China National Gold Group Gold Jewellery Co.Ltd(600916) the jewelry industry has experienced from comprehensive control to gradual opening up, with both volume and price rising, ushering in a golden decade. After the gold rush, the growth of the industry is mainly driven by volume. After the lifting of market consumption restrictions, demand was fully released. From 2003 to 2013, the annual compound growth rate of gold price was about 11.22%, the volume and price rose together, and the dividend period increased rapidly. In 2013, the sharp fall of gold price triggered a rush for gold, the subsequent consumption was weak, and the industry developed in twists and turns. From 2014 to 2019, the industry entered a mature period, with growth focusing on volume, and the erosion effect of gold price recovery is more obvious. The relationship between gold price and demand can be summarized from the splitting of volume and price over the years. Gold demand mainly depends on the psychological expectation of consumers and the measurement of short-term price fluctuation. The long-term rise and short-term sharp fall of gold price can stimulate the increase of gold demand, so as to drive the overall growth of the industry.
The resumption of the current round of high gold boom: wedding, investment and the rise of ancient Fajin have promoted the sustained high boom of gold consumption, and the driving factor has gradually changed from price factor to quantity factor. Gold consumption continued to boom from 2020h2 to 2021h2. Wedding and investment demand in 2020h2, as the main factors, promoted the recovery of the industry. In 2021, the impact of wedding and investment demand weakened. Under the resonance of supply and demand, the upgrading of Gufa gold products created new demand and continued the trend of rapid growth of gold consumption. With the explosion of demand for Gufa gold products and the weakening of wedding and investment demand, the driving factor of industry prosperity has gradually changed from the price factor of 2020h2-2021h1 to the quantity factor of 2021h2.
Short term decline of gold price + strong growth momentum of Gufa gold. Gold jewelry is expected to maintain a high outlook in 2022. In the short term, the Fed’s expectation of raising interest rates has been gradually digested by the market, and the short-term decline in gold prices will help stimulate consumption. Under the uncertainty of the epidemic situation outside China, the hedging attribute of gold makes the gold price relatively strong in the long run, which is conducive to promoting gold consumption. Compared with buy it now products (mostly new craft gold), Gufa gold has the advantages of grams and feet + profound cultural heritage, which fully meets the market demand. At present, it is in a growth period, and the market share has a large growth space. As major brands promote the sinking of channels, gufajin is gradually popularized throughout the country, and its vitality will be further continued. During the Spring Festival in 2022, gold sales increased year-on-year, and the high outlook is expected to continue in 2022.
Investment suggestion: the short-term decline and long-term strong expectation of gold price will stimulate investment demand. We judge that the prosperity brought by the innovation of Gufa gold products will last for a long time. In 2022, gold consumption is expected to maintain a high outlook driven by volume and maintain the “recommended” rating of the industry. It is suggested to pay attention to the companies that seize the rising tide of gold consumption, accelerate the expansion of stores, and have the advantages of brand value, channel expansion and product innovation. Zhou Dafu (1929. HK), Chow Tai Seng Jewellery Company Limited(002867) (002867. SZ), Guangdong Chj Industry Co.Ltd(002345) (002345. SZ), Lao Feng Xiang Co.Ltd(600612) (600612. SH), China National Gold Group Gold Jewellery Co.Ltd(600916) (600916. SH), Shanghai Yuyuan Tourist Mart (Group) Co.Ltd(600655) (600655. SH), regional gold leaders, Beijing Winter Olympics franchise retailer Beijing Caishikou Department Store Co.Ltd(605599) (605599. SH), which benefited from the explosion of demand for Winter Olympics Souvenirs.
Risk tip: repeated outbreaks lead to weak offline optional consumption; Demand growth is less than expected; Industry competition intensifies; Uncertainty of gold consumption habits; Focus on the company’s performance less than expected; The complexity of the international situation leads to the uncertainty of gold price fluctuation; The macroeconomic downturn has led to a decline in purchasing power.
