The logic behind gold consumption has changed; how is Cipu (02583.HK) capturing the new trend?

China's gold market in 2026 is undergoing a profound iteration in consumption logic. $HIPINE (02583.HK)$

Amid high gold prices, domestic gold consumption trends are shifting from a traditional focus on weight and mass to an emphasis on craftsmanship, design, and suitability for various wearing occasions. Lightweight, aesthetically appealing gold products are becoming new market favorites, characterized by declining weight per item but sustained demand. Industry competition is increasingly extending into dimensions such as design, craftsmanship, and intellectual property (IP).

The business logic for gold jewelry is shifting from selling materials to selling value.

Against this industry backdrop, Xipuni recently released its interim results for 2026. In the first half of the year, it achieved revenue of RMB 333 million, a year-on-year increase of 15.9%; net profit reached RMB 99.084 million, surging 75.3% year-on-year. The gross profit margin jumped from 31.2% in the same period last year to 41.6%, an increase of over 10 percentage points.

The real highlight of these results is not just that profit growth significantly outpaced revenue growth, but the complete logical chain behind it, spanning from technology to products and finally to brand building.

1. Significant Leap in Profitability: A Triple Progression in Technology, Products, and Business Model

With gold prices remaining at elevated levels, gold jewelry companies face the dual challenge of cost pressures and suppressed consumption. This is forcing brands to rapidly upgrade their products, craftsmanship, channels, and marketing strategies.

Xipuni's response strategy aligns with this industry transition inflection point, and the data has already provided the answer.

Technological breakthroughs serve as the initial breakthrough point.

Xipuni's independently developed supramolecular hardening technology for pure gold has increased the Vickers hardness of 999 pure gold to over 90HV. This solves the traditional problem of pure gold being soft and prone to scratching, making Xipuni the first brand in China to apply hard gold technology to watch manufacturing.

This technology not only enhances product quality but also directly optimizes the cost structure. Hard gold technology reduces the weight of products of the same volume, aligning closely with the current trend toward lightweight gold consumption. During the reporting period, despite the continuous rise in raw gold prices, the company's cost of sales was approximately RMB 195 million, a decrease of about 1.5% from RMB 198 million in the same period last year. The effectiveness of the 'weight reduction, price stability' strategy continues to materialize.

The profit margin released by cost reductions provides ammunition for upgrading the product structure.

During the reporting period, revenue from the watch business reached RMB 237 million, a year-on-year increase of 58.0%, while revenue from jewelry accessories was RMB 96.59 million. The gross margin for watches is significantly higher than that for traditional jewelry, with the online channel under the OBM model achieving a gross margin of 52.3%. As watch sales increased and cost control strengthened, unit production costs further declined, directly driving an improvement in the overall gross margin.

More noteworthy are the changes at the business model level.

Xipuni's revenue mainly comes from OBM and ODM models. During the reporting period, offline distribution revenue under the OBM model was RMB 214 million, a year-on-year increase of 51.7%; revenue from retail stores and online shops was RMB 35.02 million, representing a year-on-year increase of approximately 2.3 times. The rising proportion of own-brand products implies greater potential for brand premium, which serves as the structural support for the leap in gross margins.

The company has currently built a sales network covering more than 3,000 retail terminals nationwide. Coupled with the rapid expansion on e-commerce platforms such as JD.com, Tmall, and Douyin, the market reach of its own-brand products is being systematically enhanced. The ODM business acts as another pillar, solidifying the revenue base and customer resources while creating synergies with the OBM business in R&D and supply chain management.

From these three dimensions, Xipuni's profit growth has formed a solid logical chain, where each step from technology to product to brand creates space for the next.

II. Beyond Gold Watches: Xipuni's Logic for Boundary Expansion

If Xipuni's value growth were limited to being merely a 'beneficiary of the gold price cycle,' it would be overly simplistic. What truly deserves attention is its systematic expansion across category boundaries, with three parallel main lines: technology, culture, and globalization.

Among Xipuni's four strategic pillars, AI-driven innovative products and artificial intelligence applications offer the greatest growth potential.

Data from the China Commercial Industry Research Institute shows that the market size of smartwatches in China has grown from RMB 23.6 billion in 2021 to approximately RMB 40.7 billion in 2025, and is projected to reach RMB 47.5 billion in 2026. In the more specialized segment of smart precious metal watches, China Galaxy Securities notes a compound annual growth rate (CAGR) of 70.24% for the period 2024–2029.

