Jingu Finance News | Sealand Securities issued a research report, stating that from 2021 to 2023, the revenue of the well-established gold (06181) reached 1.265 billion yuan, 1.294 billion yuan, and 3.18 billion yuan, with a CAGR of 58.6%; the net income attributable to the parent company was 0.114 billion yuan, 0.095 billion yuan, and 4.16 billion yuan respectively, with a CAGR of 91%; the gross margin was 41.2%, 41.9%, and 41.9%; the net margin was 9%, 7.3%, and 13.1%. Expanding store openings is the top priority for the listing of the well-established gold. According to the use of raised funds, about 73.3% of the funds will be used to expand the sales network, and about 11.3% will be used to maintain brand positioning and increase brand awareness. According to the prospectus, the company plans to open approximately ten new stores in mainland China in the next three years, and about five new stores in areas outside mainland China (including Hong Kong, Macau, Tokyo, and Singapore).
The bank pointed out that, according to Frost & Sullivan, the market size of ancient gold and jewelry based on sales revenue has increased from 13 billion yuan in 2018 to 157.3 billion yuan in 2023, with a staggering CAGR of 64.6%, while the market size CAGR of the ordinary gold and jewelry category industry from 2018 to 2023 is only 12%; in 2018, the penetration rate of ancient gold was only 4.6%, growing rapidly year by year, reaching 31.2% by 2023. The total revenue generated by the top five ancient gold and jewelry brands in 2023 is approximately 72.4 billion yuan, collectively occupying a market share of 46.1%, with the market share of well-established gold at 2.0%, still having significant room for improvement.
The bank further pointed out that the level of craftsmanship in ancient gold production is outstanding. Different from the four major Hong Kong brands that use mechanized molding processes to sell traditional gold ornaments, the production line of well-established gold requires hiring craftsmen with rich experience in handcraft design, hand-crafted mold making, and detailed processing of products through ancient manual techniques such as hammering, carving, filigree, inlaying, and blue burning, significantly higher in quality compared to other traditional gold ornaments. The retention and utilization rates of craftsmen at well-established gold are high, and skilled craftsmen all have over 10 years of experience in ancient gold production, with a retention rate of 94.7% at the end of 2023.
The bank stated that the company is expected to achieve revenues of 6.43/8.75/10.61 billion yuan in 2024-2026, with year-on-year growth rates of +102.3%/36.1%/21.3%, and net income attributable to the parent company of 1.03/1.42/1.74 billion yuan, with year-on-year growth rates of +147.8%/+37.9%/+22.5%. The closing price on October 18, 2024 was 166.3 Hong Kong dollars, corresponding to a PE ratio of 25/18/15X for 2024-2026. The bank continues to be bullish on the company's brand awareness improvement, the growth of ancient gold market penetration rate, and the contribution of performance revenue from continued expansion of offline stores. Initiation coverage, with a "shareholding" rating.
