Core Insights - The report analyzes the internationalization strategies of Japanese jewelry brands MIKIMOTO and TASAKI, highlighting their unique paths to success and the lessons that can be applied to the overseas expansion of the company under study [6][7][9] - It emphasizes the resilience of the Japanese pearl consumption market, supported by cultural roots, a robust grading system, and a mature second-hand market [6][18][26] - The report outlines potential strategies for the company under study to leverage cultural empowerment, product innovation, channel expansion, and digital marketing in its international endeavors [12][15] PART 1: Internationalization of Jewelry Brands - Japanese pearl consumption is deeply rooted in traditional cultural practices, with a stable pricing system for high-quality pearls [18][23] - MIKIMOTO and TASAKI represent two distinct paths to brand development: MIKIMOTO focuses on cultural authority and technical expertise, while TASAKI emphasizes capital-driven design innovation [7][9][35] - MIKIMOTO's internationalization began in the early 20th century, establishing a presence in key global markets through royal endorsements and participation in international exhibitions [9][60][64] - TASAKI accelerated its international expansion post-2009 through strategic acquisitions and collaborations with renowned designers, enhancing its brand appeal [9][36][39] PART 2: Outlook for Overseas Expansion of the Company Under Study - The company under study can draw from MIKIMOTO and TASAKI's experiences by focusing on cultural collaborations, innovative product designs, and strategic channel placements in luxury markets [12][15] - The report suggests a phased approach for the company's international expansion, starting with flagship stores in Southeast Asia and gradually moving into duty-free channels and Chinese communities abroad [15] - The potential for growth in the Southeast Asian market is significant, particularly among the Chinese diaspora, which presents a large consumer base for luxury goods [15][27] Market Dynamics - The Japanese jewelry market has seen a shift towards second-hand sales, with 40% of the market comprising pre-owned jewelry, driven by changing consumer preferences and sustainability trends [28][26] - The report highlights the importance of adapting to consumer behavior, particularly among younger demographics who favor high-quality, cost-effective second-hand options [28][26] - The company under study is advised to consider the evolving landscape of luxury consumption, particularly the increasing acceptance of second-hand luxury items [28][26]

Core Viewpoint - The stock of Laopu Gold (06181.HK) has rebounded nearly 4%, currently up 3.61% at HKD 631, with a trading volume of HKD 446 million [2] Company Summary - Laopu Gold's stock price has shown a significant increase, reflecting positive market sentiment [2] - The current trading volume indicates strong investor interest and activity in the stock [2]

Core Viewpoint - The reduction of the VAT rate for non-investment gold producers in China from 13% to 6% is expected to lower the direct profit margin risks for Lao Poo Gold, enhancing its market position and attractiveness to consumers [1] Group 1: Company Performance - Lao Poo Gold's stock rebounded nearly 4%, trading at 631 HKD with a transaction volume of 446 million HKD [1] - The company raised prices significantly at the end of October, which, combined with a 3% decline in gold prices since then, is anticipated to provide a buffer against profit margin pressures [1] Group 2: Market Dynamics - The general increase in gold jewelry prices may enhance the appeal of Lao Poo Gold's products, potentially encouraging consumers to purchase gold jewelry in advance [1] - UBS indicated that while short-term demand for Lao Poo Gold and Chow Tai Fook may face pressure, both companies are expected to further consolidate the market in the long term [1] Group 3: Profit Margin Implications - Assuming the VAT rebate rate decreases from 13% to 6%, Lao Poo Gold's gross margin is estimated to face a pressure of 3 to 4 percentage points [1] - The company’s recent price increase of over 20% may help offset some of the margin pressure, while Chow Tai Fook has also raised the prices of its weighted gold products by 5%, passing the margin pressure onto consumers [1]

Core Viewpoint - The recent reduction of the VAT rate for non-investment gold producers in China from 13% to 6% is expected to lower direct profit margin risks for Lao Pu Gold, enhancing its market position and attractiveness to consumers [1] Company Summary - Lao Pu Gold's stock rebounded nearly 4%, trading at 631 HKD with a transaction volume of 446 million HKD [1] - Daiwa believes that the significant price increase by Lao Pu Gold at the end of October, combined with a 3% decline in gold prices since then, will provide a buffer for the company [1] - UBS indicates that while short-term demand for Lao Pu Gold may face pressure, the company is expected to benefit from market consolidation in the long term [1] Industry Summary - The general increase in gold jewelry prices may make Lao Pu Gold's products more attractive, potentially encouraging consumers to purchase gold jewelry in advance [1] - The estimated impact of the VAT reduction on Lao Pu Gold's gross margin is a decrease of 3 to 4 percentage points, although the recent price increase of over 20% may offset some of this pressure [1] - Competitor Chow Tai Fook has also raised the prices of its gold products by 5%, passing the margin pressure onto consumers [1]

