On April 30th, the first-quarter reports of 10 gold mining stocks in the A-share market were fully disclosed. Overall, the net profit attributable to the parent company of these 10 companies all achieved growth in the first quarter. Many gold mining stocks, when explaining the significant increase in net profit, mentioned the rise in the sales volume and price of gold products.

However, in stark contrast to the positive performance of gold mining stocks, the performance of downstream gold jewelry consumer companies was lackluster. The high gold prices began to suppress consumer demand, and according to the statistics of First Financial, among the first-quarter performance of 13 gold jewelry stocks in the A-share market, many companies saw a significant decline in net profit growth rate.

Among them, Leysen Cempion (603900.SH) even turned from profit to loss in the first quarter, with a loss of 18.76 million yuan. Yuyuan Shares (600655.SH), Mingpai Jewelry (002574.SZ), Chow Tai Fook (002867.SZ), and other gold jewelry companies also experienced a situation where revenue increased but profits did not.

Globally, the gold market also shows a similar trend. The World Gold Council's "Global Gold Demand Trends Report" released on April 30th shows that in the first quarter of 2024, international gold prices repeatedly hit new highs, and global gold jewelry demand decreased by 2% year-on-year to 479 tons. In the domestic market, gold jewelry consumption in the Chinese market decreased by 6% year-on-year to 184 tons in the first quarter. Despite the strong demand for gold jewelry consumption in January and February of this year, the surging gold prices in March suppressed consumption, leading to an overall unimpressive demand for gold jewelry in the first quarter.

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In the secondary market, the gold stock sector continued to decline this week. As of the close on April 30th, Chifeng Gold (600988.SH) fell more than 4%, with a weekly decline of 6.37%. Shandong Gold (600547.SH), Zijin Mining (601899.SH), Hunan Gold (002155.SZ), and others followed suit, with weekly cumulative declines of 3.73%, 3.61%, and 3.22%, respectively.

Upstream companies saw an increase in both production and sales of mined gold.

According to First Financial reporters' statistics from Wind, the 10 gold mining stocks achieved a combined net profit attributable to the parent company of about 8.8 billion yuan in the first quarter of 2024.

Looking at the growth rate of net profit attributable to the parent company, Chifeng Gold achieved a net profit of 201 million yuan in the first quarter, a significant year-on-year increase of 166.41%; followed by Western Gold (601069.SH), which achieved a net profit of 201 million yuan in the first quarter, a significant year-on-year increase of 155.98%; in addition, Shandong Gold and Hunan Gold's net profits attributable to the parent company in the first quarter increased by about 59% and 52%, respectively.

As for the reasons for profitability, Western Gold stated that the main reasons for the increase in operating income and net profit attributable to the parent company were the sales of self-produced gold from the previous year's inventory during the reporting period, with an increase in sales volume and sales price compared to the same period last year.

In addition to the performance being boosted by rising gold prices, many companies also mentioned that both the production and sales volume of mined gold have increased.Looking at the first quarter operating income, Zijin Mining achieved 74.777 billion yuan, ranking first, followed by Hengbang Shares (002237.SZ) and Shandong Gold, which respectively realized revenues of 20.808 billion yuan and 18.957 billion yuan.

Specifically, Chifeng Gold recorded an operating income of 1.854 billion yuan in the first quarter, a year-on-year increase of 16.83%; the production volume of mineral gold increased by 9.03% compared to the same period last year, and the sales volume also increased by 1.18%.

Zhongjin Gold (600489.SH), in the first quarter of 2024, the company's revenue was 13.164 billion yuan, a year-on-year decrease of 1.37%; the company's production volume of mineral gold in the first quarter was 4,465.30 kilograms, a year-on-year increase of 8.91%; the sales volume of mineral gold was 4,146.12 kilograms, a year-on-year increase of 9.89%.

According to the latest statistical data from the China Gold Association, in the first quarter of 2024, the domestic raw gold production was 85.959 tons, a year-on-year increase of 1.16%. In addition, in the first quarter of 2024, 53.225 tons of raw gold were imported, a year-on-year increase of 78.00%. If this imported raw gold is added, the country produced a total of 139.184 tons of gold, a year-on-year increase of 21.16%.

