A report from China Merchants Securities indicates that as gold prices have surged since 2023, the consumer base for gold jewelry has shifted from the mass market to mid-to-high-end consumers in first- and second-tier cities. Purchasing motivations have evolved from wedding, collection, and value preservation to self-gratification, collection, and value preservation, moving from asset holding to aesthetic wearing, and from focusing on weight to pursuing craftsmanship and cultural significance. For mid-to-high-end brands, capabilities in original product design and development, process iteration, channel management, and distribution in first- and second-tier cities are expected to become core competitive factors in the next phase.
Review of the 20-Year Operating History of Leading Gold Jewelry Brands
2003-2013: During a period of rising gold prices and rapid economic growth, retail sales of gold, silver, and jewelry maintained a growth rate between 10% and 50%.
2014-2016: Affected by falling gold prices, product homogenization, and a slowdown in overall consumer industry growth, the sector underwent a period of adjustment. Store saturation occurred, low-level price competition intensified, and overall industry profitability declined.
2017-2023: Gold prices stabilized and rebounded. Product-side process upgrades, such as ancient method gold and hard gold techniques, spurred demand for self-gratification. On the channel side, networks were densified in first- and second-tier markets. Driven by shantytown redevelopment monetization, consumption upgrades in lower-tier cities were significant, prompting brands to accelerate their channel expansion into these areas.
2024 to Present: From 2024 to March 2026, gold prices have risen by a cumulative 109%. Over the same period, gold jewelry consumption volumes declined by 25% in 2024, 32% in 2025, and 37% in Q1 2026. The consumer base has concentrated among middle-class and high-net-worth individuals in first- and second-tier cities, forcing brands to rapidly upgrade their products, processes, channels, and marketing.
1) Product Side: Products like Laopu's ancient method gold and inlay series (e.g., rose window, cross, seven-seed gourd, vajra pestle), Chow Tai Fook's gold inlay series like "Chuan Fu," "Chuan Xi," "The Palace Museum," and "Wan Xiang," and Luk Fook Group's "Fu Man Chuan Jia" and "Ice Diamond Light Gold" series have seen strong sales. Meanwhile, many emerging brands like Junpei, Linchao, Baowangfu, and Baolan have appeared.
2) Channel Side: Traditional brands have closed underperforming franchise stores in mainland China. Compared to the end of 2023, by the end of 2025, Chow Tai Fook had a net closure of over 1,800 stores, Zhou Dasheng had a net closure of 627 stores, and Lao Feng Xiang had a net closure of 639 stores. Concurrently, Laopu opened stores in high-end commercial districts like SKP, Mixc malls, Shanghai Xintiandi, Grand Gateway 66, and Nanjing Deji Plaza. Chow Tai Fook also began opening luxury image stores in Hong Kong and Shanghai starting in 2025. The operational goal for leading brands has shifted to focusing on improving store efficiency and profitability per store.
3) Supply Chain: The process has evolved from ordinary lost-wax casting gold to 3D hard gold, 5D hard gold, 5G gold, and 6D gold inlay. High gold prices have driven a shift towards lighter weight, stronger inlay, and higher precision craftsmanship.
Market Review: Common Traits and Valuation Analysis of Leading Companies in Different Phases
Beyond the impact of gold price fluctuations, earnings certainty determines the volatility and central tendency of valuations. Higher valuation elasticity comes from differentiated, high-growth narratives for specific periods.
1) 2003-2013: With few listed companies in the sector, a scarcity premium existed. The valuation leader was Chow Sang Sang (CHOW TAI FOOK), listed late in the period (post-listing P/E expanded from 40x to 70x within the year, staying between 20-40x after 2011). Lao Feng Xiang and Luk Fook Group also saw historically high valuations (Lao Feng Xiang between 10-25x, Luk Fook peak 18x). Driven by loose liquidity and rising gold prices, stock prices of listed companies rose from 2009-2011. Lao Feng Xiang's stock price increased 10 times, Luk Fook Group 20 times, and Chow Sang Sang's stock price nearly doubled in its listing year of 2010. From 2011 to early 2014, as consumption growth slowed and gold prices fluctuated significantly, stock prices generally entered a slow decline.
2) 2014-2016: Falling gold prices and weak gold jewelry consumption led to significant market adjustments. Earnings stability influenced valuation levels. Lao Feng Xiang's stable wholesale model, where distributors acted as a buffer, made it the most resilient company with relatively low valuation volatility (maintained between 10-20x). Chow Tai Fook and Luk Fook Group saw their stock prices halve, with valuations between 8-15x. Chow Sang Sang, due to its fashion jewelry attributes and share placements/acquisitions, had high but volatile valuations, with a P/E TTM ranging from 25-65x.
3) 2017-2023: This phase was channel-driven. Weight-based gold products were highly homogenous, and brand premiums had not yet fully formed. The market priced companies based on the space, speed, and certainty of their channel expansion. The rapid rise in gold prices in 2020 unleashed gold demand, amplifying the earnings elasticity of channel expansion. The industry's valuation center was locked in a channel valuation range of 10-20x. With no significant differentiation in business models, no single company enjoyed a significant premium. Valuation differences stemmed from varying expansion speeds and potential. Chow Tai Fook opened nearly 3,000 stores in two years from FY2022 to FY2023, reaching a peak market cap corresponding to 25x P/E. Zhou Dasheng doubled its franchise stores to 4,775 over seven years, with valuations in the 10-35x range. Lao Feng Xiang had valuations between 10-20x. Chow Sang Sang missed the expansion phase due to resources being diverted by diversified acquisitions, and goodwill impairment led to a sharp profit decline, distorting its P/E. Luk Fook Group traded in a 6x-20x range, mostly below 15x.
4) 2024 to Present: This phase is driven by branding and differentiated products. Companies still relying on the previous channel narrative are given around 10x+ valuations. Those with differentiated product capabilities and brand premiums are experiencing valuation recovery. Companies with scarce growth narratives, such as Laopu's high-end brand positioning and Chow Sang Sang's fashion jewelry story, have achieved the greatest valuation elasticity. Both Laopu and Chow Sang Sang reached valuation highs of over 30x during 2025.
Risk Factors
Gold Price Fluctuation Risk: Significant volatility in gold prices. Rapid short-term increases or decreases could materially impact end-consumer demand and the profits of leading companies. Risk of Weak Domestic Consumption: Pressure on domestic retail trends means that persistently weak consumer purchasing power could affect brand sales performance. Risk of Changing Trends: If brands fail to keep pace with accelerating changes in craftsmanship and fashion trends, it could negatively impact their sales performance.
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