What's happening with LAOPU GOLD, the self-proclaimed "Hermès of gold" that can sell 77.5 million yuan worth of products daily, yet saw its stock price decline on 22 out of 31 trading days?

On August 20, LAOPU GOLD (06181.HK) released its interim report showing revenue of 123.54 billion yuan for the first half of 2025, up 251% year-over-year, with net profit of 22.68 billion yuan, surging 285.8% year-over-year. Adjusted net profit reached 23.5 billion yuan, up 291% year-over-year.

Following the earnings release, the outstanding performance drove LAOPU GOLD's stock price up 8.84% to close at HK$782 per share, temporarily halting the selling pressure that had persisted for over a month.

Since reaching a historic high of HK$1,108 per share on July 8, LAOPU GOLD's stock declined on 22 out of the subsequent 31 trading days. Shockingly, on August 1, the stock broke below the HK$700 threshold, closing at HK$690 per share, with market capitalization falling 38% from its July 8 peak.

The capital market's reaction precisely reflects the valuation disagreements surrounding LAOPU GOLD.

Based on August 20's closing price, LAOPU GOLD's market capitalization stood at HK$109 billion, slightly below Chow Tai Fook's HK$140.8 billion, but its P/E ratio of 78.03 far exceeded Chow Tai Fook's 24.11. On August 21, LAOPU GOLD opened higher but declined throughout the day, falling over 7% to HK$724.5 by 11:15 AM.

Does this gold jewelry brand, dubbed the "Hermès of gold," deserve such a high valuation?

**Daily Sales of 77.5 Million Yuan Can't Support Hundred-Billion Market Cap?**

LAOPU GOLD's interim report showed sales performance of 141.82 billion yuan in the first half of 2025, up 249.4% year-over-year. This translates to average daily sales of 77.5 million yuan, a remarkable achievement amid sluggish consumption.

Supporting this performance are impressive profitability metrics: gross margins consistently above 40%, far exceeding traditional brands like Chow Tai Fook and Lao Feng Xiang.

The core weapon is the ultra-high premium from ancient gold craftsmanship. A butterfly necklace using filigree and inlay techniques sells for over 900 yuan per gram at Beijing Arts and Crafts, while LAOPU GOLD charges over 1,400 yuan per gram, representing a 55% premium.

According to data from China's Jewelry and Jade Association and China Gold Association, ancient craft gold jewelry achieved a compound annual growth rate of 64.6% from 2018-2023, significantly outpacing ordinary gold jewelry and hard gold jewelry. Frost & Sullivan predicts that China's ancient craft gold jewelry market will continue growing above industry average from 2023-2028.

Puyin International's Chief Consumer Analyst Lin Wenjia noted that China's ancient craft gold jewelry market reached approximately RMB 157.3 billion in 2023 (expected to reach RMB 219.3 billion in 2024). LAOPU GOLD's revenue of RMB 3.18 billion in 2023 and RMB 8.5 billion in 2024 represented approximately 2% and 3.9% of China's total ancient craft gold market respectively. As the ancient craft gold sector maintains high growth, LAOPU GOLD, focusing exclusively on ancient craft gold, will undoubtedly be the biggest beneficiary.

As LAOPU GOLD continues monetizing its strong brand power, Lin believes the company's market share in the ancient craft gold sector will expand significantly over the next two years.

LAOPU GOLD's channel efficiency also crushes industry peers. As of June 30, LAOPU GOLD operated 41 stores across 29 leading commercial centers, with average sales per mall reaching 459 million yuan, not only significantly surpassing all domestic and international jewelry brands but also leading international luxury front-line brands.

LAOPU GOLD specifically highlighted in its prospectus that in 2023, its two Beijing SKP stores generated total revenue of 336 million yuan, equivalent to 440,000 yuan monthly revenue per square meter. According to Frost & Sullivan, Beijing SKP, one of the world's most productive shopping centers, achieved approximately 170,000 yuan in monthly sales per square meter in 2023, making LAOPU GOLD's efficiency more than double. Current performance shows even stronger momentum.

Therefore, LAOPU GOLD frequently appears in media reports and social videos with long queues of eager buyers. Consumer enthusiasm quickly created a market capitalization miracle in capital markets. After listing on the Hong Kong Stock Exchange at HK$40.5 per share in June 2024, LAOPU GOLD's stock price soared over 20-fold within a year, breaking through HK$1,100 in early July and becoming the tenth "thousand-dollar stock" in Hong Kong Stock Exchange history.

