Mixed results for jewellery companies

Chow Sang Sang's first-half profit surged 40 per cent year on year to HK$614.75 million on strong sales of gold and jewellery.

Emperor Watch & Jewellery did not fare so well because its high exposure to the high-end timepiece market caused the company's profits to plummet 29 per cent to HK$157 million.

"The anti-corruption drive probably played an important part at dampening the overall growth of sales of luxury goods. However, given that high-end gift items account for a small portion of our sales, the impact has not been significant," Chow Sang Sang said in a statement filed with the stock exchange.

Jewellery accounts for 77 per cent of Chow Sang Sang's business. In contrast, jewellery is 32 per cent of Emperor's revenue and luxury watches make up 77.3 per cent.

Sharp gold-price declines in April and June helped Chow Sang Sang's volume sales but it also squeezed margins. Gold sales drove same-store growth to 50 per cent in Hong Kong and Macau, compressing the ratio of non-gold jewellery sales to 24 per cent from last year's 33 per cent.

"Investor sentiment may remain negative for Hong Kong listed jewellery players in the short term because… [of] the high proportion of sales of gold products and China's anti-corruption measures that might rein in luxury spending," said a research report from Nomura.