Behind the hovering near the historical high of the international gold price: many A-share jewelry concept stocks have "far underperformed", and the diamond ring leader plummeted by nearly 60% during the year
Finance Associated Press, December 17 (edited by Ruoyu) This week, precious metal varieties have skyrocketed, the British government announced on Thursday that it will impose new sanctions on Russian metals, and palladium soared 12% on the day. As of Friday's close, the international gold price is not too far from the all-time high set at the beginning of the month, and in the long run, the cumulative maximum increase of more than 18% since the beginning of October.
According to the data released by the National Bureau of Statistics, the total retail sales of gold, silver and jewelry of units above designated size from January to October this year was 274.9 billion yuan, a year-on-year (nominal) increase of 12%, ranking second in terms of growth rate, and the retail market of gold, silver and jewelry continued to improve. It is worth mentioning that while the international gold price hit a record high on December 4, central banks are still a major force in gold purchases. Bank of America report shows that central banks are on track to buy more than 1,000 tonnes of gold this year for the second year in a row, and an earlier World Gold Council survey showed that 24% of central banks intend to continue to increase their gold reserves over the next 12 months.
Guotai Junan Futures analyst Wang Rong said in a report on December 14 that short-term optimistic expectations will continue, and with the obvious downward trend in interest rates, gold still has room to continue to rise. Goldman Sachs expects the Fed to cut interest rates by 25 basis points three times in a row in March, May and June next year. In the future, it may continue to stimulate the market's expectations for the trend of gold prices.
However, it is still unclear whether and when the Fed will cut interest rates next year. New York Fed President Williams said late Friday that the Fed is not really talking about cutting interest rates at this time, and will continue to raise interest rates if necessary. However, Atlanta Fed President Bostic also said that two 25 basis point rate cuts are expected in 2024, the first of which will occur "sometime" in the third quarter.
▌ International gold prices hit a new historical record this month, and the trend of A-share jewelry concept stocks is polarized: Lao Fengxiang ranked first in the sector during the year, but has not yet refreshed the record high set in May;
Based on the overall high gold price and high demand background during the year, Lao Fengxiang, Caibai Shares, Chao Hongji, FIYTA, Zhou Dasheng and Laishen Tongling recorded positive returns throughout the year, among which Lao Fengxiang and Caibai Shares ranked first and second in the year's list of gainers, with cumulative increases of 67.33% and 43.34% respectively. It is worth noting that in this wave of international gold price rises since October, Lao Fengxiang has risen nearly 30% in the same period to exceed the gold price increase in the same period, and Caibai shares have risen less than 11% in the same period to underperform the international gold price, but both stock prices have not been able to refresh the new high in the year.
On the other hand, the share price performance of diamond ring leader Dia shares and gold jewelry leader China Gold is relatively "miserable", far underperforming the international gold price, with a cumulative decline of 51.89% and 19.62% respectively so far this year. In the round of gold price rally so far in October, Dia shares have fallen more than 12% and China Gold has fallen more than 11%, both of which have diverged significantly from gold prices.
According to industry analysis, the reason for the divergence between the stock price of jewelry concept stocks and the gold price is that the market is worried that the rise in gold prices will not convert into corporate profits, the international gold price is too transparent, and the profits of most gold brands mainly come from processing fees and brand premiums. In addition, relevant companies said that the acceleration of store expansion in the sinking market of franchise stores, coupled with operating costs such as store rents and employee salaries, will further reduce the gross profit margin. From the perspective of listed gold jewelry companies, the gross profit margin of Zhou Taisheng in the first three quarters was 18.22%, and the gross profit margin of Caibai shares was 11.15%, while the gross profit margins of Lao Fengxiang and China Gold were lower in the same period, 8.12% and 4.23% respectively.
Lao Fengxiang, Zhou Dasheng, China Gold, Caibai and Chaohongji were among the top five in the net profit list of the A-share jewelry sector in the first three quarters
Behind the sharp rise in the stock price of Lao Fengxiang and Caibai shares during the year, their performance is also outstanding. According to incomplete statistics from the Financial Associated Press, Lao Fengxiang, Zhou Dasheng, China Gold, Caibai and Chao Hongji ranked among the top five in the net profit list of the jewelry sector in the first three quarters, as detailed in the figure below:
Specifically, Lao Fengxiang's net profit in the first three quarters was 1.964 billion yuan, a year-on-year increase of 44.87%, and the revenue was 62.066 billion yuan, a year-on-year increase of 15.93%. Guosheng Securities Yang Ying and others pointed out in a research report on November 3 that Lao Fengxiang has 5,631 stores by the end of 2023H1, compared with the net opening of 22 stores at the beginning of the year, and the sales and peak season of jewelry companies are mostly in the second half of the year.
