China Securities Co., Ltd. released a research report projecting LAOPU GOLD's (06181) revenue for 2025–2027 at RMB 25.28 billion, RMB 33.37 billion, and RMB 41.39 billion, representing year-on-year growth of 197.3%, 32.0%, and 24.0%, respectively. Adjusted net profits attributable to shareholders are estimated at RMB 4.81 billion, RMB 6.51 billion, and RMB 8.15 billion (with 2025 adjustments primarily including RMB 227 million in equity incentive expenses), reflecting YoY increases of 220.1%, 35.4%, and 25.2%.

On October 26, LAOPU GOLD implemented its third price adjustment this year (following hikes on February 25 and August 25, with an official WeChat announcement on October 17). Based on sampling data, plain gold products saw price increases of approximately 24%–30%, while diamond-set products rose by 16%–26%. Key insights from China Securities include:

1. **Strategic Price Positioning**: The significant hike widens the price gap with mass-market gold jewelry, reinforcing LAOPU GOLD’s premium positioning. Unlike brands pricing by weight, LAOPU adopts fixed pricing and adjusts prices 2–3 times annually, akin to global luxury brands. Recent gold price surges had narrowed this gap, but post-hike, plain gold averages ~RMB 1,600/gram (RMB 1,500+ after discounts) and diamond-set products ~RMB 2,100–2,200/gram (RMB 1,900+ post-discount), markedly higher than Shanghai gold’s ~RMB 900/gram. This move reduces price sensitivity among target customers and stabilizes revenue volatility.

2. **Financial Impact**: Q4 2025 gross margins are expected to rebound to 40%, with H2 margins stabilizing at ~38% (vs. Q3). Despite gold’s recent pullback from its October 17 peak of RMB 997/gram (+28.5% since August 25), LAOPU’s current pricing could yield 43% gross margins (excluding tax policy effects). With inventory turnover at five months, H2 2025 margins may match H1’s 38%. Future adjustments are anticipated to sustain a 40% target.

3. **Target Audience & Growth**: Post-hike, LAOPU’s clientele will skew toward mid-to-high-net-worth individuals, with upward expansion into ultra-high-net-worth segments. Despite initial consumer adjustment periods, flagship stores in Shanghai’s IFC, Plaza 66, and Beijing’s SKP report steady foot traffic, indicating strong brand alignment. Discount-driven promotions (e.g., Wuhan’s 10% off) further boost demand.

4. **Market Trends**: Rising gold prices amplify its investment appeal, diverting demand from foreign luxury categories (e.g., jewelry, leather goods) to high-end gold. China’s gold jewelry market grew 9.8% in 2024 (RMB 568.8 billion), while other segments declined. Premium gold (RMB 10,000+ transactions) is projected to rise from 16% (2023) to 19% (2025) of sales. LAOPU’s cultural heritage and premium pricing further cement its luxury status.

5. **Global Expansion**: Domestically, LAOPU focuses on store upgrades in top-tier malls (e.g., newly opened/renovated locations in Nanjing IFC, Hong Kong IFC, Hangzhou MixC). Internationally, 3–4 new stores are planned for Hong Kong, Macau, Japan, and Singapore by 2026, targeting affluent demographics attracted to Chinese cultural gold artistry.

6. **Valuation Upside**: Aligning with Hermès (48.3x forward PE), LVMH (27.9x), and Richemont (28.1x), LAOPU’s strategic initiatives—price desensitization, craftsmanship innovation (e.g., lacquerware techniques), cultural fusion (Christian crosses, Amazonian motifs), and global outreach—support re-rating potential.