Xipuni entered into a deep strategic partnership with Huawei in 2023, launching precious metal watches equipped with Huawei’s smart movement and integrating them into the HarmonyOS ecosystem. During the reporting period, the company further expanded its product lineup by introducing smart precious metal rings featuring heart rate monitoring, blood oxygen tracking, and NFC functionality. This marks an accelerated expansion of its product matrix, evolving from 'dual-wear' smart gold watches to smart precious metal rings.

Alongside hardware advancements, the company is advancing AI empowerment on the operational front. Its self-developed 'Jinling Digital Assistant System,' the first comprehensive AI agent suite tailored for the gold and jewelry industry, has been piloted in real-world retail store operations.

From hardware to software, and from products to application scenarios, AI is emerging as a new variable for Xipuni to reshape industry efficiency.

While technological attributes address functional experience, the cultural dimension fosters emotional connection.

During the reporting period, the company’s high-end collectible series, 'Intangible Cultural Heritage: The Twelve Hours,' was showcased at the China National Arts and Crafts Museum. The collection incorporates eight national-level intangible cultural heritage techniques—including engraving, lacquerware, Kesi silk weaving, and Suzhou enamel—into watchmaking. This makes Xipuni the first brand in the industry to systematically translate the Eastern cultural framework of the 'Twelve Hours' into a complete line of watch products.

A recent research report by Huaan Securities pointed out that IP empowerment is becoming a new growth driver for gold jewelry. Consumer demand for gold products is no longer limited to value preservation but has extended to daily wear, business gifting, cultural collecting, and self-reward consumption. As traditional gold jewelry faces homogeneous competition, the integration of culture and craftsmanship is building new brand moats.

Global expansion opens up incremental growth in terms of spatial reach.

Currently, Xipuni has established distribution and retail networks in Malaysia through local partners. In May this year, the company became one of the first core enterprises to join the Shenzhen Global Expansion Center, partnering with Microsoft to accelerate its global layout. Leveraging the center’s global resource network, Xipuni is speeding up the expansion of overseas channels to build a global brand ecosystem covering products, services, and culture. Next, markets in Singapore, Macau, and other Southeast Asian regions are also under planning.

AI-driven innovation injects a technological core into all product lines, cultural empowerment provides content support for brand expression, and global expansion opens up incremental growth space. Xipuni’s strategic layout is clear: transforming gold from a raw material priced by weight into a brand asset with functional value and cultural significance on a global scale.

III. Conclusion

Viewing this interim report within the broader industry context may better help us understand its significance.

Currently, the shift in gold consumption logic is opening up considerable room for incremental growth.

The transition of jewelry pricing from 'by gram' to 'by piece' essentially reflects consumers' growing willingness to pay premiums for design, craftsmanship, and emotional value. Brands with technical barriers and design capabilities will continue to benefit. According to Euromonitor data, the market size of China's gold jewelry has grown from approximately RMB 394.9 billion in 2015 to about RMB 650.9 billion in 2025, with its share of the total jewelry market rising from 75% to 81%. The continuous expansion of the industry provides ample market space for brands with genuine product innovation capabilities.

Xipuni’s supramolecular hard gold technology effectively addresses the physical limitations of pure gold being 'heavy and soft,' granting gold bracelets greater flexibility in wearability scenarios and functional integration. Meanwhile, the rapid growth of the company’s proprietary brand channels, combined with improved gross margins driven by cost reductions through technology, means that profit elasticity is just beginning to be released. At the same time, initiatives in AI-driven innovation, cultural empowerment, and globalization demonstrate that Xipuni’s growth logic no longer relies on gold price trends but is built on the self-driving forces of category innovation, brand upgrading, and market expansion.

These changes are driving a shift in Xipuni’s valuation logic from a 'gold-price cyclical stock' to a 'brand consumer stock.'

However, it is worth noting that recent earnings forecasts from institutions such as China Galaxy Securities and Guotai Haitong Securities are primarily based on existing business operations and have not fully accounted for the potential non-linear growth resulting from enhanced brand momentum. As performance continues to materialize in the second half of the year and next year, upward revisions to earnings and valuation reshaping are expected to resonate, potentially leading to a premium valuation beyond current levels.

What this interim report presents may merely be the beginning of a longer-term story.

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