Everbright Securities Initiates Coverage on LAOPU GOLD (06181) with "Buy" Rating, Sets Target Price at HK$804.64

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Everbright Securities released a research report highlighting LAOPU GOLD (06181) as a pioneer and leader in China's ancient-style gold jewelry market, with a high-end positioning and long-term expertise. Since 2023, accelerating gold price increases have boosted consumer demand for gold as an investment and store of value. Ancient-style gold, with its understated elegance and collectible appeal, has seen rising popularity, driving LAOPU GOLD's performance to record highs.

Using relative and absolute valuation methods, Everbright Securities set a target price of HK$804.64, with 2025–2027 target P/E ratios of 27x, 20x, and 15x, respectively, initiating coverage with a "Buy" rating. Key insights include:

**Ancient-Style Gold Thrives as Gold Consumption Trends Younger** Despite weak overall gold jewelry consumption amid rising prices, niche segments like ancient-style gold and "Guochao" (national trend) concepts have grown against the trend. China's gold product market reached RMB 568.8 billion in 2024, with ancient-style gold's share rising from 4% in 2018 to 30% (RMB 157.3 billion) in 2023. By 2028, it is projected to account for 52% (RMB 421.4 billion). Gold consumption is no longer limited to traditional occasions like weddings or birthdays but has become a fashion statement, appealing to younger demographics while carrying emotional and cultural significance.

**Differentiated Positioning with Leading Craftsmanship** 1) Unlike mass-market gold brands offering homogeneous products, LAOPU GOLD competes in the premium ancient-style gold segment. As of June 2025, its customer base overlapped with luxury brands like LV, Hermès, Cartier, Bvlgari, and Tiffany by 77.3% on average, with ~480,000 members. 2) Years of refinement have endowed LAOPU GOLD with superior craftsmanship, creating a strong brand moat. Its products command higher premiums, with H1 2025 gross and net margins at 38.1% and 18.4%, respectively, outperforming peers.

**Aesthetic Leadership and Omnichannel Growth** LAOPU GOLD’s success stems from: 1) Designs blending Eastern and Western cultural elements, aligning with the "New Chinese Style" trend and making gold a daily fashion accessory. 2) Strategically located high-end stores with exquisite displays, reinforcing its luxury image. Despite limited outlets, same-store sales doubled or more in 2023, 2024, and H1 2025. 3) Online expansion with lightweight, affordable items attracting younger customers, complementing offline growth.

**Earnings Forecast and Valuation** 2024 revenue surged 167.5% YoY to RMB 8.506 billion, with net profit up 253.9% to RMB 1.473 billion. H1 2025 revenue and net profit grew 251.0% and 285.8% YoY. Projected 2025–2027 revenue: RMB 26.74/36.17/46.09 billion (+214.4%/35.2%/27.4% YoY); net profit: RMB 4.76/6.54/8.45 billion (+223.3%/37.3%/29.2% YoY). EPS estimates: RMB 27.00/37.08/47.90, with current P/E at 21x/15x/12x.

**Risks**: Gold price volatility, intensified competition, and store expansion delays.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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