Shares of LAOPU GOLD (06181.HK) tumbled as much as 20.79% in intraday trading, hitting a low of 314 Hong Kong dollars and marking the largest single-day decline since its listing. The company debuted on the Hong Kong Stock Exchange in June 2024 at an IPO price of 40.5 Hong Kong dollars, and its stock price surged past the 1,000 Hong Kong dollar mark in mid-2025, achieving nearly a 26-fold increase from the IPO price. LAOPU GOLD was once hailed as one of the "three new consumer sisters" in Hong Kong stocks, alongside Pop Mart and Mixue Group. Prior to today's sharp decline, the stock had already fallen more than 60% from its historical peak of 1,083.8 Hong Kong dollars set in July 2025, erasing over 120 billion Hong Kong dollars in market value.

Sharp Sequential Decline in Second-Quarter Performance

The company released a positive profit alert last night, forecasting first-half revenue of 22.7 billion to 23.35 billion yuan, representing a year-on-year increase of approximately 60% to 65%. Net profit is expected to be between 4.31 billion and 4.36 billion yuan, a year-on-year increase of roughly 83% to 85%. Based on the company's previously released preliminary financial data for the first quarter, second-quarter revenue is estimated to be between 2.3 billion and 3.95 billion yuan, with net profit ranging from 510 million to 760 million yuan, indicating a significant sequential decline.

Gold Price Decline and 'Zero-Hedging' Risk

The trajectory of gold prices is a key external factor weighing on performance. Since April 2026, international gold prices have continuously fallen from a historical peak of nearly 5,600 US dollars per ounce, dropping by nearly 30% from the year's high by late July. The Shanghai Gold Exchange's AU9999 price fell 8.4% in the second quarter compared to the beginning of the year and 28.2% from its yearly high. The year-on-year growth rate of retail sales for gold, silver, and jewelry items shifted from 12.6% in the first quarter to -11.3% in the second quarter. For LAOPU GOLD, which uses a 'fixed-price' model and commands a premium significantly higher than peers, consumers were willing to pay for the brand story during a gold price uptrend. However, when gold prices fall, the high premium becomes a key obstacle dampening purchasing desire. Additionally, the company has long adhered to a 'zero-hedging' inventory strategy. Its inventory surged from approximately 4 billion yuan at the start of 2025 to 16 billion yuan by year-end, creating significant asset impairment risk during a gold price downturn.

Institutions Cut Target Prices

CICC stated that LAOPU GOLD's operational performance in a volatile environment will serve as a touchstone to test the narrative of its high-end brand and capital market confidence. Considering the negative impact of gold price fluctuations on demand, CICC lowered its 2026/27 EPS forecasts by 14%/26% to 39/42 yuan. The current stock price implies 9/8 times 2026/27 P/E, and the expected 2026 dividend yield is around 9%, which is at a relatively high level. The firm maintained an 'Outperform' rating but slashed its target price by 44% to 604.48 Hong Kong dollars. Morgan Stanley released a research report stating that while LAOPU GOLD issued a profit alert, the results fell short of both market expectations and the firm's estimates. Morgan Stanley anticipates that the market will revise down its earnings forecasts for LAOPU GOLD for this year and next, and that stock sentiment is likely to be weak in the short term. The bank will focus on shareholder returns and management guidance in the interim results. Morgan Stanley reiterated its 'Overweight' rating and maintained a target price of 590 yuan.