A recent research report indicates that Hong Kong-based jewelry companies, despite facing short-term challenges amid recent industry changes, have demonstrated strong adaptability. Through multi-dimensional transformation from products to channels and leveraging their strong brand foundations, these companies are gradually returning to growth trajectories and driving continuous valuation recovery. Key recommendations include CHOW TAI FOOK (01929), Luk Fook Group (00590), and Chow Sang Sang (00116).
**Performance Recovery and Strong Stock Price Rebounds**
Since the beginning of this year, gold jewelry sector stocks have shown outstanding performance. Beyond widely watched "new consumption" themed targets such as Lao Pu Gold and Chao Hongji, traditional Hong Kong jewelry leaders including CHOW TAI FOOK, Luk Fook Group, and Chow Sang Sang have also demonstrated remarkable stock performance. Against the backdrop of sector rotation and cooling consumer sentiment, these stocks have achieved counter-trend sustained growth: as of September 10, 2025, the three companies recorded gains of 151%, 95%, and 135% respectively.
The driving force behind this rally extends far beyond simple "catch-up" gains, stemming from fundamental business renewal. Luk Fook Group's mainland same-store sales accelerated further with 19% growth during April-June, while Chow Sang Sang's net profit attributable to shareholders increased 76% year-over-year in H1 2025. Based on this foundation, as companies' future transformation logic continues to materialize and improvement potential opens up, valuation levels will achieve sustained recovery from low levels, presenting Davis double-click characteristics.
**Industry Evolution: Jewelry Consumption Logic Shifts to "Fashion + Value Preservation"**
In recent years, sustained gold price increases and consumer disillusionment with high-premium categories like diamond-set jewelry have continuously strengthened recognition of gold's value preservation attributes. However, rapidly rising gold prices have also suppressed some traditional demand release, while cost-plus pricing for weight-based gold products faces margin pressure. Simultaneously, breakthroughs in design craftsmanship have significantly enhanced gold's fashion attributes, opening up self-indulgent consumption scenarios. Fixed-price gold jewelry with strong product design achieves perfect fusion of "fashion + value preservation," with multiple companies reporting over 100% growth in fixed-price gold jewelry in 2024. Fixed-price products with product premiums achieve gross margins of 30%-40%, ensuring corporate profitability.
**Hong Kong Jewelry Companies' Self-Transformation: Triple Upgrade in Product, Channel, and Brand Power**
1) **Enhanced Product Design and Differentiation**: Fixed-price gold jewelry's revenue contribution continues growing. For CHOW TAI FOOK's mainland China operations in fiscal 2025, fixed-price product contribution increased from 7.1% to 19.2%. Luk Fook Group's fixed-price gold products achieved high double-digit same-store growth.
2) **Store Transformation and Optimization**: Focusing on premium high-end locations and service experience to enhance single-store output and resist short-term store contraction pressures.
3) **Deep Brand Power Accumulation**: Reshaping youthful positioning through social media marketing, IP collaborations, and celebrity endorsements. Recently, major Hong Kong jewelry brands achieved high double-digit growth in Xiaohongshu exposure over the past 30 days, with over 80% of followers aged 18-34.
**Risk Warnings**: Terminal jewelry consumption sentiment falling short of expectations; significant gold price volatility; companies failing to adapt to new product and channel trends; deteriorating industry competitive environment; poor franchisee management.