Series of special reports on gold jewelry industry: why does gold jewelry consumption break out at the current time?

Since the third quarter of 2020, gold jewelry consumption has started a new business cycle. We believe that the outbreak of gold jewelry consumption mainly stems from the normal return of gold jewelry consumption after the decline in 2014-2020 (gold jewelry consumption fell by 31.5% in seven years), the improvement of gold technology and the recognition of young consumer groups under the rise of national tide After the high level of gold fell, it was relatively stable and gold’s Hedging and anti inflation functions.

1) gold jewelry consumption starts a new business cycle. Since the third quarter of 2020, the growth rate of gold, silver and jewelry sales above the limit has begun to exceed the growth rate of social zero consumption, and gold consumption has shown a high momentum. Since 2022, the growth rate of gold and jewelry consumption has been strong. In January, the sales of dealers increased by 30% – 50% year-on-year. During the Spring Festival, the national gold consumption still increased by 13% under the background of last year’s Spring Festival superimposing the high base of Valentine’s day.

2) why does gold jewelry consumption break out at this time? We believe that there are three main reasons:

First of all, after experiencing the “gold” decade of industry development from 2003 to 2013, the industry has been successively affected by the overdraft consumption of the “gold rush” in 2013, the decline of marriage logarithm, the continuous rise of gold price since 2019 and the epidemic since 2020. From the high level in 2013 to 2020, the consumption has decreased by 31.5%. The outbreak of this round of gold jewelry consumption is actually a normal return of suppressed demand in history.

Secondly, the current outbreak of gold jewelry consumption is influenced by the resonance between the improvement of gold technology on the supply side and the rise of national tide culture on the demand side. The improvement of gold processes such as 3D / 5G / Gufa gold supports the development trend of gold jewelry. The rise of Guochao culture has triggered the cultural recognition of Gufa gold by young consumer groups, and gold consumption shows a younger trend. The jewelry and youth of gold consumption is the supporting force for the high-profile of this round of gold jewelry consumption. Finally, the gold price is relatively stable after falling from a high level, which is more conducive to consumers’ purchase. With the weakening of macro-economy, the functions of gold itself, such as value preservation and anti inflation, are welcomed by consumers.

Investment advice

1) Chow Tai Seng Jewellery Company Limited(002867) (002867. SZ): “aesthetic awakening” and “leading reform” will dominate the trend of gold and jewelry sector in the future. Leading brands have entered the “golden” era, and the performance growth and certainty will exceed expectations.

2) Guangdong Chj Industry Co.Ltd(002345) (002345. SZ): the company has long adhered to the culture of ingenuity + original design + inheriting oriental culture, established strong product power and aesthetic power, and fully benefited from the consumption trend of “aesthetic awakening”.

3) Chow Tai Fook (1929. HK): Jewelry leader, channel sinking repeatedly exceeded expectations, leading the trend of gold jewelry.

4) China National Gold Group Gold Jewellery Co.Ltd(600916) (600916. SH): a central enterprise brand, with high growth in gold jewelry business.

5) Lao Feng Xiang Co.Ltd(600612) (600612. SH): the brand has a long history, with both channel sinking and product advantages.

Risk tips: repeated outbreaks at home and abroad, intensified industry competition, fluctuations in gold prices, etc

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