LJ International Reports Strong Gains in Sales and Earnings

LJ International Reports Strong Gains in Sales and Earnings




             China-based Jeweler's Third-Quarter Results Top
                     Guidance, Reflect Strong Demand



HONG KONG and LOS ANGELES, Nov. 11 /Xinhua-PRNewswire-FirstCall/ -- LJ
International, Inc. (LJI) (NASDAQ:JADE), one of the fastest-growing fine
jewelry companies in the world, today announced financial results for the third
quarter ended September 30, 2004.  Following are highlights for the quarter:

  -- Revenue rose 28% from the third quarter of 2003.  This was the sixth
     straight quarter in which sales rose more than 20% year-over-year.
  -- In LJIs ninth straight profitable quarter, EPS rose 29% from a year
     earlier.
  -- Revenue was sharply above earlier guidance range of $16.9-$17.2
     million.  EPS exceeded guidance of 6.5 cents to 6.8 cents.
  -- Nine-month revenue and EPS also rose sharply year-over year, with
     revenue up 32% from first nine months of 2003, and EPS up 42%.
  -- Cash and cash equivalents now total $5.36 million, nearly doubling
     since the end of 2003. Long-term debt remains below $100,000.



With new customers and demand for new products pacing its sales, LJ
International added to its string of high-growth quarters with another sharp
rise in revenue and EPS in the third quarter of 2004, ending September 30.
Revenue totaled $21.6 million, up 28% from $16.9 million in the third quarter
of 2003.  This is the sixth consecutive quarter in which the year-over-year
revenue increase exceeded 20%.  The Company said sales were also aided by
customers' early placement of orders for the fourth quarter of 2004.

Net income and EPS also rose.  Net income in the third quarter of 2004 was
$1.07 million, up from $701,000 in the third quarter of 2003.  Earnings per
fully diluted share were $0.09 in the latest quarter, up 29% from $0.07 a year
earlier.  This was the ninth straight profitable quarter for LJI.  For the nine
months ended September 30, 2004, revenue totaled $52.4 million, up 32% from
$39.7 million in the comparable period of 2003.  Nine-month net income rose to
$1.96 million from $1.22 million.  Earnings per fully diluted share rose 42%,
to $0.17 in the first nine months of 2004 from $0.12 a year earlier.

Demand from New and Repeat Customers Remains Strong

LJI Chairman and CEO Yu Chuan Yih commented, "The latest results for LJI show
the continuation of trends that have led the Company to consistently surpass
expectations.  We have seen robust demand for new products from both new and
repeat customers, while our expansion into new markets, particularly China,
proceeds according to our strategic plan.  With its worldwide marketing effort
and distribution, LJI is now able to benefit fully from the global economic
expansion."

Yih noted that LJI in the latest quarter had once again exceeded early sales
guidance.  "The Company's revenue and EPS both were well above the projections
we had set forth when we reported second quarter earnings in August," he said. 
"Long-time investors have found that LJI consistently delivers on, or
surpasses, the expectations it sets."

Sales in the third quarter received a boost from a $1.7 million order, one of
the Company's largest ever, from one of the leading retail jewelry chains in
the U.S. The retailer, unnamed for competitive reasons, is among one of the
largest jewelry retail chains in the U.S. market, with over 2,000 stores
nationwide.  The announcement of this order followed an earlier announcement by
LJI that it had just begun a national rollout of products at the chain's stores
after a successful test-marketing of its products in no more than 50 of the
chain's stores.

Also in the third quarter, the Company moved its expansion strategy forward by
raising $3.55 million (gross proceeds) in a private sale of common shares and
warrants to several institutional investors.  Net proceeds were approximately
$2.80 million, and will be used for growth capital, including expansion in
China.

Cash Rises, Debt Remains Low

The Company's balance sheet remained strong and nearly free of long-term debt
at the end of the third quarter.  Cash and cash equivalents totaled $5.36
million on September 30, 2004, up 97% from $2.72 million on December 31, 2003.
With restricted cash included, cash and equivalents were $11.60 million in
September 30, up from $8.65 million on December 31.

The Company said gross margins improved slightly in the third quarter of 2004
from year-earlier levels, rising to 21.5% from 20.7% in the third quarter of
2003.  For the first nine months of both years, they remained steady at 22.8%. 
Selling, general and administrative expenses were controlled at approximately
16% of sales for both the third quarter of 2004 and the third quarter of 2003. 
For the first nine months of 2004, they improved to 17.7% of sales, compared to
18.9% of sales in the first nine months of 2003.

