Overview

Laopu Gold (6181.HK) is the top heritage gold jewelry brand in China. Based on data of Frost & Sullivan, Laopu Gold was the first brand in the industry to introduce diamond-inlaid pure gold jewelry, leading trends for the industry. In the first half of 2025, among all jewelry brands (including both international and domestic jewelry brands), the company ranked first in Mainland China in terms of average revenue per shopping mall and revenue per available square meter.

The Value King Amid the Gold Price Frenzy": Revenue and Profit Both Achieved Growth

In H1 2025, the company's revenue reached RMB 12.354 billion with a year-on-year increase of 251%. By sales channel, offline store revenue was RMB 10.736 billion, accounting for 86.9% of the total and up 243.2% year-on-year. Online platform revenue was RMB 1.618 billion, accounting for 13.1% of the total and surging 313.3% year-on-year. The company's sales are primarily driven by offline stores, with online platforms serving as a powerful supplement to enhance the customer shopping experience. By region, revenue from Mainland China was RMB 10.758 billion, up 232.8% year-on-year. Overseas revenue was RMB 1.597 billion, benefiting from continuous expansion in international channels and soaring 455.2% year-on-year. We believe that Laopu Gold's ancient craftsmanship, exceptional artisanship and cultural storytelling represent a unique differentiator in overseas markets, potentially positioning it as a distinctive "Oriental luxury brand." The growth in overseas revenue holds promising prospects for the future. The gross profit margin was 38.09%, down 3.24 percentage points year-on-year, primarily due to the misalignment between the company's price adjustments and the rising gold prices. However, thanks to the scale effects generated by the explosive growth in performance, the short-term fluctuations in the gross profit margin did not impact the company's earnings.Net profit attributable to shareholders was RMB 2.268 billion, up 285.76% year-on-year. EPS was RMB 13.38 with a year-on-year increase of 225.55%.

Rising of R&D Expense Ratio Strengthened Operational Capabilities

In H1 2025, the company's sales expense ratio was 11.85% with a year-on-year decrease of 3.27 percentage points. The R&D expense ratio was 0.2% with a year-on-year increase of 0.01 percentage points, reflecting the company's emphasis on product research, development, innovation, and upgrading. As of June 30, 2025, the company had created over 2,100 original designs, and held 273 domestic patents, 1,505 copyrights, and 246 international patents. The company's inventory turnover decreased significantly, from 195 days in FY 2024 to 150 days in the reporting period. The trade receivables turnover days were 12 days, shortened from 25 days in FY 2024. This improvement was primarily due to the promotion of the self-checkout model with more malls at the company's directly operated stores, indicating an overall improvement in the company's operational capabilities.

"Culture + Scenario" Diversified Product Portfolio Creates Elevated Differentiation

Laopu Gold's product coverage is extensive, extending beyond traditional jewelry to include cultural collectibles, daily necessities, and decorative pieces. This caters to diverse needs ranging from daily wear to collection, gifting, and home decor. While other brands compete on dimensions like "design," "craftsmanship," and "price," Laopu Gold has directly ascended to competing on the planes of "culture" and "lifestyle." We believe this approach has allowed Laopu Gold to carve out a blue ocean market with few direct competitors. This strategy has successfully enabled the company to break free from the price wars common in the industry, establishing strong brand premiums and high customer loyalty. Customers are not merely purchasing a gold product, but an item that fulfills deeper psychological needs.

The Placing Strengthened Capital Reserves and Accelerated Stores Expansion

In May 2025, the company placed 4.31 million new H-shares at HKD 630 per share, raising net proceeds of HKD 2.698 billion. The funds will be primarily used for core business development (80%) and supplementing working capital (20%). With the proceeds from the placement, the company plans to further accelerate the expansion of its store network in Mainland China, targeting a broader consumer base across various high-end commercial centers in different cities. This initiative aims to support business operations following the expansion of existing store areas and fuel the rapid growth of same-store sales.

Investment Thesis

Recently, gold prices have continued to climb, with COMEX gold once breaking through $4,000 per ounce. Gold has become the preferred safe-haven asset, and central banks are consistently increasing their gold reserves. The latest data from the People's Bank of China shows that in September 2025, China increased its gold reserves by 1.24 tons. As of the end of September 2025, China's gold reserves stood at 2,303.52 tons. Last week, the escalation of Sino-U.S. economic and trade conflicts further boosted gold prices due to safe-haven demand. In the long term, we believe the drivers for gold price appreciation persist, and gold prices are expected to continue strengthening. Data from the China Gold Association shows that in the first half of 2025, national gold consumption was 505.21 tons with a year-on-year decrease of 3.54%. Among above, gold jewelry consumption was 199.83 tons, down 26% year-on-year. Although high gold prices have suppressed gold jewelry consumption, lightweight, design-intensive, and high value-added jewelry products remain popular. These products have allowed merchants to maintain favorable profit margins. According to data from Frost & Sullivan, the market size is projected to reach approximately RMB 421.4 billion by 2028, with a compound annual growth rate of 21.8%, indicating significant growth potential for the ancient-style gold market.

Laopu Gold is a leading enterprise in the ancient-method gold segment. According to survey data from Frost & Sullivan, the average overlap rate between Laopu Gold consumers and those of five international luxury brands---Louis Vuitton, Hermès, Cartier, and Bulgari---reaches as high as 77.3%, reaffirming its premium brand positioning. Recently, Laopu Gold opened a new store at Hong Kong's IFC Mall in Central, which was crowded with customers inside and saw long queues outside. This indirectly reflects the high level of attention its products are receiving overseas. We believe that the gradual increase in the number of overseas stores in the future will contribute additional growth to the company's revenue. We forecast the company's operating revenue for 2025-2027 to be RMB 26.324 billion, RMB 33.793 billion, and RMB 40.045 billion respectively. EPS is projected to be RMB 29.61, RMB 38.14, and RMB 45.36, corresponding to a P/E ratio of 23.5x, 18.2x, and 15.3x. Based on a 2026 expected P/E of 20x, we have raised the target price to HKD 829.13 and maintain an "Accumulate" rating. (Current price as of October 15)

Risk factors

1) Gold price fluctuations;
2) Intensified industry competition;
3) Macroeconomic recovery is weaker than expected;
4) Store expansion is weaker than expected.

Financial Data

(Current Price as of: 15 Oct 2025)
Exchange Rate: HKD/RMB=0.92
Source: PSHK Est.

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