Agreement and the merger contemplated in the Merger Agreement and resolved to recommend that the Company's shareholders vote to approve and authorize the Merger Agreement and the merger.

Shareholders of record as of the close of business on May 28, 2013 will be entitled to vote at the EGM. Additional information regarding the EGM and the Merger Agreement can be found in the Transaction Statement on Schedule 13E-3, and the proxy statement attached as Exhibit (a)-(1) thereto, filed with the Securities and Exchange Commission (the "SEC"), which can be obtained from the SEC's website (http://www.sec.gov).

Investors and shareholders are urged to read carefully and in their entirety these materials and other materials filed with or furnished to the SEC, as they contain important information about the Company, the proposed merger and related matters.

This announcement is neither a solicitation of proxy, an offer to purchase nor a solicitation of an offer to sell any securities and it is not a substitute for any proxy statement or other filings that have been or will be made with the SEC.

Houlihan Lokey (China) Limited is serving as financial advisor to the Special Committee. Akin Gump Strauss Hauer & Feld LLP is serving as United States legal advisor to the Special Committee and Maples and Calder is serving as British Virgin Islands legal advisor to the Special Committee. Andrew N. Bernstein , P.C. and Han Kun Law Offices are serving as United States and PRC legal advisors to the Company, respectively.

Fried, Frank, Harris, Shriver & Jacobson LLP is serving as United States legal advisor to the buyer group. Conyers Dill & Pearman and King & Wood Mallesons are serving as British Virgin Islands and PRC legal advisors to the buyer group, respectively. Sidley Austin LLP is serving as United States legal advisor to Mr. Yu Chuan Yih , Chairman of the Company's Board of Directors, President and Chief Executive Officer.  

Premium alert sent to members on 10/2/2012

Recall that we discussed the JADE going private scenario several times over the past few months.  As of 7/16/2012 Yu Zhen (Parent company Fosun) had purchased 1,721,282 JADE shares or 6.6%. Also recall that on 8/13/2012 JADE announced that they received a preliminary, non binding proposal letter from the CEO Mr. Yu Chuan Yih, to acquire all the outstanding shares of the Company for $2.00 per share. We stated that there is a good possibility that Fosun will propose a competitive offer.

Well the battle has begun.  A 13D filed on 10/01/2012 reveals that Yu Zhen has purchased additional JADE stock and now owns 7.1%. But key verbiage in the 13D suggests that Yu Zhen will not let management take the Company private at fire sale prices.

Yu Zhen originally acquired the Common Stock that is the subject of this Schedule 13D for investment purposes. With respect to the recently proposed “going private” transaction involving the Company as described in the Company’s press release dated August 13, 2012 (the “Transaction”), Yu Zhen believes that the terms of the proposed Transaction as described in the press release substantially undervalue the Company. Yu Zhen intends to closely monitor the Company’s response to the Transaction proposal in order to see that the special committee of the Board of Directors of the Company acts independently and at all times in a manner consistent with the fiduciary duties owed by the Board to the Company’s shareholders.

Combine this development with the fact that Roth capital only reduced its price target on JADE to $4.00 from $5.00 well after the 8/13/2012 going private announcement could imply that ROTH also feels the $2.00 offer is too low.

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Second Quarter 2012 Results

• Operating Revenue  in the second quarter 2012 increased 6% year-over-year to US$42.75 million from US$40.17 million.
• Net loss in the second quarter 2012 was US$1.91 million, compared to a net income of US$3.75 million in the second quarter 2011. Basic and diluted loss per share were both US$0.15, compared to basic and diluted earnings per share of both US$0.05, in the second quarter 2011.

Yu-Chuan Yih, Chairman and Chief Executive Officer of LJ International, commented on the results. "In the face of a bleak global economy and decelerated Chinese economic growth, the jewelry sector has seen a prominent slowdown in the second quarter, especially in discretionary gem set items, and has affected the industry as a whole. As a jeweler with close to half our revenue exposure in gem-set jewelry, we felt a greater impact than jewelers with a higher proportion on gold jewelry."

"We responded to this challenge on multiple fronts. First, we cut our marketing expenses to below 6% over sales. Second, we developed and launched more diamond and gem-set jewelry at a lower entry price point range to capture a broader segment of consumers and sustain a similar margin profile to protect our profitability. Third, we realigned our stores by replacing the non-performing stores with new openings in much better locations which carried a broader appeal. With our core competencies of innovative design and craftsmanship, we achieved across-the-board revenue growth in all markets for our wholesale business, resulting in a performance in line with our expectations.

"We believe these strategic initiatives will ensure we are best positioned to capitalize on growth opportunities in market upturns."

The Third Quarter and 2012 Guidance:

The third quarter is traditionally a stronger quarter than the second quarter, the Company expects operating revenue for the third quarter 2012 to be higher than that of second quarter and expects a modest year-over-year growth in revenue.

With the market slow down, the Company revises its expectations for retail revenue for full year 2012, anticipating it to be in the range of US$130 million to US$133 million, which represents a 15% to 18% year-over-year growth. Wholesale revenue is expected to maintain at a similar level as in 2011. This represents our current and preliminary view, which is subject to change.

HONG KONG, August 29, 2012 /PRNewswire-Asia/ -- LJ International Inc. ("LJI" or the "Company," NASDAQ: JADE), a leading colored gemstone and diamond jeweler with retail and wholesale businesses, today announced that the special committee of the Company's Board of Directors (the "Special Committee") has appointed Houlihan Lokey as its independent financial advisor.

As previously announced, the Company's Board of Directors formed the Special Committee to review and evaluate the August 13, 2012 non-binding proposal from Mr. Yu Chuan Yih, Chairman of the Board of Directors, President and Chief Executive Officer of the Company, and Urban Prosperity Holding Limited, an affiliate of FountainVest Partners, to acquire all of the outstanding ordinary shares of the Company not currently owned by Mr. Yih at a proposed price of $2.00 per ordinary share, in cash, subject to certain conditions (the "Proposal").

The Special Committee is considering the Proposal, as well as the Company's other strategic alternatives. No decisions have been made by the Special Committee with respect to the Company's response to the Proposal. The Special Committee has not set a definitive timetable for the completion of its evaluation of the Proposal or any other alternative and does not currently intend to announce developments unless and until an agreement has been reached. There can be no assurance that any definitive offer will be made, that any agreement will be executed, or that the Proposal or any other transaction will be approved or consummated.

HONG KONG, August 23, 2012 /PRNewswire-Asia/ -- LJ International Inc. ("LJI" or the "Company," NASDAQ: JADE), a leading colored gemstone and diamond jeweler with retail and wholesale businesses, today announced that the special committee of the Company's Board of Directors (the "Special Committee") has appointed Akin Gump Strauss Hauer & Feld LLP as its legal counsel.

