New Shares Outlook | National Tide Jewelry Leader Seeks New Engine, Can Going Abroad Become the "Panacea" for Guangdong CHJ Industry?

In recent years, with the continuous improvement of residents' purchasing power and the increasing diversity of daily wearing needs, China's jewelry market has achieved steady growth. In terms of competitive landscape, the domestic jewelry market is still mainly dominated by foreign brands. These brands have built multi-dimensional competitive advantages with high quality, high recognition, scarcity, and deep historical accumulation, making their market position relatively stable. Facing strong competition from international brands, local jewelry companies face challenges in breaking through. In this background, many brands have chosen to expand their market by "going overseas". To prepare enough "bullets" for expansion, after being listed on the Shenzhen Stock Exchange for 15 years, the mainland Chinese jewelry industry "national trend innovation" model Guangdong CHJ Industry chose to list again, this time on the Hong Kong Stock Exchange. Recently, Guangdong CHJ Industry officially submitted its IPO application to the Hong Kong Stock Exchange main board, with CITIC SEC as its exclusive sponsor. What highlights does Guangdong CHJ Industry bring in this return to the capital market? Steady revenue, fluctuating profit According to the prospectus, Guangdong CHJ Industry was founded in 1997 and gradually expanded its business based on its core jewelry brand "CHJGuangdong CHJ Industry", promoting the brand's influence in the fashion field. With the support of national intangible cultural heritage flower silk craftsmanship, the company promotes the commercial transformation of traditional skills and cultural innovation, and has won several important awards in design and craftsmanship. In 2023, Guangdong CHJ Industry was selected as the only mainland Chinese jewelry brand in the "Forbes" "National Trend Innovation Brand". The company emphasizes the breakthrough of the traditional jewelry paradigm with the "culture + design dual-drive" positioning itself not only as a jewelry manufacturer but also dedicated to conveying modern Chinese aesthetic concepts. The brand positions itself around "youth and fashion", gradually establishing a differentiated brand image and product system. Currently, Guangdong CHJ Industry has become one of the major fashion jewelry companies in mainland China. According to a Frost & Sullivan report, based on 2024 sales revenue calculations, the company ranks first in the Chinese fashion jewelry market with a market share of 1.4%. Focusing on the mid- to high-end market and relying on a comprehensive and distinctive product mix, the company has established a leading position in the market and is among the mainstream jewelry companies in mainland China. CHJGuangdong CHJ Industry has been selected as one of the "China's 500 Most Valuable Brands" for 21 consecutive years and was named a "Top 500 Asian Brand" by the World Brand Lab in 2024. The jewelry business is the core business of the company, contributing approximately 90% of the total revenue annually. With CHJGuangdong CHJ Industry as the main brand, the company has adopted a multi-brand coordinated development strategy, offering diversified products through different positioned brands like CHJGuangdong CHJ Industry, Guangdong CHJ Industry|Souffl, and CHJZHEN. In addition, the company has launched a sub-brand Cvol focusing on the emerging cultured diamond market to cover a more diverse consumer group. To enrich its product matrix, the company acquired the fashion handbag brand FION in 2014, which mainly targets a younger customer base. As of June 30, 2025, the company had a total of 1542 offline jewelry stores. Specifically, the company's sales network includes 201 self-operated stores and 1337 franchise stores in over 200 cities across the country, along with four overseas stores, including one self-operated store in Malaysia, one franchise store in Thailand, and two franchise stores in Cambodia. By simultaneously establishing self-operated and franchise stores, the company has leveraged the advantages of both operation strategies to drive growth through this hybrid model. With this strategy, Guangdong CHJ Industry has achieved steady revenue growth. In 2022, 2023, 2024, and the first half of 2025, the company recorded revenues of approximately 4.364 billion yuan (RMB), 5.836 billion yuan, 6.452 billion yuan, and 4.062 billion yuan, respectively. The company's gross profit has also shown an overall upward trend, amounting to 1.278 billion yuan, 1.474 billion yuan, 458 million yuan, and 936 million yuan during the reporting period. However, influenced by fluctuating raw material prices, intensified market competition, and other factors, the company's profitability has shown a downward fluctuating trend. During the reporting period, the company's gross margin decreased from 29.3% in 2022 to 22.6% in 2024, then slightly increased to 23.1% in the first half of 2025. At the same time, the company's net profit also fluctuated. The net profits for 2022, 2023, and 2024 were 205 million yuan, 330 million yuan, and 169 million