UJDC Quantum-Finance Cockpit Designing out the dead-inventory & earnings-volatility trap

M9 · AI & Corporate Finance
HKU ICB · Individual Assignment
David Kwan, CFO

Every figure is computed from UJDC's audited management accounts FY2022–FY2025 and genuine listed-peer market data (stockanalysis.com, TradingView, 2026-06-16). Inputs marked modelled are illustrative — to demonstrate finance technique, refined with management figures before any board decision.

⚠ CONFIDENTIAL — this live MVP and its underlying data are shared solely for HKU ICB faculty and examiners' review. Not for distribution.

The Pain

核心财金痛点audited data

Earnings instability + margin swing

Net profit (bars) vs gross margin (line), FY2022–FY2025

The dead-inventory tail

Finished goods by year of origin (audited Note H, 30/9/2025)

Industry Benchmark

上市同业对标genuine market data

Hong Kong listed jewellery & watch peers vs UJDC

Market cap, revenue, net margin, equity beta & P/E — retrieved 2026-06-16 from stockanalysis.com & TradingView.

*Indicative value (not listed). †Beta is a listed-peer proxy (UJDC has no traded equity).

Aged-Stock Triage

呆滞存货分流AI action queue

What the AI recommends the CFO do with the stock pile

Module C segments finished goods by age into an action queue — the dead tail is melt/redesign candidates, not carrying value.

Triage thresholds: ≥3 yrs → melt/redesign · 1–3 yrs → markdown & promote · <1 yr → hold. The CFO approves each batch (human-in-the-loop).

Live Investment Appraisal + ML Optimiser

投资评估与寻优CFO sliders → recompute

CFO control panel

Move the levers, or let the ML optimiser find the best settings. Optimised values appear as ✦ markers.

Equity beta β 1.15

Gem/gold volatility 18%

Target inventory days 300

Hedge ratio h 0.91

Build capex (HK$m) 3.5

Prov. avoided/yr (HK$m) 6.0

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Cost of equity (CAPM)

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WACC

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NPV (HK$m)

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IRR

Decision rule: accept when IRR > WACC.

Project cash flows

Capex (Yr0) then ramped annual benefit; line = cumulative.

Efficient Frontier

有效前沿Markowitz · genuine betas

Frontier of HK jewellery stocks

Single-index (Sharpe) model from genuine 1-yr betas; market σ assumed 22%.

Max-Sharpe (tangency) portfolio

Optimal long-only weights across the listed peers.

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Expected return

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Volatility

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Sharpe

Risk Engine

风险引擎Monte-Carlo · hedge

Monte-Carlo input-price distribution

6-month gem/gold input price index — accept the distribution, not a point forecast (Quantum mindset).

Margin value-at-risk & hedge

One-sided 95% VaR on UJDC's FY25 precious-input book, before/after hedge.

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Unhedged 6-mo VaR (HK$m)

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Residual after hedge h

Explainable-AI driver ranking · attribution ≠ causation.

State-of-the-Art: SHAP & Causal AI

前沿：SHAP 与因果 AIexplainability core

(a) SHAP — attribution

Shapley values: a fair share of each prediction to each driver. Answers "what is the model using?"

φᵢ = Σ |S|!(M−|S|−1)!/M! · [f(S∪{i}) − f(S)] · attribution, not causation.

(b) Causal AI — intervention

Effect of an AI markdown policy on margin, confounded by inventory age. Answers "what if we ACT?"

Naive (SHAP-style) association is biased; back-door adjustment recovers the true do(·) effect.

AI Co-pilot

AI 副驾RAG · auto-tune

Ask about UJDC's finances — answers grounded only in retrieved audited data

Anti-hallucination by design (幻觉): the model uses only the data context and will refuse to invent figures. Ask it to optimise and it can auto-adjust the sliders above. The CFO holds the final decision.

Course Lens

课程理论应用Dr Li · M9

Machine-Learning Stack & Code

机器学习栈与代码XAI transparency

Models behind the cockpit

Each module, its model and library — the same listing appears in Appendix A of the paper.

Code listings — SHAP, Causal AI, Optimiser

Production-representative code supporting the XAI and optimisation layers (Appendix D of the paper).

UJDC Quantum-Finance Cockpit · M9 MVP v3.0 · grounded in audited FY2022–2025 figures + genuine listed-peer market data · built for HKU ICB Module 9 (AI & Corporate Finance) · © David Kwan, CFO · CONFIDENTIAL, for faculty & examiner review only. Modelled inputs are illustrative.