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<Research>Daiwa Expects New VAT Policy to Dampen Gold Jewelry Stocks in Near Future, Prefers LAOPU GOLD in ST
Recommend 17 Positive 23 Negative 13 |
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China's Ministry of Finance recently announced a new policy reducing the VAT deduction for jewelry retailers from 13% to 6%, which will in turn increase the cost of gold procurement by around 7%, according to a Daiwa research report. This policy will be in effect from November 1, 2025, to December 31, 2027. In Daiwa's estimation, LAOPU GOLD (06181.HK) and CHOW TAI FOOK (01929.HK) will ultimately pass these costs onto consumers. The broker is not concerned about the long-term impact of the policy on jewelry stocks' gross margins. While this policy may trigger a rush to purchase priced products before the anticipated price hikes, Daiwa expects this news to damage the short-term sentiment of gold jewelry stocks, especially as international gold prices have recently retreated from their peak. Still, the broker considers this adjustment healthy. Daiwa has kept a Buy rating on LAOPU GOLD and CHOW TAI FOOK, but it will prefer LAOPU GOLD in the near term, as the company has recently raised prices and has a higher proportion of priced product sales. Despite this policy change, the broker believes LAOPU GOLD's and CHOW TAI FOOK's 4Q25 sales may still exceed expectations. AAStocks Financial News |
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