LAOPU GOLD has delivered a financial report that has captured Wall Street's attention. According to market analysis, both Citigroup and Nomura have issued Buy ratings in their latest research reports. They highlighted that the company's preliminary results for the first quarter of 2026 significantly surpassed market expectations, with net profit margins reaching a record high. The firms position LAOPU GOLD as a rare investment opportunity on the path to becoming "China's first true luxury brand."

Citigroup's research indicates that LAOPU GOLD's Q1 2026 revenue reached between RMB 16.5 billion and RMB 17.5 billion, representing year-over-year growth of over 100%. This figure equates to 41% to 44% of Citigroup's full-year forecast. Net profit was between RMB 3.6 billion and RMB 3.8 billion, yielding a net profit margin of 21.7% to 21.8%. This is notably higher than the adjusted 17.9% margin in the second half of 2025 and Citigroup's full-year forecast of 19.3%. Nomura pointed out that the quarterly net profit was close to 60% of its previous full-year forecast of RMB 6.25 billion, describing it as a "more meaningful surprise."

Both institutions maintained their Buy ratings, with target prices of HK$1,162 (Citigroup) and HK$1,171 (Nomura). These targets imply an upside potential of over 100% compared to the closing price of HK$558.5 on March 23.

**Q1 Performance: Volume and Price Rise, Margins Improve Significantly** Citigroup attributes the strong Q1 2026 performance to multiple factors: sales contributions from new stores opened in 2025 (10 new stores for the year, including 5 large-format stores in Shanghai and Hong Kong), demand pulled forward by a rapid gold price increase in January 2026, and a buying rush effect triggered by the company's retail price increase at the end of February 2026.

The significant improvement in net profit margin is also noteworthy. Citigroup analysts believe this is primarily due to a gross margin recovery above 40% following an October 2025 price hike and operating leverage from strong sales. Nomura analysts added that price increases in October 2025 and February 2026 effectively hedged against gross margin erosion from rising gold costs, while improved cost control also played a positive role.

Full-year 2025 results were also robust. According to Nomura, LAOPU GOLD's full-year 2025 revenue grew approximately 2.2 times year-over-year to RMB 27.3 billion, with net profit increasing about 2.3 times to RMB 4.87 billion. Citigroup data shows full-year 2025 same-store sales growth (SSSG) reached 161%, with 201% growth in the first half.

**Outlook Amid Gold Price Volatility: Limited Downside in Pessimistic Scenario** Recent significant declines in the gold price have raised market concerns about LAOPU GOLD's demand outlook, contributing to recent stock price pressure. Citigroup conducted a scenario analysis on this.

Citigroup estimates that among LAOPU GOLD's customer base, some consumers are attracted by the rising gold price trend. These price-sensitive customers accounted for approximately 40% of Q1 2026 revenue, totaling around RMB 7 billion. In a pessimistic scenario where this demand completely disappears, Citigroup estimates full-year 2026 revenue could still reach RMB 37 billion. This breakdown includes approximately RMB 17 billion in Q1 (comprising RMB 7 billion in one-time demand and RMB 10 billion in recurring revenue), about RMB 5 billion in Q2, and roughly RMB 15 billion in the second half.

Under this scenario, Citigroup expects LAOPU GOLD could maintain a gross margin above 40% and a net profit margin between 20% and 21%. This would correspond to a net profit of approximately RMB 7.4 billion to RMB 7.8 billion, aligning closely with its current forecast of RMB 7.6 billion, indicating "limited downside risk."

**Inventory and Funding: No Pressing Need for Financing** Market speculation about whether LAOPU GOLD requires financing has also weighed on the recent stock price. Citigroup provided a clear assessment.

According to Citigroup, LAOPU GOLD's inventory surged from RMB 4.1 billion at the end of December 2024 to RMB 16 billion at the end of December 2025, primarily to stock up for the Spring Festival sales season. Citigroup calculates that, based on an annual inventory turnover of about 2 times and a gross margin above 40%, the existing inventory could support 2026 revenue of approximately RMB 53 billion. This is almost double the 2025 revenue of RMB 27.3 billion. Citigroup therefore believes that unless sales continue to sustain triple-digit growth, the company has no urgent need for financing.

**Path to Luxury Status: Increasing Customer Overlap** Nomura's report emphasized LAOPU GOLD's brand upgrade process, characterizing it as in the "early stages of becoming China's first true luxury brand."

Citing Frost & Sullivan data, Nomura pointed out that the customer overlap ratio between LAOPU GOLD and the world's top five luxury brands increased from 77.3% in July 2025 to 82.4% in March 2026. Nomura believes that continuous iteration in product and store design is driving LAOPU GOLD closer to global luxury brands. Success in this endeavor would grant the company higher pricing power for its products and allow its gross margin to decouple to some extent from gold price movements.

Citigroup corroborated this trend from a store operations perspective. As of December 2025, LAOPU GOLD operated 45 boutiques in 34 shopping malls, with average annual tax-inclusive sales per mall approaching RMB 1 billion in 2025. The opening of a store in Shanghai's Plaza 66 signified that the company has now established a presence in all of China's top ten commercial centers.

Citigroup lists LAOPU GOLD as its top pick in the Chinese jewelry sector. Its target price of HK$1,162 is based on a 2026 forecast price-to-earnings ratio of 24x. This represents a slight discount to the global luxury peer average of 26x, which Citigroup believes is justified as LAOPU GOLD's faster growth momentum can offset the disadvantage of its relatively shorter brand history.