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On July 27, Laopu Gold (06181.HK) released a positive profit forecast. For the first half of the fiscal year ending June 30, 2026, the company achieved sales revenue of approximately 22.7 billion to 23.35 billion yuan, a year-on-year increase of about 60% to 65%. Net profit was approximately 4.31 billion to 4.36 billion yuan, up about 83% to 85% year-on-year. Although still maintaining high double-digit growth, this performance was notably weaker compared to the same period last year. In the first half of 2025, Laopu Gold generated revenue of 12.354 billion yuan, a sharp year-on-year increase of 251%, while net profit for the period reached 2.268 billion yuan, surging 285.8% year-on-year.
This high growth was fueled by last year's gold price rally. However, this year's slowdown reflects broader changes in the gold market. In the second quarter of 2026, the gold market underwent a deep correction. Spot gold plunged 14.1% in the quarter, retreating from a historical high of $5,598 per ounce at the start of the year and briefly falling below the $4,000 mark in June. Affected by multiple factors, including a stronger US dollar and fading safe-haven premiums, domestic retail prices for pure gold also fell from a high of nearly 1,700 yuan per gram at the start of the year to below 1,300 yuan per gram.
Before Laopu Gold, Chow Tai Fook Jewellery Group (01929.HK) disclosed its unaudited operational data for the three months ending June 30, 2026 (the first quarter of its fiscal year 2027) last week. During the reporting period, the group's overall retail value increased by 15.1% year-on-year. In mainland China, retail value grew by 10.7%, accounting for 83.6% of the group's total, while retail value in Hong Kong, Macau, and other markets rose by 44.8%, comprising 16.4% of the total. Chow Tai Fook noted that the quarter coincided with a significant retreat in international gold prices from their historic highs, leading to a clear drop in terminal gold retail prices and a prevailing sense of market caution.
Contrary to the situation during the previous gold price surge, which favored fixed-price (one-price) products, this cyclical correction in gold prices has released some of the previously suppressed demand for wedding and daily gold purchases, benefiting sales of weight-based (per-gram) gold jewelry. In its second-quarter operational data announcement, Chow Sang Sang (00116.HK) mentioned that its retail sales value grew by 16% during the quarter. Amid gold price volatility, mainland consumers showed a preference for purchasing weight-based gold jewelry. Chow Tai Fook also stated in its announcement that the softening gold prices stimulated demand for weight-based gold during the quarter. Data shows that same-store sales for weight-based gold jewelry in mainland China grew by 38%, while same-store sales for fixed-price jewelry declined by 1%. In Hong Kong and Macau, same-store sales for weight-based gold jewelry surged by 63.7%, compared to a 13.1% increase for fixed-price jewelry.
Furthermore, the product mix of the company has shifted significantly. In mainland China, the share of weight-based gold in total retail value rose to 67.2% from 61.5% in the same period last year, while in the Hong Kong and Macau markets, its share increased from 64.4% to 70.1%. However, some industry insiders believe that while weight-based gold jewelry can offset the slowdown in fixed-price product growth during a gold price correction, its lower margins and product homogeneity could create earnings pressure for companies.
Facing cyclical gold price fluctuations, leading companies continue to seek a balance. Laopu Gold stated in its announcement that with the gradual implementation of targeted strategies, including product innovation and high-value customer management, along with the continuous optimization and expansion of its store network, the board expects to see a significant boost in the group's revenue and net profit support in the second half of 2026. Meanwhile, although Chow Tai Fook has used weight-based gold products to capture essential demand during this correction, thereby balancing the performance volatility from gold price fluctuations, it does not intend to rely on these high-volume, lower-margin products. The company stated it will continue to advance its brand transformation, enhancing its premium by developing new product lines. In April, it launched the "Wanxiang" design series, which achieved retail value exceeding HK$870 million in a single quarter, surpassing management's expectations.
Industry analysts believe that the current gold market is in a period of intense price volatility. Small and medium-sized brands face dual pressures from inventory and customer traffic, accelerating industry consolidation. In contrast, leading brands are speeding up their brand transformation to move away from the homogeneous competition of simply "selling gold" and enhance their ability to withstand market cycles.
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