yuan, showing a downward fluctuating trend, but the net profit rebounded to 333 million yuan in the first half of 2025. How to break through the "Red Sea" market? The company mentioned in the prospectus that fluctuating raw material prices and unstable supplies have impacted its business. During the reporting period, gold accounted for the largest proportion of raw material costs, with significant implications. The company's gold purchases accounted for 94.4%, 96.6%, 98.3%, and 97.3% of the total raw material purchase amount. According to Frost & Sullivan data, the average annual spot price of 9999 gold in China steadily increased from 387.4 yuan per gram in 2020 to 557.2 yuan per gram in 2024. Meanwhile, most of the company's inventory consists of or is made of gold. During the reporting period, Guangdong CHJ Industry's inventory levels remained high, reaching 2.216 billion yuan, 2.247 billion yuan, 2.603 billion yuan, and 2.592 billion yuan. While strong gold prices usually create high demand for gold jewelry in a bullish market, reducing the inventory turnover days significantly, excessive inventory during a cooling gold market can pose a risk to the company. The company acknowledged that significant fluctuations in gold prices could have a significant adverse impact on its business, operating performance, and financial condition. However, looking at the current industry situation and future trends, the fashion jewelry market remains a segment with considerable development potential. From 2020 to 2024, the overall size of China's mainland jewelry market increased from 610 billion yuan to 728 billion yuan, with a compound annual growth rate of 4.5%. It is expected that by 2029, the overall market size will further expand to 937 billion yuan, with a compound annual growth rate of 5.2% from 2024 to 2029. This growth is mainly due to the rise of the "national trend" brought about by the fusion of traditional Chinese culture and modern design, as well as the continuous increase in consumer demand for personalized and light luxury jewelry. Brands are actively deploying youthful strategies, enhancing digital interaction through live streaming, social e-commerce, and short video platforms to shorten the distance between themselves and consumers, significantly boosting online sales. With factors like consumer upgrading, brand value highlighting, and channel integration, the jewelry industry is gradually moving towards high-end and differentiated development, laying a foundation for its long-term growth. In the mainland Chinese fashion jewelry market focused on by Guangdong CHJ Industry, the market size decreased from 2.848 billion yuan in 2020 to 2.038 billion yuan in 2024, with a compound annual growth rate of -8.0%. This decline is mainly attributed to the significant increase in gold prices, making gold jewelry more attractive and highlighting its investment attributes, as well as the significant decline in demand for diamond jewelry, intensifying competition in this segment. From 2024 onwards, the market is expected to gradually recover, reaching 2.45 billion yuan by 2029, with a projected compound annual growth rate of 3.7%. Factors driving this recovery include the growth in demand for light luxury accessories, the increasing pursuit of individuality and style by young consumer groups, and the continued influence of digital marketing and social e-commerce. It is worth noting that this market is highly competitive. Despite being ranked first in the Chinese fashion jewelry market based on 2024 sales revenue, Guangdong CHJ Industry only holds a market share of 1.4%, reflecting the industry's high level of fragmentation and low brand concentration. To further capture the market, Guangdong CHJ Industry has chosen to "go overseas". It was reported that in 2024, the company expanded its business overseas for the first time, opening stores in IOI Citymall in Kuala Lumpur, Malaysia, and ICONSIAM in Bangkok, Thailand, officially entering the Southeast Asian market. Since 2025, Guangdong CHJ Industry Jewelry has opened two stores in AEON STORES in Phnom Penh, Cambodia, and Umall in Sihanoukville. Looking at the use of funds raised, global expansion is one of the main purposes of the company's IPO. According to the prospectus, the raised funds will be used for overseas expansion, the construction of new production bases, etc. Guangdong CHJ Industry plans to open 20 self-operated stores overseas by the end of 2028 to expand its international sales network. In the current industry context of opportunities and challenges, Guangdong CHJ Industry continues to advance its strategies of brand youthfulness and product differentiation, actively expanding its multi-brand matrix and the integration of online and offline channels, and accelerating its presence in overseas markets like Southeast Asia, demonstrating strong market adaptability and growth potential. In the future, with the deepening of the "national trend" and consumer recovery, can the company further enhance its brand influence, optimize its product structure and cost control, and seize opportunities in industry consolidation? This requires continued attention from the market.