As previously announced, the Company's Board of Directors formed the Special Committee to review and evaluate the August 13, 2012 non-binding proposal from Mr. Yu Chuan Yih, Chairman of the Board of Directors, President and Chief Executive Officer of the Company, and Urban Prosperity Holding Limited, an affiliate of FountainVest Partners, to acquire all of the outstanding ordinary shares of the Company not currently owned by Mr. Yih at a proposed price of $2.00 per ordinary share, in cash, subject to certain conditions (the "Proposal").

The Special Committee is considering the Proposal, as well as the Company's other strategic alternatives. No decisions have been made by the Special Committee with respect to the Company's response to the Proposal. The Special Committee has not set a definitive timetable for the completion of its evaluation of the Proposal or any other alternative and does not currently intend to announce developments unless and until an agreement has been reached. There can be no assurance that any definitive offer will be made, that any agreement will be executed, or that the Proposal or any other transaction will be approved or consummated.

HONG KONG, August 22, 2012 /PRNewswire-Asia/ -- LJ International Inc. (NASDAQ: JADE) ("LJI" or "the Company"), a leading colored gemstone and diamond jeweler with retail and wholesale businesses, today announced that its Board of Directors has formed a special committee of disinterested directors (the "Special Committee") consisting of 3 independent directors, Mr. Xiang Xiong Deng, Mr. Jin Wang and Ms. Jieyun Yu, to consider the non-binding proposal from Mr. Yu Chuan Yih ("Mr. Yih"), Chairman of the Board of Directors, President and Chief Executive Officer of the Company, and Urban Prosperity Holdings Limited, an affiliate of FountainVest Partners to acquire all of the outstanding ordinary shares of the Company not currently owned by Mr. Yih.

The Special Committee intends to retain an independent financial advisor and legal counsel to assist it in its work. No decisions have been made by the Special Committee with respect to the Company's response to the proposed transaction. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated.

HONG KONG, August 13, 2012 /PRNewswire-Asia/ -- LJ International Inc. (NASDAQ: JADE) ("LJI" or "the Company"), a leading colored gemstone and diamond jeweler with retail and wholesale businesses, today announced that its Board of Directors has received a preliminary, non-binding proposal letter dated August 13, 2012 from Mr. Yu Chuan Yih, Chairman of the Board of Directors, President and Chief Executive Officer of the Company, and Urban Prosperity Holding Limited, an affiliate of FountainVest Partners, ("FountainVest", together with Mr. Yih, the "Consortium Members"), to acquire all of the outstanding ordinary shares of the Company not currently owned by Mr. Yih at a proposed price of $2.00 per ordinary share, in cash, subject to certain conditions. Mr. Yih currently beneficially owns, in the aggregate, approximately 11% of the Company's outstanding ordinary shares.

According to the proposal letter, the Consortium Members will form an acquisition vehicle for the purpose of pursuing the transaction and the acquisition is intended to be financed by equity capital from the Consortium Members (and, if applicable, debt financing). A copy of the proposal letter is attached hereto as Exhibit A.

The Board of Directors intends to form a special committee of disinterested directors to consider the proposal. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated.

Fosun International has taken a stake into JADE, this news will assist Fosun in implementing all of its merger and acquistion goals.

HONG KONG, July 19, 2012 /PRNewswire-Asia/ -- Fosun International Limited ("Fosun" or the "Company", together with its subsidiaries, the "Group", HKEx stock code: 00656) today announced the signing of a cooperation agreement for development finance with China Development Bank Corporation ("China Development Bank") that valued HK$30 billion in aggregate, providing a robust support for the Group's business development in the future.

Mr. Guo Guangchang, Chairman of Fosun, said, "China Development Bank is an important partner of Fosun. To foster a closer collaboration, Fosun and China Development Bank had mutually agreed to build a long-term, stable and in-depth collaboration in development finance. This comprehensive and in-depth strategic partnership would allow both parties to prosper together, by leveraging Fosun's competitive edges with China Development Bank's strengths in financing."

According to the agreement, China Development Bank will provide Fosun with a comprehensive financial service coverage including investments, loans, debts, leases and securities issuances. In addition, the Bank will also serve as a financial advisor, providing consultancy and financing planning services for Fosun's business strategic plans, mergers, acquisitions and reorganisations, debt issuances, investment and financing solutions, legal and governance structures and syndicated financings.

Mr. Guo said, "The financing support from China Development Bank represents strong financial reassurance on Fosun's rapidly-developing investment capabilities, which lays a solid financial backing towards the pursuit of the Group's vision of becoming 'a premium investment group with a focus on China's growth momentum'."

Via a schedule D, Yu Zhen Industrial reports 5.4% stake in LJ International

This Schedule 13D is filed by Yu Zhen Industrial Limited. (“Yu Zhen”), a corporation organized under the laws of Hong Kong, China. The principal business address for Yu Zhen is 269 Fangbangzhong Road, Shanghai, China. The principal businesses of Yu Zhen include import and export businesses, as well as industrial investment. Yu Zhen is a wholly owned subsidiary of Yuhai Industrial Company Limited (“Yuhai”), which in turn is a wholly owned subsidiary of Shanghai Yuyuan Tourist Mart Co., Ltd. (“Yuyuan”). Shanghai Fosun Industrial Investment Co., Ltd. (“Fosun Industrial”) owns 17.3% of Yuyuan, making it Yuyuan’s largest shareholder, and appoints three members of Yuyuan’s eight-member board of directors, including the chairman of the board. Accordingly, Fosun Industrial may be deemed to be a controlling shareholder of Yuyuan.

Fosun Industrial is a subsidiary of Shanghai Fosun High Technology (Group) Co., Ltd (“Fosun Hi-Tech”). Fosun Hi-Tech is a subsidiary of Fosun International Limited (“Fosun International”). Fosun International is a subsidiary of Fosun Holdings Limited (“Fosun Holdings”), which in turn is a subsidiary of Fosun International Holdings Ltd. (“Fosun International Holdings”). Fosun International Holdings is controlled by Mr. Guo Guangchang. The place of organization, principal business address and principal business of Yuhai, Yuyuan, Fosun Industrial, Fosun Hi-Tech, Fosun International, Fosun Holdings, and Fosun International Holdings are set forth in Exhibit 99.1, which is attached hereto and incorporated by reference.

Purpose of Transaction:

Yu Zhen acquired the Common Stock that is the subject of this Schedule 13D for investment purposes. Yu Zhen will continue to evaluate its ownership and voting position in the Issuer and may consider and pursue the following future courses of action, among others:

(i) continuing to hold the Common Stock for investment;

(ii) acquiring additional Common Stock in the open market or in privately negotiated transactions; or

(iii) disposing of all or a portion of the Common Stock in open market sales or in privately negotiated transactions.

