Daiwa has issued a research report initiating coverage on LAOPU GOLD (06181) with a "Buy" rating and a 12-month target price of HK$950, based on a target price-to-earnings ratio of 22x applied to the company's fiscal year 2026 earnings per share. Daiwa believes the market has undervalued the combination of LAOPU's brand strength, growth profile, and disciplined expansion strategy, presenting an attractive entry opportunity for investors at current levels.

The stock appears to be weighed down by two non-fundamental factors: concerns about potential additional equity offerings and ongoing selling pressure from stock incentive platforms. The valuation premium that previously distinguished it from peers has completely disappeared. While not ruling out the possibility of these events occurring, Daiwa believes current prices already reflect near-term risks and create an attractive long-term risk-reward proposition.

Daiwa projects LAOPU's net profit to grow 207% year-over-year in the second half of this year, with 32% growth expected in fiscal year 2026.

From a fundamental perspective, Daiwa believes LAOPU stands out with its deep understanding of luxury brand building in the Chinese market, a capability recognized by global leaders such as LVMH and luxury conglomerate Richemont. The company's management track record in strategic transformation, focus on sustainable growth, and first-mover advantage in securing prime luxury mall locations in major Chinese cities gives Daiwa confidence in the company's ability to build enduring brand appeal. The firm believes the network can expand by at least 50% over the long term.