Looking back, from August 2022 to May 2023, Lao Fengxiang's share price has risen by 111.8% cumulatively.
In the first three quarters, the net profit of Caibai Co., Ltd., a leading jewelry company in North China, was 591 million yuan, a year-on-year increase of 66.36%, and its revenue was 12.37 billion yuan, a year-on-year increase of 45.08%. Sun Haiyang of Tianfeng Securities and others pointed out in a research report on November 5 that the main reason for the growth of Caibai shares is the increase in consumers' willingness to buy, and the impact of the upward trend of gold prices has further stimulated consumption vitality and the company's sales are improving. In 23Q3, the company added 7 new directly-operated stores, in addition, the company has Caibai Jewelry's self-operated official mall and more than 10 online stores opened on JD.com, Tmall, Douyin and other platforms, continuing to promote the development of live broadcast business and broaden online channels.
Looking back, from October 2022 to July 2023, the share price of Caibai shares has risen by 83.7% cumulatively.
China's gold stock price diverged from gold price and performance Dia shares were killed by the stock price and performance Davis
Compared with the above two stocks that have risen to varying degrees in the gold price rise since October, the other two leading stocks in the industry with the highest total market capitalization, Dia shares and China Gold, have performed in the secondary market in this round of gold price rise can be called "miserable". China Gold, the first listed central enterprise in the gold and jewelry industry, has fallen 19.59% since the beginning of August, and Dia shares, which opened the market with DR diamond rings, have fallen 24.32% since mid-September.
In the long run, China Gold has fallen by 42.3% since August 2022, and the share price of Dia shares has fluctuated and fallen since the beginning of this year, with a maximum decline of 57.47% this year.
It is worth noting that the performance of China's gold share price diverged from the performance. In the first three quarters, the company's operating income was second only to Lao Fengxiang's 41.314 billion yuan, a year-on-year increase of 15.76%, and its net profit was 741 million yuan, a year-on-year increase of 20.66%. Li Dian of Guoyuan Securities pointed out in a research report on November 2 that in 2023Q1-3, China Gold will have a net increase of 7 directly-operated stores and 217 franchised stores, of which Q3 will significantly accelerate the expansion of stores, with a net increase of 4 directly-operated stores and 202 franchised stores. Q4 plans to add 11 directly operated stores and 173 franchised stores, and first- and second-tier cities will focus on opening boutique flagship stores. At the same time, the company increased the layout of lab-grown diamonds, and in February 3, the company established a lab-grown diamond promotion division, created a number of series of new products, and held a new product launch conference on the Jingdong platform to test the waters, and is expected to gradually deploy offline in the future.
Dia shares suffered a double kill of stock price and performance Davis. The company's net profit in the first three quarters was 74 million yuan, down 90.4% year-on-year, and revenue was 1.742 billion yuan, down 42.75% year-on-year. Source Securities Huang Zepeng and others pointed out in a research report on November 3 that although the domestic economy is recovering, the consumption environment is still under pressure, and the diamond inlay market, as one of the optional consumption, has insufficient demand momentum in the short term. In order to maintain a healthy cash flow, Dia took the initiative to adjust its business strategy, laid out the gold category in terms of products, integrated the Chinese romance of gold "love is stronger than gold" with the brand concept, and developed a series of classic gold products "DR Little Gold Heart".
It is worth noting that after the gold price continues to rise sharply, if there is a large price fluctuation in the future, will it bring risks to the operation of related jewelry companies? Another manufacturer previously told the Financial Associated Press reporter that "if the price of gold has been rising or rising frequently or sharply, consumers may take a wait-and-see attitude, which will inhibit the retail side to a certain extent." If the price fluctuation is relatively stable, everyone should still consume. ”
(Finance Associated Press Ruoyu)