LJ International Inc. (NASDAQ/NMS: JADE)

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LJ International Inc.(NASDAQ/NMS JADE)

• 17th Annual Roth Conference
• Investor Presentation
• February 2005

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Forward Looking Statements

• Our discussion of the Companys financial and
  operational outlook contains predictions,
  estimates and other forward-looking statements.
  Use of words like estimate, projection, expect,
  and similar expressions is intended to identify
  these statements. While these forward-looking
  statements represent our best current judgment on
  what the future holds, they are subject to risks
  and uncertainties that could cause the actual
  results to differ materially. By making these
  forward-looking statements, we undertake no
  obligation to update these statements for
  revisions or changes after the date of this
  presentation. In addition to the factors we will
  discuss later, important factors relating to our
  business are described in our most recent filings
  with the Securities and Exchange Commission.

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Color me Beautiful Color me LORENZO
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Snapshot
Symbol (NASDAQ/NMS) JADE Recent price (31 Jan
05) 2.79 Forward Looking P/E Ratio 8.30
52-week high 5.60 Avg. Daily
Vol. 137,181 Shares outstanding 12.2
million Market Capitalization 34.3
million Insider Ownership 37.3 Analysts 2
Source Company Filings, Hoovers Online and
Taglich Brothers Research Report
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Company Overview

• Based in China and selling to primarily the U.S.,
  LJ Intl. designs, brands, markets, retails and
  distributes a full range of fine jewelry
• Founded on its mine to market strategy and
  commitment to quality and service, Lorenzo now
  sells globally
• LJ Intl. offers a full range of fine jewelry in
  yellow or white gold, platinum or sterling
  silver, diamonds, and variety of rare and exotic
  gems, pearls and colored gemstones such as
  amethyst, topaz, garnet, citrine, aquamarine and
  peridot
• LJ Intl. distributes to fine jewelers, department
  stores, national jewelry chains and electronic
  and specialty retailers throughout North America,
  Western Europe, Japan, Hong Kong and China
• Company built initially for home shopping
  channels now sells to three largest in U.S.
• Growth enabled Company to add two-thirds of the
  top 40 retail chains in the U.S. to customer base
• LJ Intl. seeking to duplicate and enhance U.S.
  model into China

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Stunning Product Lines
LJI has over 40,000 different models of rings,
bracelets, necklaces, earrings and pendants

• Colored Gemstones
• Silver Level (basic line)
• Mass Market
• Retail price from 29.99 to 99.99
• Gold Level (premium line)
• Higher end
• Big, prominent stones from 9x7 or above
• Retail price from 99.99 to 299.99
• Platinum Level (platinum line)
• Top quality, used by Tiffany, Cartier, Chanel,
  etc.
• Aquamarine, Tourmaline, Imperial Topaz, etc.
• Retail price from 299.99 to 499.99 (up to
  5,000)
• Diamonds and Precious Stones
• Fashion diamond
• Ruby, sapphire, emerald

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In-house Creative Design Team

• LJI has over 20 designers in China, Hong Kong,
  USA and Brazil producing over 18,000 designs
  annually
• Competitions and awards
• 2003
• Tahitian Pearl Trophy Asia, organized by Perles
  de Tahiti GIE China Branch
• 2002
• Final, Brooch Group
• The Buyers' Favorite Diamond Jewelry Design
  Competition, organized by Hong Kong Jewelry
  Manufacturers Association
• 1999
• Gold prize, Necklace Group
• The Buyers' Favorite Diamond Jewelry Design
  Competition, organized by Hong Kong Jewelry
  Manufacturers Association

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Total Vertical Integration
Market

• Opened own retail shops in China - ENZO

• Sell directly to customers globally
• No middleman

Wholesaling
Ensure impeccable Quality Complete control of
production lead time

• Produce directly in our own factory in China
• Best craftsmanship
• Cost efficient

Manufacturing

• Direct sourcing miners from (Brazil, Africa,
  India, China)
• Creates Economies of Scale, more favorable cost

Mine
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Large Production Facilities With Capacity

• Annual Production
• More than 2 million pieces of fine jewelry and 3
  million carats of cut stones
• Size
• 6 floors, spanning over 100,000 square feet in
  tax-free zone in Shenzhen, PRC
• Production Team
• Over 2,500 craftsmen
• Production Lines
• Colored Jewelry
• More traditional manufacturing plant
• Diamond and Precious Stones
• High-tech
• CAD/CAM, wax-set technology

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Blue-Chip Customer Base
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Sales Marketing Strategies

• Solid Blue Chip Customers
• 1. Top 50 Retail Chain Stores /100 million
  Supersellers
• Zales, Sterling, Fred Myers, JC Penny, Walmart,
  etc.
• Focus on Product Development by push strategy
• 2. TV Shopping Channels
• USA ALL top three TV shopping channels
• The top three shopping channels accounted for
  more that 1.8 billion in jewelry sales in the
  U.S. and had an approximate 5 share of the
  estimated 42 billion U.S. jewelry market(1)
• International Network Germany, England,
  Australia and Japan
• Push sales strategy
• Product development together with the Customers
• No Inventory Risk

