The fluctuation of gold price is expected to promote the volume and price of gold jewelry to rise both in volume and price.

Huaan Securities released a research report pointing out that under the background of repeated epidemic and rising gold prices, brands' profits are limited by short-term gold price fluctuations through hedging means, while long-term gold price fluctuations are upward conducive to gold consumption. During the epidemic period, the fluctuation of gold price is easy to form that the stock price is ahead of the performance. In the medium and long term, it is expected that the attribute of gold jewelry consumption will be enhanced, and economic growth will support the increase in consumption. It is recommended to pay attention to Chow Tai Fook (01929), Zhou Dasheng (002867.SZ), Chao Acer (002345.SZ).

Gold jewelry investment demand: gold jewelry discount rate is low, compared with other jewelry has the ability to maintain and increase value. Its recovery price anchors the gold price, with a discount rate of about 6% (excluding processing fees), which is much lower than about 50% of diamond jewelry (bare diamond only). Looking back in history, the rise in gold price volatility is conducive to gold consumption, and the logic behind it is that consumers are easy to form a consistent expectation of gold preservation. The current gold price fluctuates and rises, but considering the short-term epidemic factors, it is expected that it will be released centrally after the subsequent epidemic is under control.

Gold jewelry consumption demand: gold jewelry consumption has a strong correlation with GDP growth rate and income. Long-term economic growth supports the increase of gold jewelry consumption.

The trend is as follows: (1) process upgrading, the proportion of 5G gold and ancient gold is increased, the consumption attribute is enhanced, the customer base is broadened, the brand is younger, and the heavy industry cost of Tongg is increased; (2) branding, the head accelerates the expansion of stores in the low-line market, increase share; (3) the change of pricing mode: "pricing by gram" instead of "pricing by piece" to boost sales and accelerate concentration. (4) the rise of the national tide: gold jewelry consumption has Chinese characteristics, Z generation gold jewelry consumption will increase; (5) self-pleasing demand increases: giving birth to gold jewelry consumption with high frequency and scene diversification.

Gold price analysis: the Russian-Ukrainian crisis has pushed the gold price higher in stages, and the center may maintain a high level in the medium and long term.

Short-term: the crisis in Russia and Ukraine pushed gold prices higher in stages. Short-term risk aversion supported the rise in gold prices, which became a good safe haven asset during the Russian-Ukrainian crisis. In retrospect, the geo-war on the gold price is a phased catalysis, and depends on the breadth and depth of the event, if the later situation is clear, the gold price may gradually return to the medium-and long-term logic.

Medium to long term: high inflation and low real interest rates support the gold price center to remain high. Gold has the ability to resist inflation, but in retrospect, gold price shows a weak positive correlation with inflation, which is essentially driven by real interest rates (nominal interest rates minus inflation). The TIPS yield implies the market's expectation of the real interest rate. The correlation between the historical gold price and the TIPS yield is-88.5%. At present, TIPS is at an all-time low, and high inflation and low real interest rates hidden in risk aversion keep the gold price center high, which is expected to rise to 2000-2200 US dollars / oz.

The influence of brands: the fluctuation of gold price has a limited impact on profitability, and the demand for wedding ceremony has been delayed repeatedly due to the epidemic.

Impact on performance: different brands have different product structure and different sensitivity to gold price. The company avoids the risk of gold price fluctuation through a variety of means, and its profit is less affected by gold price fluctuation.

Correlation with stock price: the correlation between the stock price of Chow Tai Sang and Chow Tai Fook and gold price is about 0.7. By reviewing the performance and stock price performance of brands during the period of rising gold price fluctuation in 2020 and delayed release of wedding demand caused by the epidemic, it is easy for gold price to fluctuate upward during the epidemic period and the stock price is ahead of the performance rise. In 2020, the share price of brands led the rise in performance, and entered a shock after the epidemic.