Shares of LAOPU GOLD (06181) experienced a significant decline in afternoon trading, falling nearly 7% to hit a new low for the year at HK$404.2. At the time of writing, the stock was down 6.9% at HK$404.8, with a turnover of HK$414 million.

Analyst Insights on Sales Weakness

A recent research report highlighted that the company's weak second-quarter sales were primarily impacted by disappointing promotional activities at SKP in April and a lackluster performance during the Tmall 618 shopping festival. These channels are noted for attracting a higher proportion of price-sensitive customers. Following a significant surge in the company's product premiums and a subsequent retreat in gold prices, these customers have opted to reduce their purchases. The report estimates that these two major channels previously accounted for approximately 30% of total sales, a figure that has now declined to around 20%. The sales drop from these channels has not been fully offset by revenue generated from new large-scale stores opened in the second half of 2025.

Underperformance and Market Sentiment

Another analysis pointed out that LAOPU GOLD has underperformed the broader market and some of its peers this year. This underperformance is attributed to increased volatility in gold prices since March and a prevailing market preference for technology and AI-themed stocks over consumer sector equities among capital market investors. The analysis suggests that the downside risk of sales slowing due to gold price fluctuations has largely been priced into the stock. It further posits that if gold prices stabilize in the coming months, potentially aided by progress toward peace agreements in the Middle East and an improved geopolitical climate, the pessimistic sentiment among investors regarding the company's sales performance in the latter half of the year could begin to ease.