Yu Zhen’s future actions with regard to this investment will be dependent upon its review and evaluation of numerous factors, including the price levels of the Common Stock; the Issuer’s business, financial condition, operating results and prospects; general market and economic conditions; and the relative attractiveness of alternative business and investment opportunities. Consistent with its investment purpose, Yu Zhen or its representatives may engage in communications with other shareholders of the Issuer and members of the Issuer’s management and board of directors with regard to the business operations of the Issuer and strategies for enhancing shareholder value

First Quarter 2012 Results

• Retail revenue was US$36.72 million, up 44% over the first quarter 2011.
• ENZO had net additions of 6 new stores, expanding the retail network to 208 stores at the end of March 2012. Store count further grew to 218 at the end of May 2012.
• Comparable store sales increased by 17 % over the first quarter 2011.
• Wholesale revenue was US$15.49 million, down 1% over the first quarter 2011.
• Both basic and diluted loss per share was US$0.09, for the first quarter 2012, compared to both basic and diluted earnings per share of US$0.11 for the first quarter 2011.

Yu-Chuan Yih, Chairman and Chief Executive Officer of LJ International, commented on the results. "Against the backdrop of a challenging macro environment with decelerating economic growth, we are pleased to report that we achieved our targets for business growth in the first quarter, with both retail and wholesale businesses demonstrating their anticipated performance."

"We continue to share the view that the long term outlook of China's luxury market is promising, yet the growth has evidently slowed down, a trend which is expected to appear more pronounced in slow seasons such as the second quarter of the year, and is compounded by comparisons as a result of the exceptionally strong growth last year. In light of economic headwinds, we will continue to place a strong focus on optimizing store productivity and efficiency while cautiously executing our roadmap for growth, and drive sales and traffic with a coherent product strategy to meet changing preferences in anticipation of a slower economic climate."

Mr. Yih concluded, "With a solid foothold built by ENZO in the past few years along with disciplined expansion and a coherent product strategy, we are confident that the Company, despite concerns about China's slower economy, will maintain its growth in the China market and sustain its position in the global market through the wholesale business, delivering long-term value to our shareholders."

Ringo Ng, Chief Financial Officer of LJ International, added: "The Company's gross margin level moderately improved as a result of a higher share of retail business in the business mix. Alongside this, our operating level profitability continued to absorb the investment for growth, a commitment which we believe is imperative to form a solid foundation for long-term growth."

"While we will continue to make necessary investments for business growth, build the brand, upgrade internal control over financial reporting, and commit additional resources to enhancing our operating infrastructure, we will also put cost management measures in place to improve competitiveness in our cost base structure and to alleviate the moderated effect on margin levels, which we expect to trend up after the investment period."

2012 Guidance:

The second quarter is generally a slow season of the year with the absence of major festivals. The Company expects operating revenue for the second quarter 2012 to be lower than that of the first quarter, due to seasonality and a decelerating rate of economic and industry growth in major markets.

The Company maintains its view to expect retail revenue for full year 2012 to be in the range of US$135 million to US$140 million, representing a 20% to 25% year-over-year growth. Wholesale revenue is expected to maintain at a similar level as in 2011. This represents our current and preliminary view, which is subject to change.

Fourth Quarter 2011 Results

• Retail revenue was US$31.61 million, up 28% over the same period in 2010.
• ENZO added net 20 new stores, expanding the retail network to 202 stores at the end of 2011.
• Comparable store sales (or same store sales) increased by 29% over the same period last year.
• Wholesale revenue was US$25.03 million, up 23% year-over-year, driven by the US market which grew by 28%.

Yu-Chuan Yih, Chairman and Chief Executive Officer of LJ International, commented on the results. "We are pleased to report another solid quarter capping a year of exceptional progress. 2011 was a year of continued strong momentum, driven by a robust growth in the retail business and healthy development in our wholesale platform amidst a volatile global economic environment. It was also a transformative year for us as we invested to strengthen our foothold in the China market and to enhance our operational and financial infrastructure for future growth. We are pleased to have exited the year surpassing our retail expansion targets of more than 200 ENZO stores by the end of 2011.

"Looking forward, we are confident in the long-term growth prospect of the China retail jewelry market, while remaining cautious and vigilant of the near term market slowdown brought by economic softness and macro headwinds. After accelerating retail network expansion in 2011, we will now focus on ramping up new stores, driving average sales productivity and improving same store sales growth, while strategically strengthening our presence in tier two and three cities. On wholesale, our solid partnership with leading clients, flexible deployment of materials and innovative design will allow us to maintain performance in the competitive market environment and warrant our unique position in the market."

Mr. Yih concluded, "Our strategic initiatives in 2011 position us to enter 2012 with a solid footprint in China. We will remain focused on executing our growth strategies and enhancing shareholder value in the long-term."

Ringo Ng, Chief Financial Officer of LJ International, added: "The lower profitability we experienced during the period is a reflection of our continued investment in retail network expansion, brand building and upgrade of our accounting and operational infrastructure, which are critical to our long term growth."

"We will focus on enhancing operational performance and financial returns, while maintaining our commitment to grow market share, build ENZO's brand, and strengthen retail network. These may moderate our near-term margins, nevertheless we believe that these are necessary investments to support our growth. The disciplined execution of our growth strategy will ensure that this expectation is realized."

2012 Guidance:

Management is of the view that European economic turmoil may adversely affect global economic recovery and slow down the growth rate of luxury goods demand in China's retail market. The slowing sales momentum in China retail market this year thus far and macro headwinds could impact the Company's high sales growth momentum.

The Company expects that retail revenue for full year 2012 to be in the range of US$135 million to US$140 million, representing a 20% to 25% year-over-year growth. Wholesale revenue is expected to maintain at a similar level as in 2011. This represents our current and preliminary view, which is subject to change.

Basic and diluted earnings per share for the third quarter and the first nine months have reflected the effect of charges to the holders of convertible preferred shares issued by ENZO Jewelry Inc to institutional investors during second quarter of 2011. This is a non-cash item. From the operating income perspective, non-GAAP operating income per share on a diluted basis (calculated by total operating income divided by weighted average number of shares used in calculating diluted earnings per share) for the third quarter and the nine month period ended September 30, 2011 are US$0.09 and US$0.33 respectively.

Yu-Chuan Yih, Chairman and Chief Executive Officer of LJ International, commented, "We are pleased to report strong performance for the third quarter 2011, with operating revenue exceeding top line guidance, driven by robust retail revenue growth and solid wholesale revenue growth. The healthy business growth was driven by our effective strategy, which allowed us to fully leverage on market opportunities in China through accelerated expansion in retail business; and to deepen partnership with global premium clientele in five platforms for wholesale business.