Core Insights - The gold price in Shenzhen's Shui Bei market surged significantly, rising from approximately 930 yuan per gram to 991 yuan within two hours on November 3, 2023, and remained high at 993 yuan per gram as of the latest report [1][3][7] Group 1: Price Fluctuations - The recent spike in gold prices is likely linked to the announcement of a new tax policy by the Ministry of Finance and the State Taxation Administration, which will take effect from November 1, 2025, until December 31, 2027 [3][7] - Following the announcement, gold prices across various markets in China have seen substantial increases, with some retailers in Shenzhen selling gold at prices excluding the new tax, attracting investors to stock up [3][7] Group 2: Market Reactions - Retailers in the market have adjusted their prices, with reports indicating that gold prices increased by 13 tax points, reaching 991 yuan per gram, and prices could rise to 1061 yuan per gram if invoices are required [7][9] - Many small-scale jewelers have paused their gold trading activities due to the unpredictable market conditions and high prices, opting to wait for price stabilization before resuming operations [9][10] Group 3: Investor Behavior - Investors are actively seeking to take advantage of the price fluctuations, with some resorting to local delivery services to secure gold purchases amid rising prices [10][14] - The introduction of the new tax policy has prompted a sense of urgency among investors, leading to a rush to purchase gold before further price increases [10][14] Group 4: Market Outlook - Following the implementation of the new tax policy, gold jewelry stocks have continued to decline, with notable drops in companies such as Lao Pu Gold and Chow Tai Fook [19][23] - Analysts suggest that the tax adjustments will impact market sentiment, particularly affecting the demand for weight-based gold jewelry, while the overall competitiveness of China's gold market may improve in the long term [19][23]

Core Viewpoint - UBS reports that China's adjustment of the gold value-added tax (VAT) deduction policy aims to centralize regulation of investment product demand, which may lead to a shift in some demand towards gold ETFs due to reduced liquidity [1] Industry Summary - The new 7% tax will likely be passed on to consumers in the jewelry consumption sector, whether through direct sales or franchise channels [1] - The increase in VAT is expected to exert pressure on recent demand for gold products and reduce the arbitrage opportunities between investment and non-investment demand, such as converting gold bars into jewelry [1] - With enhanced regulatory scrutiny, the market is anticipated to further consolidate, with consumers potentially shifting from smaller shops to larger brands [1] Company Summary - Short-term demand for companies like Lao Pu Gold (06181) and Chow Tai Fook (01929) may face pressure; however, both are expected to further consolidate the market in the long term [1] - Assuming the VAT refund rate decreases from 13% to 6%, Lao Pu Gold's gross margin may experience a pressure of 3 to 4 percentage points; however, the company has already raised prices by over 20% recently, which may offset some of the impact [1] - Chow Tai Fook has recently increased the prices of weight-based gold products by 5%, transferring the margin pressure to consumers [1]

Group 1 - The Chinese Ministry of Finance announced a new policy reducing the VAT deduction for jewelry retailers from 13% to 6%, increasing gold procurement costs by approximately 7% [1] - The policy will be effective from November 1, 2025, to December 31, 2027, and is expected to lead to a preemptive purchasing trend before anticipated price increases [1] - Companies like Lao Pu Gold (06181) and Chow Tai Fook (01929) are expected to pass these costs onto consumers, with no long-term concerns regarding the impact on gross margins for gold jewelry stocks [1] Group 2 - Lao Pu Gold's recent price increase on October 26 is seen as sufficient to offset recent gold price rises, minimizing immediate profit margin risks [2] - The general industry trend of raising prices for weight-based products is expected to make Lao Pu Gold's offerings more attractive, potentially encouraging consumers to purchase gold jewelry in advance [2] - Both Lao Pu Gold and Chow Tai Fook maintain a "buy" rating, with a preference for Lao Pu Gold in the short term due to its recent price hikes and higher proportion of priced products [2]

Group 1 - The Chinese Ministry of Finance announced a new policy reducing the VAT deduction for jewelry retailers from 13% to 6%, increasing gold procurement costs by approximately 7% [1] - The policy will be effective from November 1, 2025, to December 31, 2027, and is expected to lead to a preemptive purchasing trend before anticipated price increases [1] - Companies like Lao Pu Gold (06181) and Chow Tai Fook (01929) are expected to pass these costs onto consumers, with no long-term concerns regarding the impact on gross margins for gold jewelry stocks [1] Group 2 - Lao Pu Gold's recent price increase on October 26 is seen as sufficient to offset recent gold price rises, minimizing immediate profit margin risks [2] - The general industry trend of raising prices for weight-based products is expected to make Lao Pu Gold's offerings more attractive, potentially encouraging consumers to purchase gold jewelry sooner [2] - Both Lao Pu Gold and Chow Tai Fook maintain a "buy" rating, with a preference for Lao Pu Gold in the short term due to its recent price hikes and higher proportion of priced products [2]

Group 1 - The gold and jewelry stocks continue to decline, with notable drops in share prices [1] - Lao Pu Gold (06181.HK) decreased by 4.09%, trading at 609.5 HKD [1] - Chow Tai Fook (01929.HK) fell by 3.09%, with a share price of 13.47 HKD [1] - Chow Sang Sang (00116.HK) experienced a decline of 3.06%, priced at 12.68 HKD [1]

Core Viewpoint - The recent announcement by the Chinese Ministry of Finance and the State Taxation Administration to cancel the gold purchase tax incentives has led to a decline in gold jewelry stocks and is expected to increase costs for jewelry companies, prompting price adjustments [1] Company Summary - Lao Pu Gold (06181) shares fell by 4.09%, trading at 609.5 HKD - Chow Tai Fook (01929) shares decreased by 3.09%, trading at 13.47 HKD - Chow Sang Sang (00116) shares dropped by 3.06%, trading at 12.68 HKD [1] Industry Summary - The new tax policy will reduce the VAT deduction rate for gold procurement from 13% to 6%, potentially increasing gold procurement costs by up to 7% [1] - Chow Tai Fook indicated that the new tax regulations will add extra costs to gold procurement and production, leading to price adjustments for certain gold products starting November 3 [1] - Citigroup's report suggests that the jewelry industry may raise prices to pass on the increased costs to consumers, with the demand for weight-based gold jewelry being the most affected [1]