Financial Services Association, March 31 (Editor Yu Qi) Gold prices have been booming since March, and once again reached a new record high this week. On March 29, spot gold pulled up to $2,236 per ounce at the end of the session, breaking significantly above the previous high of $2222.7 per ounce. The price of the main gold futures on the New York Mercantile Exchange also rose four times in a row this week and hit a record closing record high for two consecutive days. With the strong rise in international gold prices, prices in the domestic gold retail market are also “skyrocketing.” According to a Financial Services Association reporter on Friday, retail prices of pure gold jewelry in domestic gold brand stores have generally risen. For example, the listing prices of Zhou Daifu, Chow Tai Sang, Chao Hongji, and Lukfook Jewellery have risen from 673 yuan/gram yesterday to 686 yuan/gram today, while the price of Zhou Shengsheng has risen to 688 yuan/gram.

In terms of A-shares, Chifeng Gold, Beifang Copper, Shengda Resources, Lao Fengxiang, and Lai Shen Tongling closed strong gains and stops on Friday. Yulong shares and Shandong Gold rose more than 8% in the intraday period.

According to industry analysts, gold prices have continued to reach new highs, mainly due to expectations of US interest rate cuts and strong safe-haven demand. Liu Bo of Western Securities said in a March 5 research report that with the intensification of anti-globalization and geopolitical games, due to demands such as “security” and “independence,” the monetary and financial attributes of gold may jointly drive gold to start a new upward cycle. Regarding the future performance of gold prices, some industry insiders believe that in the short term, there are still many uncertainties, which may cause a short-term correction in the gold price. However, in the long run, the shift in US monetary policy from tight to loose is the general trend. Combined with increased geopolitical risks, central banks are continuing to increase their gold holdings, and the gold market will continue to rise and fall easily.

According to incomplete statistics from the Financial Federation, as of press release, a number of listed companies, including Yintai Gold, Hunan Gold, Dengyun Co., Ltd., Shenzhen Zhonghua A, Chaohongji, Shengtun Mining, Cuihua Jewelry, and Tongling Nonferrous Metals, have responded to the impact of rising gold prices on related business or performance on interactive platforms this month. The details are shown below:

▌Behind the gold craze, jewelry stocks “overtook” resource stocks: time-honored jewellery companies took the lead in leading the stock price to record highs, and the stock prices of the two outstanding “gold miners” were high last year but have fallen short so far

In terms of the gold industry chain, it mainly includes raw material supply, production plants, brands, etc. According to a Financial Services Association reporter, the rise in gold prices has had mixed effects on enterprises in the gold industry chain. Chifeng Gold, which is the main gold mining business, said that the company's gold products are priced according to market prices, and the impact of rising gold prices is relatively positive. The most obvious sign of fluctuating gold prices is a heavy-weight product, because it is sold by gram, and the impact of selling by piece will be relatively small.

Zhang Junhao of Guoxin Securities and others said in the March 11 research report that the continued rise in gold prices has had a positive impact on both upstream and downstream enterprises in the gold industry. Judging from past experience, upstream precious metals companies have benefited more directly, and downstream retail companies have been relatively stable, but the situation has been different since 23. Since gold prices continued to rise steadily last year, the gold and jewelry retail sector has performed well.

According to statistics from Zhang Junhao and others, SEG Gold 9999 increased 17% for the whole year in 2023, while the zero growth rate of the Gold and Silver Jewelry Club reached 13.3% throughout the year. Meanwhile, the annual stock prices of the precious metals stocks Shandong Gold, Chifeng Gold, and Yintai Gold rose 19.70%, 22.38%, and 38.91% respectively. The retail stocks Lao Fengxiang, Caibai, and Zhou Dasheng's stock prices rose 64.94%, 52.24%, and 13.97% respectively. Retail stocks with a relatively high share of gold performed better.

It is worth mentioning that with the favorable news that spot gold prices hit a record high this week, Lao Fengxiang's stock price continued to reach a record high, and Lao Fengxiang's stock price continued to reach a record high on Friday, with the biggest cumulative increase of about 40% since February. Judging from the above cumulative maximum rise and fall values of the listed companies during the period since the close of trading on January 4, 2023, the maximum cumulative gains and losses of Shandong Gold, Chifeng Gold, and Yintai Gold were 52%, -47.6%, and 64%, respectively. The cumulative maximum gains and losses of Lao Fengxiang, Caibai, and Zhou Dasheng during the same period were 82%, 67.5%, and 53.85% respectively. As can be seen, the overall performance of gold and jewelry stocks is superior to that of gold resource stocks, and Lao Fengxiang's performance is the best.

As for the reason behind the gold boom, Zhang Junhao and others believe that, on the one hand, companies focusing on the gold retail business, such as Caibai Shares and China Gold, have each entered the capital market in recent years. On the other hand, listed companies are also actively exploring the gold category layout. For example, the share of Zhou Dasheng's gold products rapidly increased from 29.14% in 2019 to 76.16% in 2022; the share of Chaohongji's traditional gold jewelry increased from 22.79% in 2019 to 32.71% in 2022.

Gao Bowen of Dongfang Wealth Securities and others also mentioned in the March 1 research report that the stock prices of gold and jewelry retail companies are highly correlated with international gold prices, and Lao Fengxiang is a typical example. Lao Fengxiang's gold procurement and inventory volume has been large over the years. Inventory increased by 34.1% to 33 tons at the end of 2022, accounting for more than 80% of the total inventory value, and is expected to benefit from rising gold prices during the processing period. In addition, the textile and garment research team of Southwest Securities pointed out in the 2024 investment strategy report for the textile and apparel industry that the gold category has been the main driving force for the growth of gold and jewelry. In the first three quarters of last year, the revenue of Zhou Dasheng/Chao Hongji gold products increased by 51.7%/72.5%, respectively.

Li Chao of Guojin Securities and others mentioned in the December 7 research report that in the first two rounds of the market, the relative earnings of gold stocks such as Yintai Gold, Shandong Gold, CICC Gold, and Chifeng Gold in the current round of gold prices have not fulfilled all expectations of rising gold prices.

Notably, Chifeng Gold and Sichuan Gold both released their 2023 annual reports after the market on Friday. Among them, Chifeng Gold's revenue last year was 7.221 billion yuan, up 15.23% year on year; net profit was 804 million yuan, up 78.21% year on year. The company mentioned in the announcement that the increase in revenue compared to the same period last year was mainly due to the year-on-year increase in gold sales volume and unit sales price. Last year, Sichuan Gold achieved operating income of 629 million yuan, up 33.13% year on year; net profit of 211 million yuan, up 6.16% year on year. However, judging from the performance of the secondary market, the biggest cumulative decline in stock prices of Chifeng Gold and Sichuan Gold since last year's high was about 50%.