"Looking ahead, we are on track to have about 200 retail stores at the end of the year, which represents 67 new openings in the year. In addition to growing the network, strengthening the sales force would be a priority, which will optimize the benefits from the brand's position and expanded network. Wholesale growth is expected to continue to deliver steady growth amidst uncertain global economy, backed up by our quality jewelry and strong partnership with global clients which are leaders in their respective platforms. Our diversified client portfolio also allows us to ride on growth in different platforms.

Outlook:

For the fourth quarter 2011

• Revenue for the fourth quarter 2011 will range between US$52.0 million and US$55.0 million, representing a year-over-year increase of 15% to 22%.
  
• Retail revenue is expected to be in the range of US$32.0 million to US$34.0 million, a 29% to 38% year-over-year growth.
  
• Wholesale revenue is expected to be in the range of US$20.0 million to US$21.0 million, representing flat to 3% year-over-year increase.
  

• Operating income to be US$4.5 million to US$5.0 million, representing a decrease of 19% to 10% year-over-year, impacted by higher marketing and professional fees.

• Net income from operating businesses and excluding non-recurring items and derivative gain from warrants to be in the range of US$3.1 million to US$3.6 million, a 22% to 10% year-over-year decrease.

For full year 2011

• Operating revenue will range between US$185 million and US$188 million, representing a year-over-year increase of 32% to 34%.
  
• Operating income to be US$15.0 million to US$15.5 million, representing an increase of 5% to 9% year-over-year.
  
• Net income from operating businesses and excluding non-recurring items and derivative gain from warrants to be in the range of US$10.3 million to US$10.8 million, a decrease of 2% to an increase of 3% year-over-year.

HONG KONG--(Marketwire - Aug 25, 2011) - LJ International Inc. (LJI) (NASDAQ: JADE) announced today that the Audit Committee of the Board of Directors of the Company has approved the engagement of Deloitte Touche Tohmatsu CPA Limited ("Deloitte") as LJI's independent registered public accounting firm for the fiscal year 2011 on August 23, 2011.

This engagement follows the resignation of the Company's former independent registered public accounting firm, Gruber & Company, LLC, effective August 23, 2011.

Mr. Yu Chuan Yih, Chief Executive Officer, commented, "With the significant growth LJI has experienced in the past few years, we believe the addition of a Big Four accounting firm provides a sound foundation for continued success in the years to come and commitment to upholding the highest levels of disclosure transparency and corporate governance. LJI is excited to welcome Deloitte as our new auditor and appreciates the commitment and accounting expertise provided by Gruber & Company, LLC in the past."

Second Quarter 2011:

• Retail revenue was US$28.40 million, up 70% year-over-year.
• ENZO added 16 new stores, expanding the retail network to 154 stores at the end of June 2011.
• Among the new stores, five and eight are in tier one and tier two cities, respectively, and three are in tier three cities.
• Comparable store sales increased 61% year-over-year. Growth was exceptionally strong with some large-size transactions.
• Wholesale revenue was US$13.16 million, down 19% year-over-year.
• Sales from the US and Europe down 26% and 6% year-over-year, respectively, representing 71% and 20% of wholesale revenue, while sales from Asia and other markets grew 49% and represented 9% of wholesale revenue.
• EPS was $0.13 vs $0.09

First Half 2011:

• Retail revenue was US$56.21 million, up 70% year-over-year.
• ENZO added 21 retail stores, making the network grow to 154 stores from 133 at the end of 2010. Among the new stores, six and eight are in tier one and tier two cities, respectively, and seven are in tier three cities.
• Comparable store sales increased 24% and 61% year-over-year in the first and second quarter, respectively, showing continued strong growth momentum.
• Wholesale revenue was US$28.75 million, up 7% year-over-year.
• Sales from the US and Asia and other markets grew 11% and 60% year-over-year, respectively, representing 71% and 8% of wholesale revenue. Sales from Europe dropped 12%, representing 21% of wholesale revenue.
• EPS wasw $0.25 vs. $0.21

Yu-Chuan Yih, Chairman and Chief Executive Officer of LJ International, commented, "We are pleased to report robust business performance for the second quarter of 2011, with results exceeding most of our guidance. Our solid financial performance came in ahead of our expectation, mainly driven by the stronger than expected performance of ENZO, the retail business arm targeting affordable luxury segment. The exponential growth in retail business was a result of the successful implementation of our branding, marketing and product strategy, as well as the acceleration of our network expansion strategy, which contributed to a strong comparable store sales growth and increased average selling price, driving companywide strong revenue growth and margin enhancement during the quarter."

Business Updates and Outlook:

Retail/ENZO: Expansion on Track

• The Company operated 154 ENZO stores at the end of June 2011, up from 138 at the end of March, 2011, a net increase of 16 stores or 12%. The Company plans to bring the total number of stores to about 180 and 200 by the end of the third quarter and by the end of 2011.
• In line with the affordability and consumption pattern of the markets, more ENZO stores are located in the major cities in China, with 32% and 40% of total are located in the first and second tier cities, respectively, at the end of June, with the remainder in third tier cities.
• Comparable store sales grew 61% during the quarter. The exceptional strength in comparable store sales reflected the popularity of our new products and collections launched in the first half of the year, and that there were some large-size transactions during the quarter. Comparable store sales growth is expected to maintain a strong growth momentum while growth rate is expected to moderate.

Wholesale : LJI Remained a Key Partner Amidst Industry Consolidation

• Our customer base remained stable during the quarter. While some of our customers have been consolidating the number of suppliers amid challenging market conditions, the Company remains as a key partner of our customers due to the high quality of our products and service as well as long-term relationship. The reduced number of vendors for customers would mean opportunities for us to deepen penetration of existing customer base. The Company will strengthen collaboration with core customers to better align product strategy and design to meet changing demand.
• Our customers have been maintaining a lean-inventory strategy after the financial turmoil in 2008-9, and sales orders tend to be short-notice for stock replenish nature, it maintains space for a stable demand for our value-for-money mid-priced jewelry for wholesale market.

Outlook:

Strong Growth Momentum Continues for 2011, Fuelled by Close to 40% Growth in Retail Revenue

Management estimates that revenue for the third quarter 2011 will range between US$42.5 million and US$44.5 million, representing a year-over-year increase of 19% to 25%. Retail revenue is expected to be in the range of US$28.0 million to US$29.0 million, representing a 33% to 38% year-over-year growth. Wholesale revenue is expected to be in the range of US$14.5 million to US$15.5 million, representing flat to 6% year-over-year increase.

Operating income is expected to be US$3.7 million to US$4.2 million, representing flat to an increase of 12% year-over-year, impacted by higher professional fees.

Net income from operating businesses and excluding non-recurring items and derivative gain from warrants is forecast to be in the range of US$3.5 million to US$4 million, a 9% to 25% year-over-year increase.

