The company is mainly engaged in the gold, jewelry and precious metal investment products business. The channel is mainly self-operated and omni-channel operation opens up room for growth. The company has been a company specializing in gold and jewelry since 2010, and is deeply involved in the gold and silver jewelry sales business. In the 2023 revenue structure, precious metals investment products accounted for 53.67% of revenue; the gold jewelry business accounted for 37.21%. The company focuses on Beijing-Tianjin-Hebei as the core region. North China accounts for 87.2% of revenue in 2023, while actively exploring cross-regional markets. The sales model is mainly direct management. In 2023, offline channels accounted for 80.48% of revenue and 87 direct-run stores; online channels accounted for 18.24% of revenue, and the revenue growth rate reached 105.1% in 2023, helping the company open up room for growth.
The rise in gold prices resonates with the increase in product strength, and demand for gold products is improving. According to Euromonitor International data, the retail scale of jewellery in China increased 10.25% year-on-year to 841.3 billion in 2023, benefiting from the release of rigid demand such as marriage after the pandemic, and the resonance of residents' demand for value preservation and safe haven. In the future, on the one hand, due to the combination of global risk factors, it is expected that gold prices will continue to rise steadily in the medium to long term, which will help strengthen consumers' impression of gold preservation and appreciation, and as the sense of design of gold products improves, it is expected to further increase consumer preferences for the gold category. Furthermore, leading brands are expected to continue to increase their market share through the decline in franchise and online expansion.
Deeply cultivate the gold category, run strong brands directly and open up space for growth online. The company is characterized by a full direct management model. Through refined operation management, the company achieved high performance flexibility by improving quality and efficiency; it also promoted cross-regional expansion based on deep cultivation in the Beijing-Tianjin-Hebei region, and revenue growth outside of North China increased 165.88% in 2023. The product side is centered on the gold category, with precious metal investment products as the main focus, fully benefiting from the current upward trend in gold prices, while relying on flexible hedging policies to bring additional investment income. In addition, actively explore online channels to open up room for growth, and achieve rapid breakthroughs through differentiated products and emerging platform layouts such as live streaming.
Profit prediction and valuation: As a leading regional gold and jewelry company, the company will continue to encrypt its leading position in the North China region in the future and steadily promote offsite expansion; at the same time, it will actively expand online traffic models such as social media and live streaming to provide additional performance. At the industry level, the expected steady rise in gold prices in the medium to long term will also help boost gold and jewelry consumption. The company's full direct management system and flexible hedging strategy will bring more obvious flexibility to the company's sales and profitability. We expect the company to achieve net profit of 8.18/9.43/1,082 billion yuan in 2024-2026, respectively. The comprehensive absolute and relative valuation will give the company a valuation range of 16.3-18.13 yuan/share, covering the first time, and giving it a “superior to the market” rating.
Risk warning: Gold prices fluctuate greatly; gold and jewelry consumption falls short of expectations; online channel expansion falls short of expectations; worsening competitive environment in the industry brings about price wars, and profit predictions in the article fall short of expectations.