Guosen: The fluctuations in gold prices do not change the long-term logic of gold jewelry leading the way. The combination of AI and empowerment is breaking the game for business operators.

Guosen released a research report stating that it maintains a "outperform the market" rating for the commerce and retail sector. Although the current fluctuation in gold prices may have short-term emotional impact on the sector, it is expected that the actual fundamental impact will remain relatively stable as the industry's growth logic shifts towards relying on brand building, technological innovation, and narrative capabilities that bring "alpha gains." In the process of continuously empowering brand business development, AI is expected to open up new growth curves. Guosen's main points are as follows: Gold and jewelry prices fluctuate but do not change the long-term growth potential of leading companies. Since the beginning of the year, gold prices have fluctuated significantly, with a 12.28% increase in COMEX gold from the beginning of the year until January 29th, followed by an 8.35% decrease on January 30th. The current volatility in gold prices may have short-term emotional effects on the sector, but with the shift in industry growth logic towards brand building, technological innovation, and cultural narrative capabilities that bring "alpha gains," it is expected that the actual fundamental impact will remain relatively stable. On one hand, referring to the surge in investment purchases following the gold price correction in 2013, companies mainly engaged in investment gold business still have further growth support in the short term. On the other hand, Hong Kong jewelry brands with cost advantages and outstanding operational capabilities in Hong Kong and Macau, as well as leading companies with good product design or differentiation capabilities, are expected to continue to strengthen their business advantages and achieve sustained high growth. AI + Operator During the Spring Festival, large-scale manufacturers have launched AI red envelope activities intensively, aiming to compete for AI application access. With the cultivation of user habit in using AI, the industry chain is expected to welcome sustained benefits, while overseas innovations related to AI applications continue to be implemented, enriching commercial monetization models. Online service providers, as intermediate links in the industry chain, have accumulated long-term experience in understanding consumer demand and brand comprehensive deployment strategies in cooperation with leading e-commerce platforms. With the fast-growing capability of building AI+ content in the business development process, it is expected that new business growth curves will be opened up. Investment recommendation: Maintain an "outperform the market" rating for the sector By the end of 2025, after a certain increase in the domestic and foreign markets, market fluctuations have intensified. From the perspective of market rotation in the bull market, the new year may witness some elasticity in the consumer sector under the situation of additional policy adjustments. 1) Gold and Jewelry: The industry has entered the peak consumption season at the end of the year. The overall valuation of the sector is low. Short-term fluctuations in gold prices have not affected the growth logic of core leaders. Companies with a high proportion of investment gold business and those with strong product pricing capabilities still have the potential for stable growth. Recommended companies include Beijing Caishikou Department Store Co., Ltd., LUK FOOK HOLD, LAOPU GOLD, CHOW TAI FOOK, Guangdong CHJ Industry, among others. 2) Beauty and Personal Care: The sector has returned to low levels overall, and traditional industry leaders are gradually showing a certain turning point trend with intensive new product launches at the beginning of the year. Companies that have gradually built platform mechanisms can guarantee growth continuity and certainty through internal growth and external expansion. Recommended companies include Proya Cosmetics, MAO GEPING, CHICMAX, Dencare, Guangzhou Ruoyuchen Technology, among others. 3) Overseas Expansion: Leading companies have proven their strong risk resistance capabilities over the past year. The application of AI+ in channels and product innovation is expected to continue to catalyze internal cost reduction and efficiency improvement as well as product innovation for companies. Recommended companies include Zhejiang China Commodities City Group, Anker Innovations Technology, Focus Technology, among others. 4) Offline Retail: The end of the year and the beginning of the year are peak seasons for offline retail sales, and if CPI continues to recover, it will have a positive impact on same-store sales in supermarkets. At the same time, many supermarket adjustments are still ongoing, with multiple focus areas such as the launch of their own brands in the future. Recommended companies include MNSO, Jiajiayue Group, Chongqing Department Store, Yonghui Superstores, among others. Risk Warning: Consumer recovery falls short of expectations; intensification of industry competition; changes in management personnel, etc.