HONG KONG--(Marketwire - Jul 7, 2011) - LJ International Inc. (LJI) (NASDAQ: JADE), a leading jewelry manufacturer and retailer, today announced that its ENZO retail division is operating 156 stores to date, an increase from 138 stores on March 31, 2011. As previously announced, additional ENZO stores are scheduled to open in the second half of 2011, bringing the total count to an estimated 200 stores throughout China by year end.

Scheduled store openings are in major cities within the People's Republic of China including Shenzhen, Guangzhou, Fuzhou, Nanning and Hong Kong. LJI expects to open approximately 10 new ENZO stores in these regions. New locations were chosen for the growing consumer base and preferences for jewelry that is affordable and luxurious.

"We are proud of our progress to date with ENZO's expansion and look forward to continuing our effort in the second half of 2011. The newly opened stores carry ENZO's main product lines of colored jewelry as well as pieces that address the style preferences of local consumers. Our trained sales team is on hand to educate and advise on customer purchases," said by Yu Chuan Yih, Chairman and CEO of LJ International.

First Quarter Results:

• Revenues for the first quarter of 2011 totaled $43.4 million, up 62% from $26.9 million in the first quarter of 2010
• Companywide gross profit rose 66% in the first quarter 2011, to $18.5 million from $11.1 million a year earlier.
• LJI's net income for the first quarter of 2011 was $3.5 million, or $0.11 per fully diluted share. Net income increased 57% on a per-share basis from $1.9 million, or $0.07 per share, in the first quarter of 2010.

"The most notable aspect of the financial results reported today is the strong performance in both wholesale and retail divisions," said LJI Chairman and CEO, Yu Chuan Yih. "The ENZO retail division continues to grow rapidly through increased sales and maintaining its high margins. This contributes the lion's share of Companywide profit. But our wholesale operations also have rebounded strongly from a year ago. This is due in part to the economic recovery in North America, LJI's primary wholesale market. A strong first quarter reflects not only increased improvement in operational efficiency, but also the growing appeal of jewelry lines sold through LJI's retail partners. Meanwhile, the revenue and profit growth in our ENZO retail chain testifies to the appeal of our brand to the ever-expanding population of affluent Chinese consumers looking for Western style and luxury jewelry at reasonable prices."

HONG KONG--(Marketwire - April 14, 2011) - LJ International Inc. ("LJI") today announced that it has entered into a definitive agreement for a private placement of shares of Enzo Jewelry, Inc. ("ENZO"), its indirect wholly-owned subsidiary, with a consortium of investors (the "Investors") led by the private equity firms FountainVest Partners and Spring Capital Asia. 

Under the terms of the agreement, the Investors have agreed to make an initial investment of US$41.38 million, including an investment of US$31.40 million in newly issued ENZO shares and an acquisition of existing shares of ENZO from LJI in the amount of US$9.98 million. In aggregate, the Investors will hold approximately 28.27% of ENZO's total issued share capital after giving effect to the transaction, which will be in the form of a newly created class of redeemable convertible preferred shares.

LJI intends to apply the net proceeds from the investment towards capital expenditures for new store openings, marketing expenses and general working capital. As part of the transaction, the Investors will also receive certain rights to make a further investment of approximately US$25.88 million to acquire up to 10.35% of ENZO. LJI has also agreed to appoint Investor representatives to ENZO's board of directors

Rodman and Renshaw on JADE               3/30/2011

JADE: All-Around Strong 4Q10 Results and Above-Exp. 1Q11 Guidance; Raising 1Q11 EPS Est.

LJ International Inc. (NASDAQ: JADE) reported 4Q10 EPS of $0.14 vs. our and consensus EPS estimate of $0.13, and vs. $0.09 LY, driven by across-the-board strength in higher than expected revenues in both the retail and wholesale segments, gross margin expansion, and prudent cost controls.

Retail ($24.7MM / 54.9% of 4Q10 total revenues). Retail sales increased 47.7% YoY to $24.7MM, driven by a combination of 38 net new stores and 19% same-store sales growth. Learning from western jewelers, Enzo is marketing and promoting more around holidays to drive the topline. Looking ahead into 1Q11, Enzo has had a record Valentine’s Day and March 8^th, known as “International Women’s Day” in China and certain other countries around the globe.

Store opening plan still roughly on track. Enzo ended 2010 with 133 stores and remains roughly on track to achieve its 200 store goal by year-end 2011. We estimate PP&E expenditures of $3.5MM in 4Q10 (up from $1.8MM in 3Q10), likely for new store fixtures.

Wholesale ($20.3MM / 45.1% of 4Q10 total revenues). Wholesale revenues declined 9.5% YoY to $20.3MM, anniversarying the somewhat strong pent-up demand released in 4Q09, in which wholesale revenues jumped 52.6% QoQ to $22.4MM. Given the luxury of a steady recovery in this segment, LJ Int’l has been turning away less profitable orders over the past several months, and thereby able to raise 4Q10 gross margin to ~21% from ~19% LY in this segment.

Raising 1Q11 and 2010 EPS estimates to $0.10 and $0.54, respectively, from $0.07 and $0.52 on account of raised guidance. Given that 1Q11 is in the bag, we view the guidance as essentially an earnings pre-announcement for 1Q11. We are maintaining our full-year 2011 EPS estimate at $0.64, given that the recovery in the wholesale business has historically been and could continue to be choppy, yielding lower topline visibility in comparison to retail.

Reiterate Market Outperform Rating and 12-month PT of $7. Our 12-month price target of $7 applies a 9x NTM P/E multiple to our 2012 EPS estimate of $0.64, which we believe conservatively balances 1) Enzo’s significant store growth opportunity; 2) Enzo’s less dependence on the price / demand for gold compared with its peers; against a) potential store base, merchandise adj’s associated with a rapidly expanding concept; and b) potential choppiness in the wholesale recovery trajectory. We have seen a recent flight-to-quality in light of continued controversy over U.S.-listed Chinese companies, and believe that JADE should be viewed as a high quality name – the company, run by a Hong Kong-originated management team, has been public since 1998. Its distributor and retail customers are based mainly in the U.S., which includes well-known department stores such as JCPenney and Macy’s and online/tv shopping networks such as HSN and QVC. We also view its Chinese retail business as highly transparent, given that all store locations, products, pricing strategy are easily verifiable.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Rodman and Renshaw on JADE                                      3/29/2011

JADE: All-Around Strong 4Q10 EPS Results and 1Q11 Guidance; Reiterate MO Rating and $7 PT

LJ International Inc. (NASDAQ: JADE) this morning reported 4Q10 EPS of $0.14 vs. our and consensus EPS estimate of $0.13, and vs. $0.09 LY, driven by across-the-board strength in higher than expected revenues in both the retail and wholesale segments, gross margin expansion, and prudent cost controls. Total store count stood at 133 vs. 124 at the end of September 2010 and vs. 95 LY.

