Morgan Stanley released a research report, lowering the target price for LAOPU GOLD (06181) from HK$590 to HK$505, while maintaining an 'Overweight' rating. The adjustment is primarily attributed to weaker-than-expected performance in the second quarter of 2026 and a declining gold price environment, which has impacted the company's revenue and earnings forecast increments.

Morgan Stanley has reduced its 2026 revenue and earnings forecasts for LAOPU GOLD by 14%, and trimmed its 2027-2028 revenue and earnings forecasts by 11-12%, reflecting the weaker-than-expected Q2 2026 results amid a lower gold price environment.

The bank noted that second-quarter demand trends show a strong correlation with gold prices. Gold prices fell approximately 13% during the quarter, which correspondingly impacted LAOPU GOLD's value, as the company proactively adjusts product pricing. Morgan Stanley estimates that LAOPU GOLD's second-quarter revenue declined over 30% year-on-year. However, with gold prices stabilizing in the third quarter, there has been a sequential improvement from the previous quarter.

Chow Tai Fook (01929) reported that its priced-goods sales achieved positive year-on-year growth in July. As for LAOPU GOLD, the bank observed queues forming outside selected stores in early August. LAOPU GOLD's valuation remains attractive, trading at 7.7 times its 2026 estimated price-to-earnings ratio, implying an approximate 10% earnings yield for 2026.