Gold Prices Surge, Company's Profits Double Last Year Thanks to "Fixed Price" Model

On March 17, driven by an unexpectedly strong earnings forecast released the night before, Chow Sang Sang (00116.HK) opened sharply higher by nearly 9%, and during the trading session, it surged over 11%. By the close in the afternoon, Chow Sang Sang closed at HKD 13.96, up more than 8%.

On March 16, Chow Sang Sang announced a positive earnings forecast for fiscal year 2025. The announcement indicated that the company expects net profit attributable to shareholders from continuing operations for fiscal year 2025 (ending December 31, 2024) to be between HKD 1.6 billion and HKD 1.7 billion. According to the announcement, for the same period in 2024, this figure was HKD 772 million, making this forecast more than double the previous year and exceeding market expectations.

In the announcement, Chow Sang Sang stated that the significant profit growth last year mainly stemmed from three factors: first, improved sales performance in the Chinese market, especially in the second half of 2025; second, favorable gold price trends combined with a high proportion of priced gold jewelry sales, driving gross profit margin upward; third, continuous optimization of the retail network reducing operating costs.

Yicai notes that in recent years, the consumption structure of the gold jewelry market has been continuously evolving. Fixed-price (pricing-based) gold, with its high gross margin and strong differentiation, has become the core profit engine for leading jewelry listed companies. As Chow Sang Sang mentioned in the previous announcement: “The high proportion of priced gold jewelry sales has driven gross profit margin upward.”

Orient Securities released a research report stating that, amid the sustained rise in gold prices, domestic gold jewelry consumption has been significantly suppressed, while demand for investment-oriented products like gold bars and coins has rapidly increased year-on-year, greatly surpassing gold jewelry in absolute volume. However, benefiting from refined brand operations and product differentiation, related companies’ sales of fixed-price products have continued to rise, which has, on one hand, enhanced their overall profitability, and on the other hand, somewhat mitigated the cyclical impact of gold price fluctuations.

An industry insider told reporters that for gold jewelry companies, since gold prices are transparent and publicly available, profits mainly come from basic gold prices and a small amount of craftsmanship fees when relying solely on weight-based products, resulting in thin margins. The core value of fixed-price gold lies in breaking through the profit bottleneck of traditional weight-based products, with profit components including high craftsmanship fees and brand premiums.

Taking Lao Pu Gold (06181.HK) as an example, all its products are fixed-price traditional gold, and its performance outperforms other gold retailers in the industry. The company recently issued a profit forecast, estimating revenue for 2025 to be approximately RMB 27 billion to 28 billion, an increase of about 217% to 229% compared to 2024; sales revenue (including tax) is expected to be about RMB 31 billion to 32 billion, up approximately 216% to 227% from 2024.

As gold gains increasing attention in the market, major merchants aim to shift from “selling raw materials” to “selling craftsmanship and culture.” On the other hand, high-margin priced gold products can support brands in launching more flexible channel policies and marketing investments, enhancing market competitiveness.

However, despite the higher profits brought by fixed-price gold for brands, issues are also emerging on the consumer side. Consumer protection data shows that the platform received over 7,000 complaints about gold jewelry in 2025, with gold-related complaints accounting for 80%, and complaints related to fixed-price gold reaching as high as 62%. These products often cause disputes due to issues like hidden weight and difficulties with returns or exchanges. Experts remind consumers to actively inquire about weight when purchasing and make informed choices; in case of infringement, they can file complaints with regulatory authorities.

(This article is from Yicai.)