Movement Alert|LAOPU GOLD Falls 3.25% in Regular Trading, Citi Flags Q3 Gross Margin Pressure from Heavier Discounting

Market Focus
09/23

On September 23, LAOPU GOLD fell 3.25% in regular trading, trading at 351.2 HKD/share, with turnover of HKD 218 million. The stock has now posted three consecutive daily declines.

On the news front, Citi released a research report indicating that LAOPU GOLD intensified promotional discounts at shopping malls during the third quarter. While the strategy is expected to lift sequential sales, it will weigh on gross margins on a quarter-over-quarter basis. Citi estimates that Q3 revenue would need to grow 18% sequentially to approximately RMB 3.9 billion just to maintain the same net profit level as Q2. For the full second half, Citi projects revenue to decline 15% to 39% year-over-year, with net profit margins narrowing to a range of 16.8% to 19.2%. The bank nonetheless maintained a target price of 507 HKD and a Buy rating.

Q2 earnings had already shown a significant sequential pullback due to a rapid decline in gold prices, and the market remains in wait-and-see mode ahead of Mid-Autumn Festival and National Day holiday sales data. Low near-term earnings visibility continues to suppress share price performance.

(The above content is based on publicly available market information, generated by a program or algorithm, and is intended solely as a stock movement alert. It does not constitute investment advice or a basis for trading decisions.)

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