The price of gold hit a record high, how to find the "second pot of gold" for gold sellers?

Chinanews.com, December 12 (Zhongxin Financial Reporter Zuo Yukun) Gold prices have climbed to a record high.

On December 12, Beijing time, futures gold and spot gold opened sharply higher in early trading. COMEX gold futures stood above the $4,2150 per ounce mark, and spot gold rose to $2144,<> per ounce.

Under the hot situation, gold and jewelry companies have once again ignited their enthusiasm for listing, and they have submitted their tables to impact the IPO.

COMEX Gold Price Action in 2023.

"The big gold bracelet in my hand is worth more"

At the beginning of the week, gold prices continued to rise and broke the "ceiling" again.

In early trading during the Asian session on December 12, New York gold futures (referred to as "COMEX gold") and London spot gold once broke through the $4,2100 / ounce mark. COMEX gold futures hit an intraday high of $2152.3 an ounce; Spot gold in London rose as high as $2144,68.<> per ounce, both of which continued to hit record highs.

Industry analysts believe that the rise in gold prices is related to the recent performance of the US dollar. Last week, the Federal Reserve reportedly reiterated that it would act cautiously in an attempt to downplay the expectation of a rate cut, but the market did not buy it, and Wall Street's expectations of a rate cut further strengthened, pushing gold prices higher. In addition, a more pronounced weakening of US economic data, which led to a significant decline in US Treasury rates and the US dollar, was also positive for precious metals prices.

In addition, data released by the World Gold Council on October 10 showed that global central banks bought 31 tonnes of gold in the third quarter, the third highest quarterly net purchase on record. Although it failed to break the record set in Q337 2022, central bank gold demand has reached 2023t year-to-date in 800, the latest record since the association began to compile such data. Central banks expect strong gold purchase demand to remain strong for the remainder of the year.

Practitioners are also feeling the shock. Mr. Yu, who is engaged in the gold jewelry business in Shuibei, Shenzhen, told the Zhongxin Financial Reporter on the 4th: "Yesterday, there were some gold prices below 480 yuan/gram in Shuibei, and today's highest point was directly to 495 grams/yuan. ”

The value of "big gold bracelets" and "big gold necklaces" also rose. The reporter learned that on the 4th, the gold price of domestic pure gold jewelry of gold jewelry brands such as Chow Tai Fook, Luk Fook Jewelry, and Chao Hongji continued to rise compared with the previous day, and many have exceeded 630 yuan / gram.

"Recently, the gold price was relatively cheap during the 'October 580st' period, and the price of pure gold jewelry was more than 10 yuan under the premise of not counting derogations. Since then, it has been rising, and the gram price has been above 600 yuan in mid-to-late October. A Chow Tai Fook salesperson told reporters.

In the face of rising gold prices, consumers are inevitably happy and worried. Those who want to make a move are about to move, and those who want to start sighing. But in addition to you and me, there are also some people and companies that are experiencing the "torment of gold", and they are the gold and jewelry companies that want to go public.

Data map: People buy gold jewelry in shopping malls. Photo by China News Service reporter Lu Ming

"While it's hot" to seek listing, gold jewelry companies line up for IPO

The rising gold price and the enthusiasm of end consumers have also once again ignited the desire of gold jewelry companies to seek listing.

Recently, Laopu Gold, known as the first gold jewelry company in China to promote the concept of "ancient gold", launched an impact on the Hong Kong stock IPO. This is the second time that Laopu Gold has hit the capital market, and it had previously sought to list on A-shares in 2021, and was canceled the day before the meeting. The company has also been questioned by the market due to problems such as negative cash flow, high inventory, and supplier benefit transfer.

The popularity of the national tide continues, and the high-end well-established gold also has a higher gross profit level. From 2020 to the first half of 2023, its gross profit margin was 43.1%, 41.2%, 41.9% and 41.7% respectively, which is very high for the entire gold jewellery market.

In the prospectus submitted by Laopu Gold this time, it also introduced its stylish leading products. For example, pure gold inlay products, rose window necklaces, butterfly clavicle necklaces and gold boxes with lotus treasure boxes, etc.; Pure gold gold products filigree peace buckle, Ruyi auspicious moire bracelet, unicorn pixiu real charm, etc.

Coincidentally, Mengjinyuan Gold & Jewellery Group Co., Ltd. ("Mengjinyuan") also submitted a listing application to the main board of the Hong Kong Stock Exchange in September this year. Before going public in Hong Kong this time, Mengjinyuan also failed to hit the A-share IPO.

Mengjinyuan positions itself as "China's high-purity Seiko gold jewelry expert" and is one of the few gold jewelry brands that can mass-produce 999.9 gold jewelry, and says that the company has achieved breakthrough results in gold purification and precision manufacturing. According to the disclosure in the prospectus, on the whole, the performance of Mengjinyuan is growing.

Although the revenue ranks high, Mengjinyuan has a gross profit margin of less than 6% in the past three years due to the high proportion of plain gold jewelry in the product structure, while the gross profit margin of Chow Tai Fook and Chow Sang Sang in 2022 is higher than 20%. In addition, most gold jewellery brands mainly purchase gold from Shanghai Gold Exchange, while Mengjinyuan has long been dominated by "old material exchange". Previously, when Mengjinyuan applied for listing on A-shares, these issues were the focus of regulatory attention.

Also groping on the road to listing gold jewelry companies is Liuliufu Jewelry. As early as May 2019, Liuliufu has pre-disclosed the prospectus for the first time, and then there were twists and turns, three A-share IPOs failed, the most recent was on November 5 this year, the Shenzhen Stock Exchange decided to terminate the review of the initial public offering of shares and listing on the main board of Liuliufu Jewelry. There is a view that Liuliufu may also follow the example of Laopu Gold and Mengjinyuan to move to the Hong Kong stock IPO.

It is found that the more well-known enterprises in the industry have basically set foot in the capital market. Chow Tai Fook, Chow Sang Sang, Luk Fook Group, etc. are listed on the Hong Kong stock market, while Lao Fengxiang, China Gold, Chow Tai Sang and other companies are listed on the A-share market.

"In mainland A-shares, the market valuation of such companies is generally not high, and they are not innovative industries, so it is difficult to go public. Relatively speaking, there are many such companies listed in Hong Kong stocks, and the threshold is low, and the valuation comparison is relatively intuitive, so they seek to list in Hong Kong. Pan Helin, co-director and researcher of the Digital Economy and Financial Innovation Research Center of Zhejiang University International Business School, told reporters. (ENDS)