Main points:
Gold price analysis: the Russian Ukrainian crisis has pushed the gold price higher in stages, and the medium and long-term center may remain high
Short term: the Russian Ukrainian crisis has pushed gold prices higher in stages. Short term risk aversion supported the rise of gold prices, and gold became a good safe haven asset during the Russian Ukrainian crisis. According to wind data, the spot gold price in London rose 7.9% in February and March, while the S & P US sovereign debt index fell 4.98% and the euro zone sovereign debt index fell 2.17% in the same period. However, from the perspective of recovery, the geo war is a phased catalyst for the price of gold, which depends on the breadth and depth of the event. If the situation is clear in the later stage, the price of gold may gradually return to the medium and long-term logic. Medium and long term: high inflation + low real interest rate support the gold price center to maintain a high level. Gold has the ability to resist inflation, but in the resumption of trading, there is a weak positive correlation between gold price and inflation level, which is essentially driven by real interest rate (nominal interest rate minus inflation). Tips yield implies the market’s expectation of real interest rate. The correlation between historical gold price and tips yield is – 88.5%. At present, tips is at an all-time low. High inflation and low real interest rate hidden in risk aversion support the gold price center to remain high, which is expected to rise to $20 Yunnan Yuntou Ecology And Environment Technology Co.Ltd(002200) / ounce.
Brand influence: the impact of gold price fluctuation on profits is limited, and the repeated epidemic has delayed the wedding demand
Impact on Performance: each brand has different product structure and different sensitivity to gold price. The company avoids the risk of gold price fluctuation through various means, and its profit is less affected by gold price fluctuation. Correlation with stock price: Chow Tai Seng Jewellery Company Limited(002867) , the correlation between Chow Tai Fook’s stock price and gold price is about 0.7. By resuming the performance and share price performance of brands during the period of rising gold price fluctuation in 2020 + delayed release of wedding demand caused by the epidemic, we believe that the upward fluctuation of gold price is easy to lead the rise of share price in performance during the epidemic. In 2020, the share price of brand manufacturers took the lead in the rise of performance, and entered shock after the epidemic.
Analysis of gold jewelry consumption: it has the attributes of investment and consumption, and the upward fluctuation of gold price is conducive to gold jewelry consumption
Investment demand: gold jewelry has a low discount rate and has the ability to maintain and increase value compared with other jewelry. Its recovery price is anchored to the gold price, with a discount rate of about 6% (regardless of processing costs), which is far lower than about 50% of diamond jewelry (only refers to bare diamonds). In the history of resumption of trading, the fluctuation and rise of gold price is conducive to gold consumption, and the logic behind it is that consumers are easy to form a consistent expectation of gold preservation. At present, the gold price fluctuates and rises, but considering the short-term epidemic factors, it is expected to be released intensively after the follow-up epidemic control. Consumption demand: gold jewelry consumption is strongly correlated with GDP growth and income. Long term economic growth supports the increase of gold jewelry consumption. In terms of trend: (1) process upgrading, the proportion of 5g gold, Gufa gold and other processes is increased, the consumption attribute is enhanced, the customer base is widened, the brand is younger, and the cost of Tongke heavy industry is increased; (2) Brand, accelerate the expansion of stores in the low-line market and increase the share; (3) Change of pricing method: “pricing by gram” replaces “pricing by piece”, boosting sales and accelerating the improvement of concentration; (4) The rise of national tide: gold jewelry consumption has Chinese characteristics, and the consumption intention of generation Z gold jewelry has increased; (5) Increasing demand for pleasing oneself: giving birth to high-frequency consumption of gold jewelry and diversified scenes.
Investment advice
Repeated outbreaks + rising gold prices. Through hedging, brands’ profits are limited by short-term gold price fluctuations, while long-term gold price fluctuations are conducive to gold consumption. During the epidemic period, the upward fluctuation of gold price is easy to form, and the share price is ahead of the performance rise. In the medium and long term, it is expected that the consumption attribute of gold jewelry will be enhanced, and economic growth will support the increase of consumption. It is suggested to pay attention to Chow Tai Fook, Chow Tai Seng Jewellery Company Limited(002867) , Guangdong Chj Industry Co.Ltd(002345) .
Risk tips
The duration of the epidemic exceeded expectations, the economic growth was lower than expected, and the online growth was lower than expected.