• 4Q10 revenues rose 15.0% YoY to $45.0MM, driven by 47.6% YoY increase in retail sales to $24.7MM (SSS up 19% with 82 stores in the comp base). Wholesale declined 9.5% YoY to $20.3MM, but remains higher than the prior guidance of $19.0MM. Sequentially, wholesale was up 39.0% from 3Q10.
• Gross margin widened by 792 bps YoY to 38.9%, driven by gross margin expansion within both retail (54% vs. 47% LY) and wholesale (21% vs. 19% LY).
• Operating expense rate climbed 237 bps YoY to 26.6%, partly due to slightly higher rents than LY (10% of revenues vs. 8% LY).
• Net net, 4Q10 net income margin expanded 313 bps YoY to 8.9% and exceeded our 8.2% estimate, which reflects higher gross margins and improving cost leverage.

OUTLOOK

Importantly, JADE issued above-expectation guidance for 1Q11, which signifies continued positive momentum in the underlying fundamentals. 1Q11 EPS is expected at $0.10 (vs. our prior EPS est. of $0.07). Revenues are anticipated at ~$40MM (vs. our prior $37.0MM est.), with retail sales projected to rise 52% YoY to $25MM (roughly in line with our $25.3MM est.) and wholesale to rise 44% YoY to $15MM (vs. our prior est. of $11.7MM).

OUR TAKE

We are pleased with LJ International’s high-quality, above-expectation financial results for 4Q10. In light of the 4Q10 beat, our previous 1Q11 EPS estimate of $0.07 is under review until after the conference call.

Reiterate Market Outperform Rating and 12-month PT of $7. At $4.26, JADE shares are trading at 8.2x our prior 2011 EPS of $0.52 compared to HK peer trading levels of ~15.5x. Conservatively, we see LJ International trading into its historical average of 11.5x NTM P/E. Our 12-month price target of $7 applies a 9x NTM P/E multiple to our prior 2012 EPS estimate of $0.64, which we believe conservatively balances the 1) significant store growth opportunity with the risks associated with merchandising; 2) store base adjustments that come with any rapidly expanding retail concept; and 3) choppiness in the wholesale recovery trajectory.

CONFERENCE CALL DETAILS:

Replay: 877.660.6853

Account: 286

Conference ID: 368635

Available until: April 12, 2011

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Fourth Quarter Results:

• Overall revenues in the fourth quarter of 2010 were $45.0 million, up 15% from $39.1 million a year earlier.
• Overall operating income was $5.6 million in the fourth quarter of 2010, up 109% from $2.7 million a year earlier
• Net income for LJI in the fourth quarter of 2010 was $4.0 million, or $0.14 per fully diluted share, up 56% on a per-share basis from $2.2 million, or $0.09 per share, in 2009.

Mr. Yih summarized, "The year 2010 also included a significant strengthening to LJI's capital resources and balance sheet. During 2010, LJI raised approximately $38 million of new capital through equity and bank lines of credit. With a solid financial foundation and continued profitability for both retail and wholesale divisions, LJI remains on track to reach the previously announced goal of having 200 ENZO stores open by year end 2011."

In guidance for the first quarter ending March 31, 2011, LJI said it expects revenues to total approximately $40 million, an increase of 48% from the first quarter of 2010. Retail revenues are projected to rise 52% year-over-year to approximately $25 million. Wholesale revenues are expected to rise 44% to approximately $15 million. Net income is expected to be approximately $3 million or $0.10 per fully diluted share in the first quarter of 2011. This figure is an increase of 60% year-over-year.

HONG KONG--(Marketwire - February 17, 2011) - LJ International Inc. today announced the opening of its ##138th ENZO retail jewelry store##, in Wuxi, China. This is the #55th store #to be opened since the beginning of the current expansion of the ENZO chain in 2010.

Rodman & Renshaw on JADE                                        12/20/2010

JADE: Add’l $12MM facility spells further capital structure optimization

WHAT HAPPENED? 

LJ International (NASDAQ: JADE) announced a new $12MM credit facility from China Construction Bank that will be available to fund its retail expansion even beyond the 200 stores that the ENZO chain expects to have by the end of 2011, up from 124 at the end of 3Q10. This is in addition to the $26MM equity and debt financing package announced in October 2010, bringing the total available funds to ~$38MM ($36-$37MM net of fees). Similar to the $13MM credit line with ICBC, this new $12MM facility carries an interest rate of 5%.

OUR VIEW 

We believe today’s announcement shows LJI’s commitment towards growth while minimizing equity dilution. We like management’s sophistication in optimizing its capital structure with reasonable leverage. At current debt/total capital of 19.9% and EBITDA/interest expense of 19.0x as of the end of 3Q10, we are comfortable with LJI’s debt service ratios.

Reiterate Market Outperform Rating and $7 PT. At $3.93, JADE shares are trading at 7.6x our 2011 EPS of $0.52 compared to peer trading levels of ~15.5x. We are using a set of jewelry manufacturers and retailers traded on the Hong Kong exchange as our peer comp set. Our 12-month PT of $7 applies 11x (JADE's historical avg.) to our 2012 EPS estimate of $0.64, which we believe properly balances the significant store growth opportunity with the risks associated with merchandising and store base adjustments that come with any rapidly expanding retail concept. (please see our initiation report published on 12/16/10 for full details on our valuation rationale)


Notice Regarding Privacy and Confidentiality: 


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

HONG KONG--(Marketwire - December 20, 2010) - LJ International Inc. (LJI) today announced that it has received a credit facility of approximately $12 million from China Construction Bank to fund further expansion of the ENZO chain of retail jewelry stores in China. China Construction Bank is one of the "big four" banks in the People's Republic of China. The new funding is in addition to the $26 million package of equity and bank financing announced in October 2010, bringing the combined total to $38 million. The $12 million facility is available to finance ENZO's retail expansion beyond the Company's original plans of 200 retails stores by 2011. The new credit facility carries an interest rate of approximately 5%. 

LJI's Chairman and CEO, Yu Chuan Yih stated, "We are pleased to announce this major additional resource for LJI's growth. This facility is important as it provides LJI the capacity to expand beyond our original projections of 200 retail stores by year end 2011. As recently reported, China is one of the fastest-growing economies in the world; with the consumer sector showing the strongest increase. The established ENZO brand, demand for 'affordable luxury,' and the ability to reach new customers through new store openings allows us to leverage our use of the facility and further maximize shareholder value. The fact that LJI gained such a substantial credit line from a respected lender, China Construction Bank, further testifies to the high credibility of the ENZO business model."

Rodman & Renshaw on JADE                                              12/16/2010

LJ International (JADE): The Stars Are Aligned - Don’t Miss Out on the Growth Phase 

We are initiating coverage on LJ International, Inc. (NASDAQ: JADE, $106mm mkt cap) with a Market Outperform Rating and a 12-month Price Target of $7.

