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tising inserts or classified ads that
accompany this publication. T  #123384745 TAIPAN USERNAME: taipanmember8 PASSWORD: 8sabers www.taipanonline.com strategy for taking over the European
market.        But what gets me really excited is that
this company is strategically positioned to
seize marketing opportunities in China
now that that country has joined the
World Trade Organization. On top of that,
the company has just announced that it is
opening its first sales and marketing facili-
ty in the US to further its expansion. A girl’s best friend LJ International Inc. (JADE: NASDAQ) is based in Hong Kong with
production facilities in southern China. Its
“mine-to-market”  strategy eliminates the
middleman to ensure tighter and more
efficient quality control.        What this means is that LJ
does everything, from design-
ing and branding to marketing
and distributing a complete
range of fine jewelry. Its verti-
cally integrated structure gives
it significant advantages over
its competitors. Because LJ
International has cut out the
middleman, all profits from
value-added processes are
captured internally, rather than
shared with third-party manu-
facturers. Not only does this
increase profits for the company, but
retailers also benefit from the competitive
pricing.        You may have seen its Lorenzo brand
name with retailers in Europe and North
America. The US and Canada account for
nearly 75% of sales. Although the company
specializes in the semi-precious jewelry
segment, it also offers high-end pieces set
in yellow gold, white gold, platinum or ster-
ling silver and adorned with semi-precious
stones, diamonds, pearls and precious
stones.        The company offers finished jewelry
(some 5,000 styles of earrings, necklaces,
pendants, rings, watches and bracelets
selling for US$30 to US$999) and loose
gemstones (more than four million carats
annually). Turning a profit When the market was good, LJ Inter- national’s sales were, too. But when the market went sour, so did the company’s
profits. In 2002, it actually recorded a loss
after years of profitability.        But for the first quarter of 2003, LJ has
already seen sales rise by 5%. And its
gross profit margin rose to 30%, from 28%
in the same period last year.        LJ International recently added several
major national accounts and booked
US$15 million in early Christmas orders
from new and existing clients.        Management was obviously thinking
about shareholder value when it
announced that it has the option to repur-
chase up to 1,000,000 shares of common
stock. Since March 31, 2003, it has repur-
chased 318,200 shares.        JADE had a huge run-up in July ahead
of its earnings announcement. Prior to the
announcement, the stock had been trading
in the US$1 to US$1.50 range since the
beginning of the year.        In July there was heavy accumulation
of the stock. And after it broke US$5, there
was profit-taking. But looking at the chart,
you can see that the buying volume in
July surpassed the current selling volume.
Because JADE has a market cap of only
around US$28 million, the wave of selling
was enough to make it pull back to the
US$3 level.        There seems to be support at US$3.
After a strong quarter, and with lots of
orders on the books, the stock has been
on a tear since June. Even institutions are
beginning to take notice.        Take advantage of this healthy pull-
back and buy LJ International (JADE:
NASDAQ) under US$3.75.