Old-fashioned gold: Inheriting ancient Chinese gold techniques, setting standards for ancient gold products. Founded in 2009, it is the first brand in China to promote the ancient gold concept; in 2019, it launched pure gold inlaid diamond products; in 2022, it launched gold and burnt blue products. With its exquisite ancient gold craftsmanship, professional innovative design level and mature large-scale processing and production capacity, Old Shop Gold has accumulated brand potential and driven rapid revenue growth. In 2021-2023, revenue increased from 1.265 billion yuan to 3.18 billion yuan, GAGR was 58.6%; net profit to mother increased from 0.114 billion yuan to 0.416 billion yuan, and CAGR was 91.0%.
Industry analysis: Demand for gold and jewelry is steady, and the growth rate of the ancient French gold and jewelry market is leading. According to Frost & Sullivan, in 2018-2023, the size of the ancient French gold jewelry market grew rapidly, from 13 billion yuan to 157.3 billion yuan, with a CAGR of 64.6%. As mainstream consumer groups shift to the younger generation and consumer preferences upgrade, it is estimated that in 2023-2028, the CAGR of China's ancient gold and jewelry market will be 21.8%, reaching 421.4 billion yuan by 2028. In 2023, the market size of ancient French gold jewelry in China was 157.3 billion yuan. Old-fashioned gold accounted for 2.0% of the sales revenue of ancient gold and jewelry.
Core competitiveness: Ingenuity builds core competitive barriers in all aspects. 1) Production R&D side: Professional R&D team ensures the high-end positioning and competitiveness of the product. After the Yueyang factory was established in 2018, the proportion of in-house production increased to more than 50%. 2) High technology promotes upgrading and iteration, and the advantages of differentiated product matrices are highlighted. It supports national intangible cultural heritage and inherits the ancient court gold making process; old gold stores focus on ancient gold craftsmanship. While it has a strong sense of design, it has developed products based on pure gold and has stronger value preservation properties. 3) Channel side: Fully self-operated scenario-style stores, targeting high-net-worth customer groups. Offline stores adopt a fully self-operated model for fine management, which is conducive to controlling the quality of products and services. As of June '24, there were 33 stores, covering 14 cities across the country, mostly high-end business districts in first-tier and new-tier cities. 4) Brand influence:
Maintain a high-end position and pursue the timeless appeal of classic jewelry. Old-fashioned Gold has entered 8 shopping malls with annual sales exceeding 10 billion dollars, and the high-end business district layout strengthens its market position. According to the “2023 Hurun Zhishang Premium - China High Net Worth People Brand Tendency Report”, Old Shop Gold is listed as the top ten jewelry brands most popular among high-net-worth individuals.
Future highlights: Ancient French gold's market share is increasing, attracting high-net-worth people with product and channel advantages. 1) Taking advantage of the rapid development of the ancient gold industry, it is expected to gain more share based on its influence; 2) Product and channel advantages and brand positioning attract high-net-worth people, and seize the strong spending power of old customers with high repurchase frequency. In 2021-2023, the revenue contributed by loyal members with an annual purchase amount of more than 1 million yuan increased from 8.5% to 15.9%; the share of revenue contributed by consumers who purchased more than five times a year increased from 14.7% to 24.1%. The company has achieved remarkable results in maintaining old customers and promoting an increase in the repurchase rate; considering that high-net-worth groups have strong consumption resilience, the room for growth is worth looking forward to. 3) Looking forward to future incremental space: High-end business district layout, single stores have high sales ceilings. In line with overseas luxury jewelry layouts, there is still room for the number of stores to open. As a high-end domestic gold and jewelry brand, the channel layout is similar to that of overseas luxury jewelry brands, showing the characteristics of streamlined number of stores and high-end product positioning. 1) Compared with cities covered by existing channels of Bulgari and Cartier, many first-tier and new-tier cities in China have not yet been covered, and the development potential of high-end business districts needs to be exploited urgently. 2) The sales volume of old gold single stores is increasing year by year, and there is still room for growth compared to internationally renowned jewelry brands. In 2023, the average revenue of old gold stores reached 0.094 billion yuan, more than double that of 2022 (0.04 billion yuan). Comparatively, Lifeng Group (Jewelry Division)'s single-store revenue increased from 0.123 billion yuan in 2021 to 0.221 billion yuan in 2023, and there is still room for growth in single-store sales of long-established gold stores.
Investment advice: Old-fashioned gold products are positioned at the high-end, attracting consumption from high-net-worth people, and the repurchase rate is increasing. In high-end business districts, there is still room for growth in single-store sales and number of stores. It is expected to achieve revenue of 58.49, 72.85 and 8.563 billion yuan in 24-26 years, +84.0%, +24.5%, and +17.5%, achieving net profit to mother of 10.01, 12.59 and 1.484 billion yuan, YoY +140.5%, +25.7% and +17.9%, August 6 The corresponding PE closing price was 12, 10, and 8x, respectively. It was covered for the first time, and a “recommended” rating was given.
Risk warning: Risk of increased competition in the industry, fluctuations in gold prices or supply shortages, falling short of expectations in fund-raising projects, and large fluctuations in stock prices.