Investment Thesis. We believe that while retail investors are busy surfing the recovery in U.S. discretionary names, with heightened enthusiasm over U.S. retailers charting new territory in emerging markets, they are overlooking a seasoned emerging markets jewelry retailer, LJ International, that is further along the learning curve and has already spent years pruning its ~100 store portfolio in China, and re-growing its store base to 124 units. LJ International is a formerly Hong Kong-based, vertically integrated jewelry manufacturer that began exporting to North America, Japan, and Europe in 1987, selling initially to QVC, HSN, etc. and later to department stores such as Kohl’s, Macy’s and J.C. Penney. LJ Int’l has over time shifted to the more lucrative retail segment of the jewelry supply chain. The company opened its first store in mainland China (its Shanghai flagship) in November 2004 but experienced growing pains in 2007-2009 when it closed its first batch of underperforming stores. Investors who come in to JADE will not be paying for any initial learning curve. Riding on the tailwinds of a North American and European recovery coupled with a more enthusiastic Chinese consumer, JADE is poised to grow profitably. In the retail business, much of the fine-tuning has already been done in merchandising, pricing, real estate selection, and brand building. The retail environment in China has improved in recent years as disposable income per capita grew at 13.7% CAGR over the past two decades to $2,548. The company’s core ENZO chain now stands at a very attractive point in the life cycle of a retail concept, in which it has gained customer acceptance and is on its way to rapidly grow from ~124 stores at the end of 3Q10 to roughly 200 by the end of 2011. Even then, we believe it is far from reaching its full store potential in China. Founder Lorenzo Yih has been a visionary in the Hong Kong jewelry industry – he was one of the first semi-precious gemstone traders to address the lack of branding in Chinese jewelry retail, and is now one of the first to spearhead multiple concepts under the ENZO umbrella, which includes core ENZO, ENZO 999, and his latest brainchild, ENZO XuXu.

Furthermore, the company has the right elements to become a best-of-breed operator within our space of small-cap U.S.-listed Chinese companies: a committed and sophisticated core management team that has worked together since the late 1980’s peppered with new members with fresh ideas, a communicative investor relations team, and experience along both wholesale and retail businesses.

Market Outperform Rating and $7 PT. At $3.53, JADE shares are trading at 6.8x our 2011 EPS of $0.52 compared to HK peer trading levels of ~15.5x. We are using a set of jewelry manufacturers and retailers traded on the Hong Kong exchange as our comparables. Our 12-month PT of $7 applies 11x (JADE's historical avg.) to our 2012 EPS estimate of $0.64, which we believe properly balances the significant store growth opportunity with the risks associated with merchandising and store base adjustments that come with any rapidly expanding retail concept.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

HONG KONG--(Marketwire - December 3, 2010) -  LJ International Inc.  today announced the Company's reiteration of fourth quarter guidance for the fiscal year ending December 31, 2010. As announced on November 9, 2010 at the release of LJI's third quarter 2010 financial results, the Company expects revenues to total approximately $42.5 million in the fourth quarter, up 8% from a year earlier, and just under $138 million for fiscal 2010. LJI expects net income in the fourth quarter of 2010 to total approximately $3.8 million, or $0.13 per fully diluted share, up 44% on a per-share basis from a year earlier.

For the year 2010, projected fourth quarter results would bring total revenues to just under $138 million, with net income from operations (excluding the gain from the sale of investment property in the third quarter of 2010) totaling approximately $11 million, or $0.41 per fully diluted share. This figure is an increase from the net income of $3.7 million, or $0.15 per fully diluted share, in 2009.

"LJI's financial results for the year to date are on track with the Company's plans," stated LJI's Chairman and CEO, Yu Chuan Yih. "We are affirming guidance for earnings from operations for 2010 as we continue to roll out our execution strategy for ENZO retail stores. We anticipate that by the end of the fourth quarter 2010, LJI could reach up to 135 ENZO stores across China. On the wholesale side, as mentioned during our third quarter 2010 earnings call, consistent sales figures over the past few quarters indicate a stabilization in the global consumer sector. Furthermore, LJI's wholesale division maintains its 'blue chip' customer base and is proud to have continued all wholesales relationships throughout recent economic times. As 2010 comes to a close, we would like to thank our shareholders, employees, and customers for their continued confidence and support as we grew our ENZO business and laid the foundation for future growth. We feel 2011 will be a year of continued prosperity."

LJI today also issued a statement in response to the recent volatility in the price of its common shares: "Although the Company does not comment on market rumors as a general policy, the Company is not aware of any adverse conditions or events involving the Company or any of its subsidiaries, its management or its operations which may have contributed to the recent stock trading and share price decline of our common stock."

• LJI's company-wide revenues for the third quarter ended September 30, 2010 totaled $35.7 million, up 36% from $26.2 million in the third quarter of 2009. Retail revenues were $21.1 million, up 83% from $11.5 million in 2009. Comparable store retail sales rose 13% for the third quarter of 2010 from a year earlier. Wholesale revenues were $14.6 million, down less than 1% from $14.7 million a year earlier.

• Net income, including a one-time gain of $1.6 million on the sale of investment property, totaled $4.8 million or $0.19 per fully diluted share, in the third quarter of 2010. This was an increase of 300% on a per-share basis, from $1.1 million, or $0.05 per fully diluted share, a year earlier.

• Excluding the non-recurring gain, net income was $3.2 million, or $0.12 per fully diluted share, up 140% on a per-share basis from the third quarter of 2009.

• The Company also said it expects fourth quarter 2010 sales for ENZO to increase 40% year-over-year, offsetting an approximately 15% decrease in wholesale revenues. LJI projects EPS from operations of approximately $0.13 for the fourth quarter and $0.41 for all of 2010. 

"Today's results clearly demonstrate how our retail-based growth strategy is succeeding as planned," said LJI's Chairman and CEO, Yu Chuan Yih. "Our ENZO division is the primary driver of both sales growth and margin improvements at all levels, from gross to net profit. Retail sales also are rising not just from the opening of new stores but from significantly higher sales on per-store basis. With new financing in place to fund at least 60 new ENZO stores in 2011, LJI is on track to take advantage of continuing economic growth in China while holding its own as a leading jewelry wholesaler in slower-growing global markets."

In past articles, we have mentioned that ChinaHybrid companies which obtain debt financing can take a step in achieving credibility with the Street. Thus, we were pleasantly surprised with the news on October 22, 2010, stating that LJ International had finalized a $26 million financing which included a debt component:

• $13.0 million credit facility at an interest rate of 5.0% with China's largest bank, Industrial and Commercial Bank of China Ltd.
• $13.0 million private stock placement with J.P. Morgan and Oasis Capital Management

Terms of equity financing:

• 4 million shares at $3.25 with a six month lock up.