(1) Source National Jewelers Association.
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2003 Sales Breakdown
Sales by Category
Sales by Region
5
14
3
17
12
Europe
Other
27
USA
48
74
Earrings
Pendants
Rings
Others
Giftware
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Limited Competition

• Based on pricing, quality, service and
  established customer relationships
• LJ Intl.s strategy is to provide competitively
  priced, high-quality products to high-volume
  retail jewelry market
• United States competitors include E.E.A.C. Inc.
  and Fabrikant
• International competitors include Pranda
  International and STS

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Competitive Advantages

• Mine to market
• Short production lead time
• Full quality control

• Niche Market
• Colored Gemstones
• Vs. Diamond

LORENZO Color

• Brazilian Background
• Brazilian Mines
• US Markets
• China Retail

• Cost Efficiency
• China production facilities

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Manufacturing to Retailing
March 2004 - First retail shop in HK November
2004 - Flagship store in Shanghai Now - 3
stores in China Long Term strategy 100 stores
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The Jewelry Market
Worldwide Market size is Approximately 150
billion
USA (steady)
China (robust growth)

• The China jewelry market has grown from 2.5
  billion in 1991 to approximately 14.8 billion in
  2002
• Jewelry sales in China increased 19 in 2002
• China is
• the largest consumer for platinum and jade in the
  world over the last 3 years
• the largest consumer of diamonds in Asia
• fourth largest consumer of gold in the world

• Approximately 42 billion in 2002 and expected to
  grow at approximately 6-7 annually
• The concept of jewelry has evolved from a
  traditionally expensive investment to becoming a
  casual daily fashion

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CHINAWe See Significant Potential

• Consumer
• Price range for best selling jewelry US250 -
  500
• Average monthly salary US500-600
• Gold 18K is the most popular followed by 24K
• Diamond most popular from 0.21 carat to 0.49
  carat
• Purchasing Power Shanghai, Beijing, Guangzhou,
  Shenzhen
• Buying Pattern over 80 of surveyed consumers
  purchase jewelry every year
• Regulatory
• Strong reduction in tariffs after China entered
  WTO
• Zero tariffs on color gems
• 20 on gold, silver and pearls (down from 31)
• CEPA
• Closer Economic Partnership Arrangement (CEPA)
  between China Hong Kong
• Free trade agreement under WTO rules
• Provides preferential access to Mainland market
  for Hong-Kong-based manufacturers
• Exceeds Chinas WTO entry commitments
• Benefits only those companies registered and
  having manufacturing facilities in HK
• The establishment of Shanghai gold, silver and
  diamond exchanges
• Deregulation on setting up retail distribution
  channel, easing the process of obtaining
  government license

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What is ENZO?

•    European/Foreign
•    Trend Setter
•   Avant-garde
• Sexy
• Target customers
• 80 female, 20 male (the gift shoppers), age
  20 - 40
• Middle-class and above, working women, affluent
  homemakers
• Monthly income of RMB4,000 (US500) or above
• Looking for high-quality and trendy jewelry
• Distrustful of local jewelers and tired of
  going to the same jewelry chain stores such
  as TSL, Chow Tai Fook, etc.
• Enthusiastic about imported jewelry brands

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ENZO appears in
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Western Management Team

• Lorenzo Yih, Chairman
• More than 20 years of experience in the jewelry
  industry, including hands-on expertise in
  production engineering and gemstone cutting
• Former President of the Hong Kong Gemological
  Institute of America (GIA)
• Ringo Ng, CFO
• Joined LJI as CFO in 1997
• former senior accountant with Moores Rowland C.A.
• Betty Ho, Vice President, Corporate Development
• Former senior vice president of the Strategic
  Capital Group (SCG) Inc., an e-commerce
  conglomerate in Asia
• Has held various management positions with UOB
  Asia, SSAL and Arthur Andersen Co. respectively
• Certified Public Accountant and a member of the
  Hong Kong Society of Accountants and American
  Institute of Certified Public Accountants

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Strong Historical and Projected Revenue Growth
(in millions)
Note 2004 2005 estimates per Taglich Brothers
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Strong Historical and Projected Earnings Growth
(in thousands)
Note 4Q04 2005 estimates per Taglich Brothers
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Debt-Free Balance Sheet
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Significantly Undervalued vs. Sector
Pro-rated numbers or analyst forecast Source
Extracted from Yahoo! Finance
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Why Invest Now?

• Growing Rapidly into 150 Billion Global Jewelry
  Market
• No Significant Competition Because of
  Mine-to-Market Strategy
• Significant Expansion Opportunities in both U.S.
  and China
• Bright Macro Economic Picture in China
• Chinese Company with Western Management Team
• 20 Plus Historical CAGR in Revenues Since 1999
• Revenues and Earnings expected to Accelerate
  Going Forward
• Cash-rich Balance Sheet with Zero Long-Term Debt
• Trading at only 8.3x 2005 Earnings Expectations,
  Lowest in Sector
• Orphan Stock Beginning to Generate Wall Street
  Interest