FUQI International, Inc.

FUQI International, Inc. (FUQI - Snapshot Report) saw revenue jump 41% in the first quarter as the luxury jewelry market in China remained hot despite the global economic slump. The company has surprised 4 quarters in a row by an average of 27.84%. It recently raised 2009 guidance.

Company Description

FUQI International designs luxury precious metal jewelry in China. The company's products are made from platinum, gold and Karat gold (K-gold), diamonds and other gemstones.

FUQI adds 300 new designs every month. The company markets its products through 30 provincial distributors and 700 direct sales agents in China.

Revenue Surged 41% in the First Quarter

Despite the global economic slowdown, FUQI continued to post impressive revenue growth of 41% to $109.4 million from $77.6 million in the first quarter of last year.

Sales volume increased in both the wholesale business as well as the retail business. Wholesale, the biggest division, jumped 26.7% to $96.8 million while retail added $12.5 million, or 9.4 times the year ago period.

The company says the luxury jewelry market has held up surprisingly well during the economic slowdown. "We are focusing our efforts to drive the continued growth of our retail business and we believe the traditionally larger margins will have an increasingly significant impact on our profitability as our retail business continues to grow," said Mr. Yu Kwai Chong, CEO and Chairman.

"We will continue to serve our wholesale customers optimally, by maintaining the right amount of inventory and varieties of design on hand at all time to fulfill our customer demand," he added.

2009 Guidance Raised

On May 15, as the company reported first quarter results, it also raised full-year 2009 guidance. Earnings per share are now expected in the range of $1.49 to $1.63 which is significantly higher than the prior Mar 31 forecast of $1.35 to $1.41 per share.

Second-quarter EPS is expected to be between 27 cents and 32 cents per share.

Consensus Estimates Rise

Given the company's 4th consecutive earnings surprise and earnings guidance, covering analysts have moved to adjust their estimates for the full-year.

Full-year consensus estimates climbed 14.7% to $1.64 from $1.43 per share in the last month, with 3 out of 4 analysts raising during that period. This is higher than the company's guidance range.

Analysts expect 24.05% year over year earnings growth in 2009.

Value Fundamentals

FUQI is a Zacks #1 Rank (strong buy) stock. The stock is cheap. It is trading at just 7x forward earnings with a price-to-book of 2.08. The company has a stellar 1-year return on equity (ROE) of 23.68%.