Core Viewpoint - Gold stocks continue to decline, with significant drops in major companies, reflecting a broader trend in the gold market as spot gold prices fall below $3980 per ounce, marking a decline of over 9% from the peak on October 20 [1] Company Performance - Lingbao Gold (03330) decreased by 4.27%, trading at HKD 15.9 [1] - Jihai Resources (02489) fell by 3.55%, trading at HKD 1.36 [1] - China Silver Group (00815) dropped by 3.23%, trading at HKD 0.6 [1] - China Gold International (02099) declined by 2.65%, trading at HKD 125 [1] Market Analysis - On November 4, spot gold prices fell by 0.53%, indicating a significant market correction [1] - The decline in gold prices is attributed to high implied volatility and profit-taking after substantial gains, alongside a weakening trend in capital inflow [1] - The market has over-priced geopolitical instability, with recent easing in tensions between the US and China, as well as the Russia-Ukraine conflict [1] Future Outlook - Short-term gold prices are expected to remain relatively high with significant volatility, while geopolitical risks are diminishing [1] - Without unexpected positive stimuli, London gold is anticipated to consolidate and fluctuate until the end of the year, with potential for new highs in the first quarter of the following year [1] - Future increases in gold prices may require two conditions: a reduction in implied volatility to levels seen in August-September and new macroeconomic driving factors [1]

Summary of Key Points from the Conference Call on the Gold and Jewelry Industry Industry Overview - The conference call focused on the gold and jewelry industry in China, particularly brands such as Chow Tai Fook (CTF), Luk Fook, Lao Feng Xiang, and others [4][5]. Core Insights - **Gold Price Impact**: The rapid increase in gold prices has negatively affected weight-based jewelry demand and franchisee profitability. A potential correction in gold prices could help revive demand [2][6]. - **Consumer Behavior**: Consumers have become more price-sensitive, leading to a wait-and-see approach. Sales declines were reported across most brands in 1Q25, with a 17% increase in gold prices during that period. Sales were flat or slightly improved in 2Q, followed by renewed declines in September and October [6][10]. - **Franchisee Challenges**: Brands with high franchise exposure are more vulnerable during this down-cycle. Thin margins (approximately 10% for franchisees) have resulted in lower sales volumes, impacting profitability and leading to store closures [5][6]. Key Data Points - **Sales Trends**: - 1Q25: Sales declines reported with gold prices up 17% - 2Q25: Flat or slightly improved sales (+5%) - September-October: Renewed sales declines (+20% from August) [6][10]. - **Gold Price Threshold**: A drop in gold price to Rmb850/g (5% decrease from current levels, 15% from peak) could trigger retail demand and franchisee restocking, similar to trends observed in 2013 [10][11]. Competitive Landscape - **Price Competition**: Franchisees are offering deeper discounts to stimulate sales. Domestic brands are more aggressive with discounts of 40-50%, while Hong Kong brands maintain discipline with discounts below 20% [10][12]. - **Brand Differentiation**: The market is becoming commoditized, but CTF stands out due to superior brand and operational management, including franchisee management and product quality control [13][14]. Emerging Trends - **Luxury Positioning**: Laopu's emergence in the market has created new demand for premium gold jewelry, benefiting leading brands like CTF. Strong marketing and social media presence have contributed to Laopu's success [14]. Valuation and Risks - **Chow Tai Fook Valuation**: The target price is based on a 19x F2027e P/E, reflecting a strategy shift towards slower network expansion but improved same-store profitability. Projected EPS CAGR is approximately 30% over F2025-27 [26]. - **Risks**: - Upside risks include faster-than-expected network expansion and gold price rallies. - Downside risks involve macroeconomic slowdowns, intense competition, and potential declines in disposable income [30][32]. Conclusion - The gold and jewelry industry in China is currently facing challenges due to gold price volatility and changing consumer behavior. However, brands like Chow Tai Fook are positioned to navigate these challenges effectively through strong operational management and brand recognition. The potential for demand recovery exists if gold prices stabilize or decline.

Core Viewpoint - The recent decline in gold prices is influenced by U.S. President Trump's call for the Federal Reserve to lower interest rates, which could further impact market dynamics and gold demand [1][5]. Price Movements - On July 28, spot gold prices fell to $3310 per ounce, marking the first drop since July 17 [1]. - Domestic gold jewelry prices also decreased, with brands like Chow Tai Fook and Chow Sang Sang seeing reductions in their gold prices [1][2]. - As of July 29, the price of gold jewelry from various brands has fallen below 1000 yuan per gram, with specific prices reported as follows: - Chow Sang Sang: 978 yuan per gram (down 12 yuan) - Lao Feng Xiang: 998 yuan per gram (down 2 yuan) - Others remained stable or saw minor changes [2][3]. Market Trends - The global gold price saw significant increases earlier in the year due to rising geopolitical tensions, with the London spot gold price rising 24.31% year-to-date as of June 30 [3]. - The average price of gold in the first half of 2025 was reported at $3066.59 per ounce, a 39.21% increase compared to the same period last year [3]. - The Shanghai Gold Exchange reported a similar trend, with Au9999 gold closing at 764.43 yuan per gram, up 24.50% year-to-date [3]. Future Outlook - Analysts suggest that while short-term speculative demand has weakened, long-term support from central bank purchases and financial investments may sustain gold prices [5]. - There is a possibility that the Federal Reserve may lower interest rates more than expected, which could lead to a further increase in gold prices by over 10% by the end of the year [5].

Group 1 - The international gold price has recently declined, with COMEX gold futures closing at $3247.4 per ounce on May 2, down 7.48% from the high of $3509.9 per ounce on April 22 [2] - Many gold jewelry brands have lowered their prices, with quotes generally falling below 1000 yuan per gram, and some brands offering prices as low as 858 yuan per gram during the May Day holiday [2][3] - The decline in gold prices, combined with holiday promotions, has increased consumer interest, leading to crowded stores and significant purchases, particularly in Shenzhen's gold market [3][4] Group 2 - There is a notable increase in gold recovery activities, with many customers visiting stores to sell their gold, driven by higher recovery prices compared to previous purchases [5] - The gold recovery market has seen a surge in activity, with daily recovery volumes reaching twice the normal levels during the May Day holiday [5] - Some institutions suggest that gold prices may experience further fluctuations in the short term, indicating a potential for additional declines [6]