In terms of gold prices, since March. Since the beginning of 2024, international gold prices have been continuously setting new historical highs, especially after entering March, gold prices have ignored the traditional resistance of a strong US dollar and high interest rates, and the COMEX gold futures prices have successively broken through several important levels such as $2,200, $2,300, and $2,400 per ounce. The international gold price even touched a historical high of $2,448.8 per ounce on April 12. The current gold price is "resting" at a high level.

Louise Street, a senior market analyst at the World Gold Council, analyzed that there are multiple factors behind the recent surge in gold prices. First, the intensification of geopolitical conflict risks, coupled with the continuous existence of macroeconomic uncertainties, has jointly driven up investors' demand for gold as a safe-haven asset. In addition, the continuous purchase of gold by central banks worldwide and strong off-exchange investments have all contributed to the rise in gold prices. It is expected that the gold price in 2024 will tend to stabilize in the next few months, some price-sensitive buyers may re-enter the market, and while investors are waiting for interest rate cuts and election results to become clear, they will continue to regard gold as a good safe-haven asset.

Downstream enterprises increase revenue but not profits.

The inhibitory effect of high gold prices on gold consumption has begun to emerge.

Specifically, Leysen Lingling achieved a total operating income of 242 million yuan in the first quarter of 2024, a year-on-year decrease of 3.08%; the net profit attributable to the parent company was a loss of 18.7603 million yuan, compared to a profit of 15.8154 million yuan in the same period last year; the net cash flow generated by operating activities was -155 million yuan, compared to 86.589 million yuan in the same period last year.

Mingpai Jewelry achieved a total operating income of 1.356 billion yuan in the first quarter of 2024, a year-on-year increase of 10.24%; the net profit attributable to the shareholders of the listed company was 20.53 million yuan, a year-on-year decrease of 55.14%. The net cash flow generated by operating activities was -167 million yuan, turning negative year-on-year.Yuyuan Shares achieved a total operating revenue of 17.221 billion yuan in the first quarter of 2024, a year-on-year increase of 12.56%, with a net profit attributable to the parent company of 180 million yuan, a year-on-year decrease of 43.48%, and a net cash flow from operating activities of 596 million yuan, a year-on-year decrease of 83.67%.

Some jewelry companies also recorded profits. China Gold (600916.SH) released its first quarter report for 2024, showing that the company's operating revenue was 18.25 billion yuan during the reporting period, a year-on-year increase of 13.08%; net profit was 363 million yuan, a year-on-year increase of 21.09%.

In the first quarter of 2024, Caibai Shares (605599.SH) achieved an operating revenue of approximately 6.316 billion yuan, a year-on-year increase of 25.01%; the net profit attributable to the shareholders of the listed company was about 272 million yuan, a year-on-year increase of 16.15%; Chao Hongji (002345.SZ)'s first quarter report showed that the revenue for the first quarter of 2024 was about 1.796 billion yuan, a year-on-year increase of 17.87%; the net profit attributable to the shareholders of the listed company was about 131 million yuan, a year-on-year increase of 5.47%.

A person in charge of the China Gold Association told reporters that in the first quarter of 2024, the rapid rise in gold prices, coupled with high gold jewelry processing fees and brand premiums, has increased consumer caution, which to some extent has suppressed gold jewelry consumption and increased sales pressure on gold jewelry retailers. High gold prices and significant fluctuations have increased the production and operation risks for gold processing and sales enterprises, making wholesale and retail enterprises more cautious in purchasing, and jewelry processing enterprises face rising raw material costs and declining shipments. Some small and medium-sized processing enterprises have even suspended operations and taken holidays.

The World Gold Council report also mentioned that in the context of soaring gold prices, consumers are increasingly favoring lighter, lower-priced single items. Coupled with the intense competition in China's gold jewelry market, corporate profit pressures have increased. From the research perspective, the second quarter is usually the off-season for gold jewelry consumption, which may further exert pressure on demand. It is expected that the weak demand trend in March may continue into the second quarter. Due to the continued rise in domestic gold prices in April, consumers continue to maintain a wait-and-see attitude, and retailers are also more cautious when restocking before the traditional sales peak of the Labor Day holiday.