In recent times, performance reports of major listed gold companies have been released one after another. A CIFA reporter noticed that among the gold stocks whose performance forecasts have been disclosed so far,$SD GOLD (01787.HK)$,$Zhongjin Gold Corp.,Ltd (600489.SH)$,$Chifeng Jilong Gold Mining (600988.SH)$,$Sichuan Rongda Gold (001337.SZ)$In addition, many gold and retail companies, such as Caibai Co., Ltd., generally achieved good profit growth in 2023. Among them, Shandong Gold, Caibai Co., Ltd. and others expect annual net profit increases of 60% to 100% year-on-year.

The industry generally believes that the increase in gold consumption is mainly in the context of the continued rise in gold prices and large-scale gold purchases by central banks. As the domestic economy recovers, the appeal of gold to consumers seeking value preservation increases, and the demand for wedding jewellery grows, gold is becoming more and more popular.

Looking ahead to the future, Wang Lixin, CEO of the World Gold Council in China, believes that as a long-term strategic decision, the central bank of China will diversify reserve assets and increase gold reserves in 2024. Meanwhile, domestic demand for gold bars and coins will continue to be strong, while demand for jewellery may face challenges due to factors such as rising gold prices and slowing economic growth.

The profits of listed gold companies were generally high, and the net profit increased by as much as 100%

Specifically, in the performance reports that have been disclosed so far, many A-share precious metals listed companies such as Shandong Gold, CICC Gold, and Chifeng Gold, as well as Caibai Shares,$Guangdong CHJ Industry (002345.SZ)$Many other gold retail companies achieved significant performance growth in 2023.

Among them, Shandong Gold is expected to achieve net profit of 2 billion yuan to 2.5 billion yuan in 2023, an increase of 60.53% to 100.66% over the previous year. Chifeng Gold is expected to achieve net profit of about 760 million yuan to 830 million yuan, an increase of 68.47% to 83.99% over the previous year. Compared with the same period last year, CICC Gold expects to increase its net profit by RMB 588 million to RMB 1,084 million, an increase of 31.01%-57.21% over the same period last year.

In addition, Caibai Co., Ltd. is expected to achieve net profit of 670 million yuan to 735 million yuan in 2023, an increase of 45.61% to 59.74% over the previous year. Chao Hongji expects to achieve net profit of 320 million yuan to 400 million yuan, an increase of 60.70% — 100.88% over the same period last year.

Regarding the reason for the pre-increase in performance, companies such as Caibai Co., Ltd. said that in 2023, China's economy rebounded positively. With a series of steady growth and implementation of measures to promote consumption, the business environment continued to be optimized, the consumer market rose and picked up, compounded the upward trend of gold price fluctuations, and driven by national style trends and new process innovation, consumers' willingness to buy gold and jewelry products increased.

However, at the same time, some gold companies also experienced significant losses. such as$Western Region Gold (601069.SH)$In 2023, it is expected to achieve net profit of 250 million yuan to 320 million yuan, a decrease of 240.89% - 280.34% compared with the same period last year after retroactive adjustments. However, the main reason for the pre-loss in the company's performance was due to a drop in the sales price of the electrolytic metal manganese, and a decrease in self-produced gold production and sales compared to the same period last year due to the impact of the suspension of production at the subsidiary's main mines.

Domestic jewellery consumption reached a record high, and jewellery demand may face challenges in 2024

Overall, the gold market performed strongly in 2023 under the influence of factors such as the central bank's continued large-scale gold purchases and expectations of interest rate cuts. The data shows that in 2023, despite a 17% surge in domestic gold prices, the total demand for gold jewelry in China still reached 630 tons, an increase of 10% over the previous year. Meanwhile, due to soaring gold prices, domestic jewellery consumption reached 282 billion yuan in 2023, a record high.

“The economic recovery trend, along with the lifting of the epidemic prevention policy at the end of 2022, laid the foundation for a recovery in domestic jewellery demand.” According to the “Global Gold Demand Trend Report” released recently, on the one hand, gold consumption in the Chinese market continues to grow due to the recovery of the Chinese economy, the increasing appeal of gold to consumers seeking value preservation, and the increase in demand for wedding jewellery. On the other hand, against the backdrop of strong gold prices, weak performance of other RMB assets, and continuous announcements of gold purchases by the People's Bank of China during the year, gold is becoming more and more popular, keeping sales of gold bars and coins strong.

Looking ahead, Wang Lixin, CEO of the World Gold Council in China, believes that domestic demand for gold bars and coins may continue to be strong in 2024. The central bank's continued gold buying trend and potential geopolitical and economic uncertainty are likely to continue to fuel bar and coin sales in 2024. However, considering the high price of gold and the possible slowdown in revenue growth, it may be difficult to keep the sales volume of gold bars and coins in 2024 at the same level as in 2023.

Furthermore, demand for gold jewellery in China may face challenges in 2024. “Although the traditional peak sales season before the Spring Festival holiday may have led to strong jewellery demand performance in the first quarter, consumption throughout the year may still face challenges due to rising gold prices, slowing economic growth, and weakening demand for wedding gold.” he said.

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