Company Provides Fourth Quarter and Full-Year Guidance

We are still very confident on meeting or exceeding our full year sales
forecast of between $68- $70 million.  This represents an approximate 17% - 21%
increase over the $58.2 million reported for all of 2003.  For the fourth
quarter of 2004, LJI said it expected sales to range from $16 - $18 million.

EPS for the full-year 2004 is projected at 22 cents, representing an increase
of 18% as compared in 2003.  For the fourth quarter, earning per fully diluted
share is projected at 5 cents.

Conference Call

LJI will conduct a conference call today at 11:00 am EST to review these
results and for a Q&A session.  The dial-in number for the call is 888-338-
6461, or 973-935-8509 for international callers.

If you would like to be added to LJI's investor email lists, please contact
Haris Tajyar with Investor Relations International  .

About LJ International

LJ International, Inc. (LJI) is a publicly-owned company, based in Hong Kong
and the U.S., engaged in designing, branding, marketing and distributing a full
range of fine jewelry.  It has built its global business, currently one of the
fastest-growing in the jewelry industry, on a vertical integration strategy and
an unwavering commitment to quality and service.  LJI distributes to fine
jewelers, department stores, national jewelry chains and electronic and
specialty retailers throughout North America and Western Europe, with a growing
retail presence in China through stores and e-shopping sites.  Its product
lines incorporate all major categories sought by major retailers, including
earrings, necklaces, pendants, rings and bracelets.  It trades on the NASDAQ
National Market under the symbol JADE.

For more information on LJI, go to its Web Site at http://www.ljintl.com/ .

Forward looking statement: Except for the historical information, the matters
discussed in this news release may contain forward-looking statements,
including, but not limited to, factors relating to future sales.  These
forward-looking statements may involve a number of risks and uncertainties.
Actual results may vary significantly based on a number of factors, including,
but not limited to, uncertainties in product demand, the impact of competitive
products and pricing, changing economic conditions around the world, release
and sales of new products and other risk factors detailed in the company's most
recent annual report and other filings with the Securities and Exchange
Commission.

                          LJ INTERNATIONAL INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                    (IN THOUSANDS, EXCEPT SHARE DATA)

                                                        As of       As of
                                                    September 30 December 31
                                                        2004        2003
                                                     (Unaudited)
  ASSETS                                                  US$         US$
  Current assets:
      Cash and cash equivalents                          5,363       2,722
      Restricted cash                                    6,234       5,931
      Trade receivables, net of allowance for
       doubtful accounts (US$159 as of
       September 30,2004 and December 31, 2003)         14,418      15,243
    Derivative contracts                                   541         651
      Inventories                                       34,419      21,487
      Prepayments and other current assets               4,434       3,726

      Total current assets                              65,409      49,760
  Properties held for lease, net                         1,465       1,506
  Property, plant and equipment, net                     4,557       4,931
  Due from related parties                                 495         508
  Goodwill, net                                          1,521       1,521
  Investment securities, net                             2,460       2,460

  Total assets                                          75,907      60,686

  LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
      Bank overdrafts                                      649       1,312
      Notes payable, current portion                     1,531       1,516
    Capitalized lease obligation, current portion           18          18
      Letters of credit, gold and other loans           21,390      16,737
    Embedded derivative                                    970       1,430
      Trade payables                                    13,675       8,417
      Accrued expenses and other payables                3,678       2,864
    Income taxes payable                                   483         326
      Deferred taxation                                     87          87
      Total current liabilities                         42,481      32,707
  Other payables, non-current                               63          77
  Total liabilities                                     42,544      32,784

  Minority interest                                         --          --
  Stockholders' equity
      Common stocks, par value US$0.01 each,
      Authorized - 100 million shares,
      Issued -
       12,277,658 shares as of September 30, 2004;
       9,890,006 shares as of December 31, 2003            123          99
  Common stock warrants                                    169          --
  Additional paid-in capital                            23,111      19,802
  Accumulated other comprehensive loss                    (151)       (151)
  Retained earnings                                     10,111       8,152

  Total stockholders' equity                            33,363      27,902
  Total liabilities and stockholders' equity            75,907      60,686


                           LJ INTERNATIONAL INC
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                               (UNAUDITED)
             (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

