According to the Star Daily on November 29 (reporter Xu Cihao), following Lao Pu Gold, the Hong Kong Stock Exchange welcomes another mainland gold and jewelry listed company.

Meng Jinyuan Gold Jewelry Group Co., Ltd. (hereinafter referred to as Meng Jinyuan) was officially listed on the Hong Kong Stock Exchange today, with the opening price set at HKD 12.50, representing a 4.17% increase over its IPO pricing of HKD 12, although it briefly fell below the issue price during trading.

As of the market close, Meng Jinyuan's stock closed at HKD 12.9 per share, up 7.5%, with a volume of 12.4614 million shares and a transaction value of HKD 0.155 billion, experiencing a fluctuation of 16.67% and a total market value of HKD 3.522 billion.

It is reported that Meng Jinyuan was founded by Wang Zhongshan. Wang Zhongshan, who started as a freight driver, shifted to jewelry, focusing on lower-tier markets, and opened over 2,800 gold stores.

Notably, before the IPO, Meng Jinyuan introduced five cornerstone investors, including Tianjin Haitai Capital, Matrix Capital, Solid Elegance, Bright Ambition, and Swift Grace, with a total subscription amounting to approximately RMB 0.197 billion. Among them, Tianjin Haitai Capital subscribed for RMB 73 million, Matrix Capital for RMB 40 million, Solid Elegance for RMB 26.98 million, Bright Ambition for RMB 39.98 million, and Swift Grace for RMB 16.98 million.

The prospectus shows that Tianjin Haitai Group holds 4.37% through Tianjin Haikai Xinchuan; Citic Sec holds 1.82% through its investment; Mr. Zhao Duxue, Chairman of Shandong Mining Machinery Group, holds 1.73%; renowned actress Ms. Huang Yi (Hai Qing) holds 1.53%; Ms. Zhang Yizhen, former director and chief financial officer of Shandong Mining Machinery, holds 1.00%; and Mr. Zhang Jianjun, former director of Shandong Mining Machinery, holds 0.15%.

Actress Hai Qing served as the spokesperson for Meng Jinyuan from 2013 to 2020. In 2018, Hai Qing invested RMB 5 million to purchase 5 million shares of Meng Jinyuan, reaching a 2.22% ownership at that time. By 2022, Hai Qing sold 1.5 million shares at a price of RMB 12.98 per share, reportedly achieving a transaction amount as high as RMB 19.47 million, with a substantial yield of 11.98 times. Currently, Hai Qing still holds 3.5 million shares of Meng Jinyuan, accounting for 1.53% of the company's total share capital.

It is noteworthy that since the beginning of this year, international gold prices have risen amid safe-haven sentiments, and at the end of October, it even broke through the historical high of 2800 dollars per ounce. Under the dual pressure of rising raw material prices and declining consumer purchasing power, the performance of gold and jewelry companies has generally been under pressure.

Chow Tai Fook recently disclosed its performance report for the first half of the fiscal year 2025 (ending September 30, 2024). The report shows that during this period, Chow Tai Fook's revenue was 39.408 billion Hong Kong dollars, a decrease of 20.4% compared to the same period last year; the shareholder's profit was 2.53 billion Hong Kong dollars, a significant year-on-year decrease of 44.4%.

This decline in performance is not an isolated case; luk fook hold, chow tai seng jewellery, chow sang sang, and lao feng xiang have all faced year-on-year declines in revenue and net income in the first three quarters of this year. Among them, chow sang sang's revenue and net income in the first half of the year also suffered a double-digit year-on-year decline.

According to its prospectus, Mengjinyuan's operating revenue in the first half of this year grew approximately 7.11% year-on-year, but the corresponding net profit attributable to the parent company was 47.433 million yuan, a year-on-year decrease of 54.46%. Mengjinyuan explained in the prospectus that this was mainly due to the net loss from the realization of Au (T+D) contracts caused by the significant rise in gold prices.

It is reported that Au (T+D) contracts, which are the spot deferred delivery business launched by the shanghai gold exchange, should serve as an important tool for gold companies to hedge against fluctuations in gold prices. However, Mengjinyuan's performance in this trade has been unsatisfactory, frequently incurring losses in recent years.

The prospectus shows that in 2022, 2023, and the first half of 2024, Mengjinyuan's 'other income and net losses' recorded losses of 0.209 billion yuan, 0.37 billion yuan, and 3.87 billion yuan respectively, accumulating losses of 0.966 billion yuan. This mainly includes profits or losses from Au (T+D) contracts and gold leasing. This data undoubtedly reveals the huge challenges Mengjinyuan faces amid gold price fluctuations.

Jiang Han, a senior researcher at Pangu Think Tank, pointed out that the traditional business model of gold shops, which involves processing gold trinkets and selling them at a markup, works well when gold prices are low. However, as gold prices continue to rise, the market's demand for its investment attributes has become increasingly prominent. Investors are more concerned about purity and price when purchasing gold, rather than the design and craftsmanship of trinkets. Therefore, they are unwilling to pay a high premium for processing fees and tend to prefer investment products such as gold bars. This has severely impacted the profitability model of gold shops that rely on trinket sales, leading to a significant decline in gold trinket sales volume.

Huang Lichong, CEO of Huisheng International Capital, stated in an interview with the Star Daily that precious metals companies usually engage in hedging activities to control costs. If Mengjinyuan established short positions to hedge against rising gold prices but ultimately incurred losses, it may indicate that the company misjudged gold price trends or that market conditions changed unexpectedly. This may also imply that the company's hedging strategy needs to be reassessed and adjusted to better manage price risks.