When LAOPU GOLD's market capitalization exceeded HK$186.8 billion and the founder and his son's wealth surpassed 100 billion yuan, crisis was quietly brewing amid the euphoria.

Starting July 9, LAOPU GOLD's stock price declined consecutively, falling on 22 out of 31 trading days. On August 1, the stock touched HK$690 per share, evaporating over HK$80 billion in market value from its peak.

The stock collapse since early July poured cold water on the frenetic capital feast. Behind this collapse, while massive share unlock impacts contributed, the deeper issue lies in the fundamental contradiction between luxury narrative and gold's essential nature.

Wind data shows that on June 28, 69.0507 million shares of LAOPU GOLD were unlocked, representing 39.99% of total share capital, including stakes held by 12 shareholders including Chairman Xu Gaoming. When LAOPU GOLD's stock price exceeded HK$1,000, its dynamic P/E ratio also exceeded 100 times, more than four times Chow Tai Fook's valuation.

Can such high stock prices be supported by adequate performance? Will original shareholders cash out at high prices? Can the gold luxury narrative succeed? These questions challenge the market and represent variables affecting LAOPU GOLD's stock price stability.

**Illusory Moats: Ancient Craft Gold Competitive Barriers?**

Ancient handicraft techniques represent LAOPU GOLD's core competitiveness. According to its prospectus, it claims to be China's "professional leading brand of ancient handicraft gold artifacts" and pioneered solid gold-set diamond and gold-bodied enamel products.

Ancient handicraft gold originated from imperial workshops, exclusively creating gold accessories and artifacts for royalty. Techniques include filigree, chasing, gilding, and enameling, with some listed as national intangible cultural heritage.

China Gold Association Deputy Secretary-General Liu Yanhong views LAOPU GOLD's rise as essentially an experiment in reconstructing Chinese gold value. By grafting traditional gold with luxury logic, it created a unique craft narrative system.

Industrial transformation of intangible cultural heritage crafts forms the core barrier of this system. LAOPU GOLD builds technical moats through intangible heritage crafts like "filigree, chasing, and hollow-body techniques." CIC consulting reports show ancient craft techniques emphasize substantial texture, with processing fees higher than ordinary craft products. For example, plain gold rings sold by weight can command processing fees of 900 yuan, 1-2 times higher than regular gold products.

Beyond craftsmanship, LAOPU GOLD adopts channel positioning strategies to monopolize high-end consumption scenarios. Currently, among China's top ten luxury malls, LAOPU GOLD has opened stores in nine, excluding only Shanghai IFC.

Its first overseas store chose Singapore's Marina Bay Sands shopping center, neighboring luxury brands like Patek Philippe, Hermès, and Chanel. Morgan Stanley data shows the mall's tenant efficiency reaches approximately 223,800 yuan, higher than Beijing SKP and Macau Venetian.

LAOPU GOLD's brand positioning and marketing appear quite successful currently.

In 2023 and 2024, LAOPU GOLD added 76,000 and 147,400 new loyal members respectively, representing 71.52% and 81.64% of total annual membership. In the first half of 2025, loyal members increased by 130,000 to total 480,000. These members spend over 50,000 yuan annually on average, contributing 68% of revenue with 60% repurchase rates.

While LAOPU GOLD's luxury narrative sounds appealing, this narrative's foundation lacks sufficiently robust competitive moats. Capital markets' nearly 80x P/E premium essentially represents a huge bet on the future sustainability of its "high growth, high margins, high barriers" model. However, behind the impressive financial data lurk risks that cannot be ignored.

First is excessive dependence on single growth drivers. LAOPU GOLD's ultra-high growth and margins extremely depend on the current market enthusiasm for "ancient craft gold" as a niche category. Is this enthusiasm sustainable long-term? When competitors follow suit and ancient craft techniques become widespread or commoditized, can LAOPU GOLD maintain its shocking 55% premium?

Notably, from established chains like Chow Tai Fook, Lao Miao Gold, and Lao Feng Xiang to emerging brands like Duobaoge Gold and Linchao Gold, all have entered the ancient craft gold market. When superior designs and more cost-effective categories emerge, premium consumer loyalty built on "uniqueness and scarcity" faces erosion, with switching costs to other brands remaining low.