                                   Three months ended   Nine months ended
                                      September 30         September 30
                                      2004       2003      2004       2003
                                       US$        US$       US$        US$

  Operating revenue                 21,613     16,926    52,369     39,681
  Costs of goods sold              (16,966)   (13,426)  (40,419)   (30,570)
  Gross profit                       4,647      3,500    11,950      9,111

  Selling, general and
   administrative expenses          (3,261)    (2,630)   (9,295)    (7,515)

  Operating income                   1,386        870     2,655      1,596

  Other revenue and expense
  Other revenues                        45         45       113        163
  Interest expenses                   (260)      (203)     (645)      (521)
  Income before income taxes and
   minority interest                 1,171        712     2,123      1,238
  Income taxes                        (103)       (11)     (164)       (26)
  Income before minority interest    1,068        701     1,959      1,212
  Minority interest                     --         --        --          8
  Net income                         1,068        701     1,959      1,220

  Numerator:
    Net income used in computing
    basic and diluted
    earnings per share               1,068        701     1,959      1,220

  Denominator:
    Weighted average number of
     shares used in calculating
     basic earnings per share   11,134,491  8,503,602  10,724,915  8,503,602

    Effect of dilutive potential
     ordinary shares:
      Warrants & stock options    747,626   1,562,577  1,109,670   1,562,577

    Weighted average number of
     shares used in calculating
     diluted earnings per share 11,882,117  10,066,179 11,834,585 10,066,179

  Earnings per share:
    Basic                             0.10       0.08      0.18       0.14

    Diluted                           0.09       0.07      0.17       0.12


                          LJ INTERNATIONAL INC.
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (UNAUDITED)
                              (IN THOUSANDS)

                                                          Nine months ended
                                                             September 30
                                                            2004      2003
                                                             US$       US$
  Cash flows from operating activities:
  Net income                                               1,959     1,220
  Adjustments to reconcile net income to net cash
   used in operating activities:
      Depreciation and impairment loss on
       property, plant and equipment                         852       895
      Unrealised (gain) loss on derivatives                  (57)      162
    Loss on disposal and write-off of property,
     plant and equipment                                      --         2
    Allowance for doubtful debts                              --       (28)
    Costs associated with stock-based transactions            --         9
      Minority interests                                      --        (8)
  Changes in operating assets and liabilities:
      Trade receivables                                      825    (3,533)
      Inventories                                        (12,932)   (2,325)
      Prepayments and other current assets                  (708)   (1,564)
    Due from related parties                                  13        --
      Trade payables                                       5,258       978
      Accrued expenses and other payables                    971       697
      Letters of credit                                      877     1,581
  Net cash used in operating activities                   (2,942)   (1,914)

  Cash flows from investing activities:
  Change in restricted cash                                 (303)      845
  Purchase of property, plant and equipment                 (441)     (476)
  Proceeds on disposal of property, plant and
   equipment                                                   4         2

  Net cash (used in) provided by investing
   activities                                               (740)      371

  Cash flows from financing activities:
  Change in bank overdrafts                                 (663)     (556)
  Proceeds from issuance of common stock                   2,746        --
  Proceeds from issuance of shares upon exercise
   of stock options                                          756     1,156
  Loans acquired                                           6,070     1,553
  Repayment of loans                                      (2,572)   (1,464)
  Repayment of capitalized leases                            (14)      (24)
  Sales proceeds of treasury stock                            --       540
  Net cash provided by financing activities                6,323     1,205

  Net increase (decrease) in cash and cash
   equivalents                                             2,641      (338)
  Cash and cash equivalents, at beginning of
   period                                                  2,722       997

  Cash and cash equivalents, at end of period              5,363       659

  Supplemental disclosure:
  Cash paid during the period for:
  Interest                                                   645       521
  Taxes                                                        6        12


  For further information:

  AT LJI:
   Betty Ho
   Vice President, Corporate Development
   Tel:   [phone]
   Email: 

  AT INVESTOR RELATIONS INTL:
   Haris Tajyar
   Managing Partner
   Tel:   [phone]
   Email: 

DATASOURCE: LJ International, Inc.



CONTACT:  Betty Ho of LJI, [phone], or ; or Haris

Tajyar of INVESTOR RELATIONS INTL, [phone], or , for

LJI 



Web Site:  http://www.ljintl.com/ 

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