Summary of the Conference Call on the Gold and Jewelry Market Industry Overview - The gold and jewelry market in Henan experienced a significant slowdown in growth, with an increase of only 3.6% in October 2025, compared to 30%-50% in previous months. This slowdown is attributed to a 50% rise in gold prices and uncertainty surrounding tax reforms, particularly affecting the capital city, Zhengzhou, due to low wedding demand [1][4]. Key Points and Arguments - **Impact of Tax Reform**: The tax reform primarily targets investment gold bars, with upstream factories currently invoicing at a 13% VAT, leading to an increase of 70 RMB per gram in upstream costs, resulting in retail prices exceeding 1,200 RMB per gram. Domestic brands like Lao Feng Xiang and Lao Miao allow the exchange of old materials, mitigating cost pressures compared to Hong Kong brands like Chow Tai Fook and Chao Hong Ji, which do not allow such exchanges [1][5]. - **Sales Performance**: In November, overall sales performance was poor due to the off-season, with a 6.3% increase in monetary sales but a 24.6% decline in inventory weight. Lao Feng Xiang showed the best performance with a 12.6% year-on-year growth, while Chow Tai Fook reported a sales figure of 2.27 billion RMB due to software issues [2]. - **Market Dynamics**: The investment gold bars account for about 3% of the market, with most sales still focused on jewelry. The proportion of fixed-price products has increased, with Chow Tai Fook at 35.7% in Henan, while other brands like Lao Feng Xiang and Lao Miao are lower at 10-12% [3][10]. - **Inventory and Supply Chain**: There was a 20% decline in inventory in November, influenced by gold price fluctuations, rumors of the end of the Russia-Ukraine war, and uncertainties from tax reforms. Many brands reduced their purchase volumes due to cash flow issues caused by rising gold prices [11]. - **Government Regulation**: The government may enhance regulations on the recovery and trading of old materials and require upstream factories to purchase raw materials from the Shanghai Gold Exchange to reduce tax evasion [7]. - **Consumer Sentiment**: Consumers are primarily feeling the impact of rising gold prices. However, with increased transparency regarding potential tax increases, their initial wait-and-see attitude has eased, and wedding demand remains a significant factor [9]. Additional Important Insights - **Brand Strategies**: Major brands are reducing pressure on franchisees and developing IP series and high-end products to increase margins. Approximately 70% of purchases from leading brands are now series or IP products, which helps differentiate them from lower-end brands [12][13]. - **Future Expectations**: The willingness of consumers to spend in 2026 will depend on the clarity of tax policies. If the government clarifies that only investment gold bars will be taxed, it could significantly lower costs for franchisees and boost confidence in purchasing [17]. - **Franchisee Challenges**: Franchisees are currently facing challenges due to high tax burdens and are reducing inventory in anticipation of price corrections and tax policy changes. Many are also experiencing cash flow issues due to high inventory costs [15][16]. - **Brand Goals for 2026**: Brands are discussing their targets for 2026 with franchisees, with many facing declining sales targets due to store closures and high tax burdens. For instance, Lao Miao has projected a nearly 20% decline in order volume for 2025 [18].

Core Viewpoint - The recent sharp decline in gold prices has triggered significant reactions in the market, affecting both stock prices of gold-related companies and consumer behavior in the retail gold market [2][3][4]. Market Reaction - On October 22, A-share gold stocks experienced a collective drop, with companies like Hunan Silver and Shengda Resources hitting the daily limit down, while others like Xiaocheng Technology and Zhaojin Gold fell over 9% [3]. - The precious metals sector became the largest declining sector in A-shares that day, with the three major indices collectively falling and trading volume decreasing by 202.4 billion yuan compared to the previous day [3]. Retail Market Adjustment - The domestic gold retail market saw a significant adjustment, with major jewelry brands reducing their gold prices sharply. For instance, Chow Tai Fook's gold price dropped by 57 yuan to 1235 yuan per gram, while Lao Miao Gold saw a decrease of 83 yuan to 1211 yuan per gram [3]. - Despite the price drop, there was an increase in consumer purchases, with many taking advantage of lower prices to buy gold jewelry [4]. Factors Behind Price Drop - Analysts attribute the recent volatility in gold prices to a combination of technical corrections after a rapid increase, easing geopolitical tensions in Eastern Europe, and potential resolutions to the U.S. government shutdown crisis [5]. - The rapid rise in gold prices had created an overheated market, leading to profit-taking by institutions, which further accelerated the price decline [5]. Long-term Outlook - Despite the short-term price drop, several international investment banks remain optimistic about the future of gold prices. HSBC forecasts that gold's upward momentum could continue until 2026, with a target price of $5000 per ounce [6]. - Long-term bullish sentiment on gold remains intact, driven by concerns over U.S. fiscal deficits and the weakening of the dollar, positioning gold as a hedge against these risks [6].

[Table_Title] 研究报告 Research Report 26 May 2025 潮宏基 CHJ Industry (002345 CH) 店均高速增长，开店节奏稳健，注重品牌系统性工程建设 yy.kou@htisec.com ashley.fy.chen@htisec.com [Table_yemei1] 热点速评 Flash Analysis [Table_summary] (Please see APPENDIX 1 for English summary) 事件：5 月 23 日，海通国际海外消费组调研潮宏基总部，参加公司高管交流会。公司管理层表示终端增速自 2024 年 四季度开始提升，2025 年 4 月份店均增速约 45%，5 月初至 5 月 20 日增速约为 30%。5 月门店人流量在五一假期后 有所下滑，主要是受节日透支效应影响。 差异化打法应对市场竞争，产品设计突出年轻时尚风格。面对激烈市场竞争，管理层表示，其产品始终坚持差异化 定位，不做纯粹的"量+价"竞争，更重视客户体验和品牌美誉度。公司聚焦年轻消费群体，20-40 岁消费者占比约 80%，其中 25-35 岁区间为核心人 ...

店均高速增长，开店节奏稳健，注重品牌系统性工程建设 Strong Average Store Growth, Steady Expansion Pace, Focusing on Systematic Brand Development 寇媛媛 Yuanyuan Kou 陈芳园 Ashley Chen [Table_Title] 研究报告 Research Report 26 May 2025 潮宏基 CHJ Industry (002345 CH) yy.kou@htisec.com ashley.fy.chen@htisec.com [Table_yemei1] 热点速评 Flash Analysis [Table_summary] (Please see APPENDIX 1 for English summary) 事件：5 月 23 日，海通国际海外消费组调研潮宏基总部，参加公司高管交流会。公司管理层表示终端增速自 2024 年 四季度开始提升，2025 年 4 月份店均增速约 45%，5 月初至 5 月 20 日增速约为 30%。5 月门店人流量在五一假期后 有所下滑，主要是受节日透支效应影响。 ...