Golden jewelry investment leaders: CHOW TAI FOOK (01929) and LAOPU GOLD (06181), the growth logic behind the "buy" rating.

In the global luxury goods market, China National Gold Group's Gold Jewelry industry is attracting investors' attention with its unique posture. According to the latest industry report by Bank of America, despite the overall moderate growth (3% compound annual growth rate from 2019 to 2024, expected to be 4% from 2024 to 2029), top brands are changing the industry landscape with product innovation and cultural empowerment. Among them, CHOW TAI FOOK (01929) and LAOPU GOLD (06181) have stood out with distinct strategies and have become industry focuses. Market Size: One-third of the global "gold map" By 2024, China National Gold Group's Gold Jewelry market's retail scale will reach $114 billion, accounting for 31% of the global market, equivalent to the sum of the United States and European markets. In terms of growth drivers, rising gold prices (11% compound annual growth rate), product innovation, and store expansion are the core engines. It is worth noting that the average annual consumption per capita in China is $81, higher than the global average ($45), but still lower than Hong Kong ($663) and Taiwan ($236), indicating untapped market potential. In terms of competitive landscape, the industry is concentrating rapidly. The top 10 brands have already captured 38% of the market share, an increase of 14 percentage points from 2019. Chinese brands have performed impressively, securing an 8.7 percentage point increase, with CHOW TAI FOOK holding a stable position as the leader with a 10% share, and although LAOPU GOLD ranks lower with a 1.2% share, its rapid growth has made it a "dark horse" in the industry. Product Innovation: Culture and IP breakthrough key In a "low-growth track," the product cycle is the core of companies' breakthrough. The report highlights three major trends in the industry: National aesthetics sweeping the market - LAOPU GOLD's "culture + craftsmanship" strategy, with products like gourds and Buddhas integrating traditional craftsmanship with auspicious meanings, achieving high profit margins of 40%-50%. CHOW TAI FOOK, on the other hand, combines Oriental aesthetics with modern design through collaborations like "Forbidden City" and "Rogue" series, with heritage gold products contributing 40% of revenue. IP collaborations attracting the younger generation - CHOW TAI FOOK collaborates with characters like Doraemon and Sanrio to introduce cute jewelry, leading to significant online sales growth; although focusing on high-end products, LAOPU GOLD also attracts cultural consumers through the "Guochao" concept, with online sales during the 618 shopping festival surpassing $100 million. Emotional value driving consumption - In an economic environment, products that combine value retention and auspicious meanings are preferred. LAOPU GOLD's "Diamond Necklace" symbolizes protection, while CHOW TAI FOOK's "Fish Scale Design" symbolizes wealth, both becoming bestsellers. Channel Transformation: Coordinated by Wuxi Online Offline Communication Information Technology Co., Ltd., overseas exploration Online becoming an incremental engine - Live e-commerce and social platforms have become important battlegrounds. By 2024, CHOW TAI FOOK's online sales accounted for 20%, while LAOPU GOLD achieved a significant increase in online sales of 287% year-on-year thanks to best-selling products. However, online sales focus more on low-priced products, with high-profit boutique products still relying on offline stores. Overseas expansion targeting the Chinese market - CHOW TAI FOOK and LAOPU GOLD are exploring Southeast Asia, with locations like Singapore and Malaysia being top choices due to their Chinese population. LAOPU GOLD's stores in Singapore incorporate local culture, offering customized products such as cross necklaces; while CHOW TAI FOOK enters the Japanese market with designs like "Cherry Blossoms" and "Lucky Cats." Currently, overseas revenue accounts for less than 10%, but long-term potential is promising. Investment Perspective: Growth logic of two giants Profit-driving factors: Product, same-store sales growth, and store expansion In Bank of America's view, product is the ultimate drive for profitability. A popular product can accelerate same-store sales growth (SSSG). Strong SSSG is likely to enhance the profitability of individual stores, leading to store expansion to capture growing demand. What happened during CHOW TAI FOOK's last profit cycle (2018-2024)? In the previous profit cycle from 2018-2024, CHOW TAI FOOK introduced a popular large-scale heritage gold product series named "HUA." Since its launch in 2018, the "HUA" series has continued to grow, accounting for 39% of CHOW TAI FOOK's gold sales in the 2023 fiscal year. CHOW TAI FOOK's competitors have followed suit and introduced similar product series. Due to macroeconomic weakness, saturated market, increased competition, and insufficient launches of popular products, CHOW TAI FOOK's same-store sales growth slowed down, with net closure of stores. CHOW TAI FOOK has been focusing on developing new products, such as the Forbidden City series and Rogue series, to accelerate same-store sales growth. LAOPU GOLD is embarking on another product/profit cycle. With excellent product design, craftsmanship, and incorporation of Chinese culture and auspicious meanings, LAOPU GOLD's same-store sales growth is strong, and the company continues to expand its store network. Bank of America believes that other gold retailers are trying to emulate LAOPU GOLD's approach. Whether LAOPU GOLD can maintain brand popularity by launching new products and whether other brands can keep up with the pace remains to be seen. (1) CHOW TAI FOOK: Brand transformation unlocking potential As an industry leader, it is expected to achieve positive same-store sales growth through store optimization (closing inefficient stores) and product upgrades. Currently trading at a P/E ratio of 18 times (forecast for 2026), with a profit growth rate expected to reach 30% (2026), Bank of America has given it a "buy" rating. (2) LAOPU GOLD: High growth + valuation advantage With a high-end positioning and cultural uniqueness, it is expected to achieve a compound annual growth rate of 110% from 2024 to 2026. After a recent price correction, the P/E ratio has dropped to 24 times (forecast for 2025), highlighting a favorable risk-return ratio, with short-term catalysts including the August analyst conference and the opening of the Hong Kong IFC store. Future Focus: Cultural Empowerment + Globalization Bank of America believes that the core opportunity in China National Gold Group's Gold Jewelry industry lies in "breaking through with culture": top brands seizing the high-end market through national aesthetics design and IP innovation, while expanding their global share through overseas Chinese networks. For consumers, gold is no longer just a preservative of value but also a carrier of cultural confidence and emotional expression - this may be the "high potential" hidden in the industry in a "low-growth" environment. (Data Source: Bank of America Global Research August 2025 series reports)