Moreover, LAOPU GOLD's light R&D, heavy marketing outsourcing model fundamentally contradicts its luxury claims. LAOPU GOLD's prospectus admits 40% of products rely on outsourced processing. While its self-built factory began operations in 2018 with gradually increasing capacity, sales growth outpaced production expansion, actually reducing self-production ratios from 64% in 2021 to 59% in 2023, inconsistent with its "intangible heritage craft inheritor" and "craftsmanship excellence" brand persona.

True luxury brands like Hermès and Patek Philippe build core value on absolute control over core crafts and supply chains. By the end of 2024, LAOPU GOLD's R&D and design team numbered only 20 people, with 429 production staff representing just 35% of employees. R&D investment reached 19.2 million yuan in 2024 and increased to 24.51 million yuan in the first half of 2025. While showing significant growth, R&D investment as a percentage of total revenue continues declining. How can this support sustained product innovation and deep craft moats? Long-term, this could lead to weak product design and slow renewal speeds, ultimately being surpassed by more creative and committed competitors.

**Fatal Paradox: When Gold Aspires to Become Hermès**

LAOPU GOLD claims its consumers overlap 77.3% on average with customers of five major luxury brands including LV, Hermès, Cartier, and Bulgari, attempting to reinforce its premium image.

Brand stories are easy to tell, but consumer recognition proves difficult.

Investigation reveals LAOPU GOLD's loyal members are beginning to waver.

Zhou Min, who purchased over 2 million yuan worth of LAOPU GOLD products over three years, was once a loyal member. She acknowledges LAOPU GOLD's craftsmanship and design but admits switching to other brands in recent months. Reasons include slow product updates and "nothing left to buy," but more fundamentally, she believes gold's essence is value preservation, stating "discussing value apart from weight is deception" and "gold isn't scarce, cannot become high luxury."

This represents a common dilemma among gold consumers: the split between cultural symbolism and financial attributes. LAOPU GOLD attempts transforming gold into "cultural luxury goods," but consumers prioritize its value preservation function.

During July's four consecutive gold price declines, gold store traffic universally plummeted, indicating that during volatile periods, gold remains viewed as a safe-haven asset rather than cultural product.

World Gold Council China CEO Wang Lixin points out that consumers' precious metal perception of gold runs deep, requiring special guidance from brands to enhance added value. He affirms LAOPU GOLD's high-end market positioning while noting that Chinese gold jewelry has achieved major breakthroughs in production technology and design, with more segmented brands inevitably emerging.

However, he emphasizes that craftsmanship represents only luxury goods' foundation. Building luxury brand value, emotional identification, and social recognition requires time accumulation – precisely Chinese gold enterprises' shortcoming.

True high jewelry like Cartier and Bulgari derive value not merely from materials but from historical narratives, exclusive designs, master craftsmanship, and other multifaceted systems.

Similarly, if LAOPU GOLD hopes to become the "Hermès of gold," it needs to understand how Hermès became Hermès.

Hermès' performance growth logic represents an extremely classic and unique case study in global business. It overturns many traditional business logics, succeeding not through chasing trends, massive expansion, or aggressive marketing, but building on "anti-scale economics" extreme brand philosophy.

It operates a perfect, self-reinforcing growth flywheel: extreme craftsmanship and control → creating top-tier products and scarcity → inspiring intense desire and brand halo → driving full-category demand (especially entry products) and allocation behavior → generating extremely high profits and customer loyalty → reinvesting in craftsmanship and supply chains → further strengthening scarcity and brand value → achieving sustained, healthy performance growth.

Its core growth logic can be summarized as maintaining supreme brand value through extreme control and scarcity, thereby driving irrepressible consumer desire and ultimately achieving steady growth.

Comparatively, LAOPU GOLD faces enormous gaps with Hermès across craft design, scarcity, vertical integration, supply chain control, category expansion, brand narrative, and emotional connection.

LAOPU GOLD's dramatic stock volatility and market controversy over the past month starkly reveal its model's fragility and internal contradictions. It completed in just a few years the market capitalization journey traditional brands take decades to achieve, but luxury brands' true barriers – time, culture, irreplaceable originality – perhaps cannot be simply accumulated through capital and speed.

LAOPU GOLD's dream of becoming the "Hermès of gold" is just beginning to face its real pressure test.