JADE LJ International, Inc. (MM)

Dutton Associates issues its updated initial coverage of LJ International (Nasdaq:JADE) with a Strong Speculative Buy rating. The 26-page report by Dutton senior analyst Sally H. Wallick, CFA, is available at www.jmdutton.com, and from First Call, Bloomberg, Zacks, Reuters, Knobias and other leading financial portals. Hong Kong based LJ International, Inc., is a vertically integrated designer, manufacturer, distributor and marketer of a full range of fine jewelry. The Company's customers include leading department and discount stores, fine jewelers, national jewelry chains, electronic and specialty retailers, and home shopping television networks throughout North America, Western Europe, Japan, Hong Kong and China. We believe that the Company's vertically integrated structure, extensive product line and diversified customer base provide significant competitive advantages. Its business strategies include broadening its product line, diversifying its customer base in the United States and internationally, and expanding in existing and new distribution channels. We believe that The People's Republic of China, with annual retail sales of more than $600 billion (including an estimated $15 billion in jewelry sales), represents a large and growing market opportunity. LJ International is penetrating this market mainly by means of Company-owned and -operated retail stores and supplier relationships with leading retailers. It opened three stores in 2004, plans another nine openings in 2005 and targets at least 100 stores by the end of 2008. Management expects the retail business to be profitable by 2007. We rate LJ International common stock a Strong Speculative Buy, with a 12-18 month target price of $4.20 per share. We project flat earnings per share year over year in 2005, then 31% earnings growth in 2006. About Dutton Associates Dutton Associates is one of the largest independent investment research firms in the U.S. Its 27 analysts, primarily CFAs, have expertise in many industries. Dutton Associates provides continuing analyst coverage of over 110 enrolled companies, and its institutional-quality research, estimates and ratings are carried in all the major databases serving institutions and online investors. The cost of enrollment in our one-year continuing research program is US $35,000 prepaid for 4 Research Reports, typically published quarterly, and requisite Research Notes. Dutton Associates received $55,000 from the Company for 8 Research Reports with coverage commencing on 12/23/2003. We do not accept payment of our fees in company stock. Our principals and analysts are prohibited from owning or trading in securities of covered companies. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by us is in any way related to the specific ratings or views contained in this research report or note. Please read full disclosures and analyst background at www.jmdutton.com before investing.