Event: In March 2024, DR teamed up with world-renowned Chinese designer Vivienne Tam to launch the Contemporary Chinese Wedding Jewelry Collection and enter Paris Fashion Week. At the same time, the company released the “DR Gold Purchase Instructions” on 4/19 to interpret the “gold” points for the purchase of DR gold.
The DR x VIVIENNE TAM series achieves the perfect fusion of gold and diamonds: DR x VIVIENNE TAM's contemporary Chinese wedding series mainly focuses on gold and gold with diamonds. The products include the DRAGON series, KING & QUEEN series, etc., covering wedding rings, earrings, necklaces, bracelets, bracelets, etc., to meet the dual needs of the younger generation for traditional Chinese wedding accessories and modern contemporary aesthetics. Among them, the DRAGON series is inspired by Oriental Dragons, which exquisitely combines Chinese romance with modern style through diamonds and gold; KING & QUEEN is inspired by Xiang Long Ruifeng, which constructs the romance of Chinese wedding jewelry in the shape of a dragon and a phoenix.
The rise in gold prices and geopolitical risks have driven the trend of gold purchases, and demand for inlay categories has shown cyclical adjustments: in recent years, gold product process design upgrades have continuously enhanced their jewelry function, and the rise of Guochao culture and joint names have enhanced their cultural carrying function, thereby broadening consumer groups and usage scenarios, and global geopolitical risks and continued rise in gold prices have further stimulated residents' enthusiasm for gold purchases; China's gold consumption was +8.8% year-on-year, with jewellery/gold bars being +8.0%/+15.7%, respectively. Demand for diamond categories has been adjusted cyclically. Demand for diamonds is sluggish due to shrinking retail demand. Prices of finished diamonds are in a downward channel, but the decline in the IDEX Diamond Price Index has gradually narrowed since 24/1.
The brand is expected to use strong brand strength and recognition in the wedding field to promote wedding gold products: previously, some of the company's stores sold gold jewelry. For example, in 2023, the company launched the “DR Xiaojinxin” gold collection product series. We believe that in the current external environment where gold consumption continues to be strong, the company can hope to promote wedding gold products with the brand concept of “one lifetime, one, true love” and the strong brand power formed under the customized rules of “only one person for a lifetime”. Looking at the DR x VIVIENNE TAM series, the current brand uses elements of traditional Chinese culture, empowered by techniques such as ancient diamond inlay, 6G gilt gold, and ancient waxed methods to promote gold products such as gold inlaid diamonds and three-gold/hardware boxes, and actively follow the performance of subsequent brands of wedding gold products.
Profit prediction and valuation: In '23, the optional consumption represented by diamonds was impacted, but as the leading brand for engagement rings, the company's brand power is still leading in the industry. The diamond market is expected to gradually stabilize in 24. Combined with the company's subsequent efforts in wedding gold products, it is expected to grow again. We expect the company to return a net profit of 0.8 to 30 million yuan in 2023-2024, giving it a “recommended” rating.
Risk warning: economic recovery falls short of expectations, recovery in industry sentiment falls short of expectations, and changes in consumer spending preferences exceed expectations