HONG KONG, China — Shares in Hong Kong's Chow Tai Fook Jewellery Group Ltd jumped as much as 15 percent on Wednesday after the world's largest jewellery retailer by market value reported strong revenue growth due to plummeting gold prices.

Gold posted a record quarterly fall from April-June, luring mainland Chinese buyers to Chow Tai Fook's almost 1,800 jewellery and gold stores across China, Hong Kong and Macau.

In a statement to the Hong Kong Stock exchange on Tuesday the group said revenues in the first quarter of the financial year had jumped 63 percent from the same period in 2012. Sales growth in its stores for gold products soared 78 percent in the quarter ending June 30.

The stock had pared gains to HK$8.90 by 11:13 p.m. ET, but that was still up around 10 percent on the day, keeping it on track for its biggest-ever daily percentage climb.

Cross-selling on non-gold jewellery and replenishment orders from franchisees were also cited by analysts as driving the sales numbers.

CLSA lifted Chow Tai Fook's sales forecasts for the full year to a 12-percent rise from 5 percent, while its full year revenues were expected to hit HK$69 billion ($8.90 billion), implying 20 percent year-on-year growth.

But some analysts said the luxury retailer's growing reliance on lower margin gold sales would not necessarily translate into sustainable profits in future.

"We are negative on jewellery stocks in the medium term on weakening gold demand, over-expansion and declining return on invested capital of new shops," wrote analyst Edwin Fan at Jefferies.

Chow Tai Fook said its gross profit margin had dropped around 3 percent in the first quarter.

"(The fall was) mainly due to a change in product mix as the portion of gold product increased to 69 percent of revenue," it said.

Should gold prices fluctuate, Chinese consumer appetite for the precious metal could also be tested.

Strong physical demand from Asia has helped international gold prices recover 6 percent from a two-year low of around $1,321 an ounce in April. Prices are still about $300 an ounce below this year's peak.

Chow Tai Fook offers a mix of products from gold bars and diamond rings for China's burgeoning mass market to elaborate custom-made pieces for wealthier clients, with the Hong Kong-listed jeweler seen to be a rival to Cartier  and Tiffany & Co.

Shares in Chow Tai Fook's smaller rivals Luk Fook Holdings (International) Ltd <0590.HK> and Chow Sang Sang Holding International Ltd <0116.HK> were up 5.9 and 3.4 percent respectively on Wednesday.

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