KUALA LUMPUR: Tomei Consolidated Bhd is cautiously optimistic on its second-half outlook amid gold price volatility and softer near-term sales due to end of festive demand.
Group managing director Datuk Ng Yih Pyng said gold prices, which corrected from a peak of about US$5,580 per troy ounce to around US$4,100-US$4,200, have since stabilised at about US$4,500, and are expected to trade within a range of about US$300 on either side in the near term.
“The gold price should be within a range. At this moment, it is around US$4,500, plus or minus. I don’t expect the price to be too volatile until there is greater certainty in the market,” he told a press conference after the group’s annual general meeting today.
Ng noted that the peak selling periods for Chinese New Year and Hari Raya has already passed, with the latter falling earlier this year compared with last year, resulting in a shorter festive-driven demand cycle.
“As such, we anticipate that the second and third quarters will be relatively slower, as there are fewer festive occasions to support retail demand, and spending may moderate in the absence of seasonal buying,” he said.
Ng said Tomei remains fully exposed to gold price movements as it does not hedge its inventory, instead relying on a mark-to-market approach that involves daily stock replenishment at prevailing prices.
“If we sell 10 kilos, we buy back 10 kilos the same day to maintain our inventory levels at prevailing market prices, so we do not hedge our exposure.”
Ng acknowledged average-cost accounting can create timing mismatches, with margins improving when gold prices rise as older, lower-cost inventory is sold at higher prices, but coming under pressure when prices fall and higher-cost stock is sold at lower market prices.
“Over time, these fluctuations tend to balance out as inventory costs and selling prices adjust to market conditions,” he said.
Margins remain acceptable at current levels, supported by the group’s disciplined pricing and inventory management, he added.
Ng said Tomei has observed a marked shift in consumer behaviour in recent years, with demand for gold investment products including wafers, coins and kilogramme bars rising significantly as price awareness increased and geopolitical uncertainty drove safe-haven buying.
“More customers are investing into gold. There is a surge in gold investment products. But when the gold price goes up, the demand for jewellery has come down because it’s not so affordable anymore,” he said.
In response, Tomei is investing in product design to produce lighter, more intricate pieces that maintain visual appeal at lower gold weight and hence lower price points.
Tomei soft-launched its digital gold platform GoldNOW ahead of Chinese New Year, with the take-up rate described as encouraging. However, Ng said the platform’s contribution to overall revenue remained below 1% and was “negligible” in absolute terms, even as it grows.
“Just like our e-business when we started, it was small. It’s still not big today, but it’s growing at a very healthy rate,” he said.
On the retail network, Ng said Tomei is in active discussions with several malls but will pace any new openings carefully given the cost of setting up outlets and the softer consumption environment. The company is also reviewing underperforming stores for potential closure.
“We may open a few new outlets while closing underperforming ones, but on a net basis, the increase will likely be limited to no more than one or two stores,” he added.
Chairman Raja Tan Sri Aman Raja Ahmad cited the shift by central banks away from US dollar reserves and into gold as a key catalyst for the earlier price surge, and the correction that followed as that repositioning wound down.
He also flagged the potential for further pressure from rising US interest rates, which could draw capital back into dollar-denominated bonds and away from gold.
“When interest rates of US dollar bonds go up, people move from gold or even developing currencies into US dollars. That’s how the world market works,” he said.
Raja Aman described the current period as a defensive phase for the business, where the priority is to safeguard financial health, maintain liquidity and exercise caution in expansion and new investments.
“If you are familiar with football, this is a defending time, not scoring time. We have to make sure our debt ratio is good, our cash flow is strong. Any new business will be evaluated thoroughly,” he said.
Raja Aman added, however, that the environment also presented opportunities for cash-rich operators, and that newer business lines such as pawnbroking offered some diversification.
