Guangdong Chj Industry Co., Ltd., the Guangzhou-based jewelry brand, officially submitted its Hong Kong IPO application in September 2025. Founded in 1996 by Liao Muzhi and his son Liao Chuangbin in Shantou, Guangdong, the company differentiated itself by focusing on jewelry and K-gold products amid a market dominated by Hong Kong gold giants and domestic players like Lao Feng Xiang. After listing on Shenzhen Stock Exchange in 2010 as the "first A-share jewelry chain," Chj has expanded to 1,542 stores across 200+ Chinese cities by June 2025, including 201 self-operated outlets and 1,337 franchises.
The IPO coincides with a gold sector financing boom. Competitors like Lao Feng Xiang saw shares surpass HK$1,000 in July, while Chow Tai Fook Jewellery Group's market cap exceeded HK$20 billion post-listing. However, behind Chj's rapid expansion lie structural challenges: declining profitability and intensifying competition.
Profitability Under Pressure While China's jewelry market reached ¥778.8 billion in 2024 (73% from gold), Chj's financials reveal widening gaps with peers. Despite revenue growth from ¥4.36 billion (2022) to ¥4.06 billion (H1 2025), gross margins fell from 29.3% to 23.1%, lagging behind Chow Tai Fook's steady 30% margins. Net profit volatility worsened—2024 saw a 41.9% drop to ¥194 million before a 44.3% H1 2025 rebound to ¥331 million. Surging gold prices (up 40% since 2022) squeezed margins, while its acquired handbag brand FION required ¥177 million impairment provisions in 2024.
Expansion vs. Efficiency Chj's franchise-heavy strategy (86.9% of stores) boosted revenue 37.6% YoY in H1 2025 but dragged per-store sales down 9.3%. Self-operated stores—with 35.3% gross margins—shrunk by 37 to just 202 outlets. Contrast this with Lao Feng Xiang's 41 stores generating ¥500 million annual sales each. Online channels contributed ¥942 million in 2024, yet R&D spending halved to 0.9% of revenue since 2020, raising product homogenization risks.
Overseas Ambitions and Legal Hurdles IPO proceeds target 20 overseas stores by 2028, but current expansion remains cautious—only 4 Southeast Asian outlets opened since 2024. With 18-20 month payback periods and rising receivables (¥370 million in H1 2025), international growth could strain finances. Legal disputes with Bulgari and Richemont further expose intellectual property vulnerabilities, potentially damaging brand credibility abroad.
Strategic Crossroads Chj's HK$13.5 billion A-share valuation (25x P/E) trails Lao Feng Xiang's 60x multiple, reflecting market skepticism about its hybrid K-gold/gold model. To justify premium valuation, analysts suggest boosting self-operated sales or gold product premiums to restore 25% gross margins. Differentiation through design (623 patents) and sub-brand Cëvol's diamond focus may help avoid direct competition with gold giants. Without structural profitability improvements, Chj risks being exposed when the gold boom subsides.
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