Special topics and investment suggestions of this week
During the Spring Festival in 2022, we conducted grassroots research on 100 + jewelry stores in key areas such as central China, East China and southwest China (including provincial capital / prefecture level city / county-level city), and the main conclusions are as follows:
During the Spring Festival (as of the fourth day of the Lunar New Year), the overall sales are strong, the growth rate is slightly slower than that in early January, and the subsequent demand for Valentine’s Day is expected to boost the sales performance: the Spring Festival Schedule of jewelry retail is usually the Lantern Festival from one week before the Spring Festival to the new year. As of the fourth day of the lunar new year, the retail sales of gold and jewelry in most regions continued the sales boom since January and maintained a rapid growth rate, but the growth rate still slowed down compared with the first ten days of January, mainly because last year’s Valentine’s Day (2021.2.14) coincided with the third day of the lunar new year, and there was a high base to a certain extent. It is expected that the performance of the whole spring festival schedule this year (up to the Lantern Festival) is better than the current (up to the fourth day of the Lunar New Year).
Under the tide of returning home during the Spring Festival, the sales performance of prefecture level cities and county-level cities is better than that of provincial capital cities.
Epidemic control still has an impact on a few areas, especially on wedding celebrations. For the southwest, central China and other inland areas, the wedding demand is still one of the main demand for gold jewelry. In some areas, the epidemic prevention and control policy is relatively strict, and some wedding celebrations are postponed to the May 1 and 11 golden weeks, affecting the gold sales of local stores.
The demand for “pleasing oneself” in economically affluent coastal areas takes the lead in rising and the customer group is younger: unlike central and southwest China, which mainly focuses on wedding celebrations, middle-aged money exchange and replacement, and sending parents and elders, the proportion of wedding demand in East China (economically affluent coastal areas) has decreased to 35%, and the rest is personal wear demand. The customer group shows a younger trend. The number of customers aged 20-30 accounts for 31% The number of customers aged 31 ~ 40 accounts for 35%.
The sales performance of gold is still better than that of inlaid products, among which gram heavy gold continues to be popular, and franchisees and brands have increased the size of inlaid products to encourage sales: under the suppression of the epidemic, jewelry consumption is biased towards gold with good value preservation ability, and the sales performance of inlaid products is general, and the sales performance of various categories during the Spring Festival continues the previous differentiation. Among them, gram heavy gold continues to be popular in the market, and some brands have stopped supplying large gram heavy piece by piece gold, but the profit space of gram heavy gold is relatively thin. Therefore, some franchisees / brands begin to actively respond and encourage the sales of inlaid products through consumer guidance and sales policies, such as “three gold + one diamond” “Three gold + three diamonds” and other guide wedding groups to jointly consume mosaic products.
It is suggested to pay attention to the target of growth high-quality brands with undervalued value, Guangdong Chj Industry Co.Ltd(002345) / Chow Tai Seng Jewellery Company Limited(002867) .
Market Review
This week, the Shanghai Composite Index fell 4.57%, the Shenzhen Component Index fell 5.00%, the Shanghai and Shenzhen 300 fell 4.51%, and the diamond and jewelry sector fell 4.81%, underperforming the Shanghai and Shenzhen 3000.30pct, which is in the middle reaches of the industry. Henan Liliang Diamond Co.Ltd(301071) , Jinzhou Cihang Group Co.Ltd(000587) led the increase, while Beijing Caishikou Department Store Co.Ltd(605599) , North Industries Group Red Arrow Co.Ltd(000519) , China National Gold Group Gold Jewellery Co.Ltd(600916) led the decline.
Industry dynamics
Industry: China’s economy has recovered significantly in the past 21 years. The consumption of luxury goods in the mainland has increased by 36% to 471 billion yuan, of which the scale of jewelry market has increased by 35% year-on-year, ranking the third in all categories of luxury goods; LVMH group’s 21 year clock and jewelry business turnover was + 167% year-on-year; In the 21st year, the output of rough drill in dalbis was 32.28 million carats (+ 29%); Swatch Group’s operating revenue of jewelry and watches increased by 31% year-on-year, turning losses into profits, and China and other major markets were bright.
Announcement: North Industries Group Red Arrow Co.Ltd(000519) it is predicted that the net profit attributable to the parent company in 21 years will be 450-490 million yuan (+ 63.9% – 78.5%); Henan Huanghe Whirlwind Co.Ltd(600172) it is predicted that the net profit attributable to the parent company in 21 years is about 41 million yuan, turning losses into profits; Guangdong Chj Industry Co.Ltd(002345) it is predicted that the net profit attributable to the parent company in 21 years will be 330-350 million yuan (+ 136.2% – 150.5%); 21.12 DEA opened 20 self operated stores.
Risk tips
Terminal retail is less than expected; Gold prices fell; The expansion of franchise channels is less than expected.
