Guojin Securities has released a research report stating that the high volatility in gold prices has created significant expectation discrepancies. The report believes that under the industry trend of rising prices but falling volumes, the alpha of LAOPU GOLD's (06181) high-end brand operations is becoming apparent. Coupled with the effects of store adjustments being realized, the company's high-base growth from January to February is expected to be verified, thereby driving a valuation re-rating. The bank forecasts the company's EPS for 2025/2026/2027 to be 27.7/39.4/48.2 yuan, respectively. The current stock price implies a PE ratio of 24/17/14 times for these years. It maintains a "Buy" rating and continues to highly recommend the stock.
The core views of Guojin Securities are as follows: Brand resilience may exceed expectations amid significant gold price fluctuations, with store terminals experiencing supply shortages and forming queuing热潮. On January 30th, international gold prices fell sharply, dropping over 10% from the intraday high to the close. However, LAOPU GOLD's retail stores continued the queuing热潮 that began since New Year's Day. During the weekend following the overnight decline on January 31st to February 1st, LAOPU GOLD stores in multiple cities including Beijing, Shanghai, Guangzhou, Hangzhou, Wuhan, Nanjing, and Xi'an still witnessed bustling queues. Notably, stores in Shanghai's Henglong Plaza and Beijing's Central Ring maintained lively queues even without discount promotions, indicating the brand's strong appeal persists during periods of gold price volatility.
The bank attributes the core reason for the surging demand to end consumers forming an expectation of stable price increases for the brand, signifying continuously growing recognition of LAOPU GOLD's brand value. The bank believes the value of LAOPU GOLD's products encompasses three layers: 1) Material value: High-end gold jewelry is prone to price increases due to rising gold prices; current consumers are also confident in the medium-to-long term upward trend of gold. 2) Design value: Consumers acknowledge the premium for its product design, which is not diminished by gold price increases. 3) Brand value: The expectation of price increases is similar to luxury goods, such as the queues to purchase LV items before a price hike. The fact that consumers still queued to purchase during this sharp gold price correction reflects deep recognition of LAOPU GOLD's price increase expectation, unrelated to material value. Essentially, this signifies enhanced recognition of the company's brand value. The company completed three upward price adjustments in 2025, with the first occurring after the Spring Festival in February. Current consumer expectations that the brand will raise prices after the new year have triggered this queuing and purchasing热潮.
Adequate inventory preparation ahead of gold price increases is expected to allow gross profit margins to recover to normalized levels. In October 2025, the company completed a HK$2.7 billion placement, of which approximately 70% (about HK$1.9 billion) was allocated for inventory reserves, resulting in relatively sufficient stock preparation. Combined with the price adjustment already implemented at the end of October 2025, gross profit margins are expected to gradually recover.
Medium-to-long term growth space: The company's refined management targeting high-net-worth customers is imminent, with significant room for single-store improvement. As of the end of November 2025, LAOPU GOLD operated over 40 self-operated stores covering 16 cities, all located in high-end shopping centers in first-tier and new first-tier cities, indicating substantial expansion potential both domestically and internationally. The company focuses on store quality rather than blind quantitative expansion and is expected to continuously optimize existing store locations, sizes, and scenarios in 2026. The company has established a high-net-worth customer management department for refined management of this segment. Loyal members reached 480,000 in H1 2025, an increase of 130,000 from the end of 2024. As the company strengthens its refined operations, member numbers and loyalty are expected to continue growing.
Risk warnings include the risk of sustained decline in gold prices, intensifying industry competition, end-consumption falling short of expectations, and store expansion not meeting targets.
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