Warrants were also issued to J.P. Morgan and Oasis Capital Management to purchase shares of LJI's Enzo subsidiary at a $300 million valuation.

In our October 13, 2010 research note we had mentioned that a financing transaction might be on the table:

• There is a high probability that JADE will raise money, especially as the stock price increases.
• Aggressive retail expansion plans over next two years

  "We expect to expend significant resources to expand our retail business in China. We will require substantial funds in order to finance our retail distribution and fund operating expenses. In addition to the funds required to open additional retail locations, additional working capital will be needed to operate these additional retail locations due to longer sales and collection cycles and high inventory levels required to support them. Without these funds, we may not be able to meet our goals. We may seek additional funding through equity or debt financing or through collaborative arrangements with strategic partners."

• Files a shelf on enabling it to raise money

Overall, we view this development as mostly positive.

Aside from the credibility that the debt component of the financing portrays, this agreement establishes credibility through an association with reputable institutions. The deal also gives us a peak into growth expectations of JADE’s PRC based retail operations, Enzo, which make up about 50% of revenues.  Analysts expect 2010 consolidated revenues, which includes international wholesale business, to reach about $137 million ($69.0 million to Enzo). The fact that institutions are willing to delay the exercise of warrants until Enzo reaches a $300 million valuation imparts some confidence that Enzo sales will increase about 335% over the next four years.

We were not too enthused about the terms of the equity portion of  the financing, which took place at a P/E of  6 times analyst 2011 estimates of $0.53 (6.8 tax adjusted) and a significant discount to current prices. Dilution works out to about 15%. To be fair, it is probably safe to assume that the deal was struck at a time when prices were much lower and market sentiment was weak.  We do feel that with the private placement investors are in for the long haul. If and when they exercise their warrants they will likely push for an IPO as an exit strategy.  This also gives them incentive to hold onto JADE, as shareholders would also receive shares in the IPO.

So far the reaction to the financing deal has not been negative, although the details of transaction were not available until after the market closed last Friday.  Dilution will not play a significant factor with respect to 2010 EPS growth.  However, investors may require information on the 2011 EPS growth rate. Can the company grow EPS at 30%, despite dilution? We will make an attempt to examine analyst 2011 growth assumptions.

For the time being we will maintain our original strategy: 

The GeoTeam® strategy:

• We are riding the ChinaHybrid resurgence of many stocks, but are following a disciplined sell strategy.
• We will scale out of JADE  (possibly all soon, especially if shares eclipse $5.00).  Applying a 15 P/E on fully taxed adjusted 2010 analyst EPS estimates of ~$0.50, we believe the stock is worth about $7.50, but remain cognizant that this goal may be impeded by the high probability of a capital raise (which obviously just occurred)

On October 12, 2010, we issued an alert that we were initiating a short-term trade on JADE @ $4.07. (Current price is $4.99).

• The stock has held up well in an unkind market environment.
  
• The stock was selling at less than two  times its book value per share of $3.40.
  
• Analyst estimates show robust EPS growth for the next 6 quarters.
  
• "Perception" of credibility established:
  
  
  • Came public via an IPO.
  • JADE has strong North American presence.
  • Wholesale operations are with well known customers.
  • "We own two warehouse facilities in Hung Hom and Aberdeen consisting of 5,432 square feet and 5,200 square feet. We also own an additional property in Hung Hom. We lease all three of these properties to non-affiliated third parties. We have pledged all of our land and buildings to collateralize general banking facilities granted to us."
  
  
• Its PRC retail operations operate in regions where competition in less fierce.

• Company handled the global recession: (Excerpt from 2009 20F).

  "Obviously, we would be much farther along this growth track if the world economy had steadily hummed along since 2007. But considering the harsh current environment for sellers of luxury goods in both the retail and wholesale markets, we are not dismayed by our record of the past two years or by our current situation. The drop in our wholesale revenues reflects the sharp contraction in that part of the global jewelry market. We do not expect a quick wholesale rebound; maintaining the status quo is a more realistic hope. But we are entering this period of more-or-less flat sales with little long-term debt, ample working capital and plenty of cash. In other words, we believe that our wholesale operations are scaled-down but financially healthy, profitable and positioned to gain market share following a recovery in the U.S. economy."

• Efficient management team

  "Retail store count has remained in the low 90s over the past two years. So its strong revenue performance results not from new store openings but from prudent management of existing stores and the ability to close stores that are not performing up to ENZO standards."

• Internal controls are in check

  "Based on this evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2009."

  Points to ponder:

• We have not performed on-the-ground due diligence.

• We have not pulled SAIC filings (Keep in mind that JADE is an FIE, but also derives a good deal of business from international operations that may not be required to be reported in SAIC documents).

• Operates in a low margin industry.

• Has had legal problems and internal control issues throughout 2007, that have since been settled. Auditor (Gruber and Company) is not a top firm.

• We need to be aware of past legal and internal issues.

• There is a high probability that JADE will raise money, especially as the stock price increases.
  
  
  • Has aggressive retail expansion plans over next two years

We expect to expend significant resources to expand our retail business in China. We will require substantial funds in order to finance our retail distribution and fund operating expenses. In addition to the funds required to open additional retail locations, additional working capital will be needed to operate these additional retail locations due to longer sales and collection cycles and high inventory levels required to support them. Without these funds, we may not be able to meet our goals. We may seek additional funding through equity or debt financing or through collaborative arrangements with strategic partners.

• Files a shelf on enabling it to raise money

The GeoTeam® strategy:

• We are riding the ChinaHybrid resurgence of many stocks, but are following a disciplined sell strategy.

• We will scale out of JADE  (possibly all soon, especially if shares eclipse $5.00).  Applying a 15 P/E on fully taxed adjusted 2010 analyst EPS estimates of ~$0.50, we believe the stock is worth about $7.50, but remain cognizant that this goal may be impeded by the high probability of a capital raise.

Net income in the second quarter of 2010 totaled $2.3 million, or $0.09 per fully diluted share, compared to $0.2 million, or $0.01 per fully diluted share, a year earlier.

In guidance for the third quarter ending September 30, 2010, the Company projects:

• Revenues of approximately $34 million, which would be approximately 30% above the $26.2 million reported in the third quarter of 2009. By segment, the projected year-over-year revenue increase would be approximately 55%, to $18 million, for retail, and approximately 9%, to $16 million, for wholesale.
  
• Net income is expected to be between $3.8 million to $4.0 million, or about $0.15 per fully diluted share, up from $1.1 million and $0.05 EPS a year earlier. Excluding an expected one-time gain of about $1.6 million due to a gain on sale of investment property, projected EPS in the third quarter of 2010, fully diluted, is expected to be approximately $0.09.