LAOPU GOLD (6181.HK) shares plunged 12.97% on Tuesday morning, following a mid-year profit forecast that revealed a significant slowdown in the second quarter, with a quarter-on-quarter revenue drop of over 70%.

The company expects total revenue including tax for the first half of the year to be between 227 and 233.5 billion yuan, a year-on-year increase of approximately 60% to 65%. Revenue is expected to be between 198 and 204.5 billion yuan, up around 60% to 66%. Adjusted net profit under non-IFRS standards (excluding employee share-based compensation) is projected to be between 4.31 and 4.36 billion yuan, a rise of about 83% to 85%.

Based on the first-quarter earnings forecast released on March 23, the midpoint calculation suggests second-quarter revenue was around 3.1 billion yuan, an 80% sequential decline from the 16.5 to 17.5 billion yuan reported in the first quarter. Even at the highest estimate, second-quarter revenue would only be 3.95 billion yuan, a drop of over 70% from the first quarter's 16.5 billion yuan. Profit trends are difficult to gauge due to inconsistent disclosure standards between the two periods, and the true picture will only be clear when the company releases its full half-year results in August. The first-quarter forecast was based on net profit, estimated at 3.6 to 3.8 billion yuan.

Investors remain most concerned about inventory levels, which were not disclosed in the Monday's mid-year forecast.

On March 23, LAOPU GOLD reported strong full-year results and a similarly robust first-quarter forecast. However, due to a sharp surge in inventory and founder Xu Gaoming's subsequent claim during the earnings call that the company could not only profit from rising gold prices but also withstand a downturn, stating, "LAOPU GOLD does not hedge against gold," the stock has been in a persistent decline. This comment surprised the market. Since then, the stock price has continued to fall, dropping 43% in the second quarter alone. As of Monday's close, the stock is down over 34% year-to-date.

Following the post-market earnings forecast on Monday, the company's alleged luxury status has become increasingly untenable, as its performance is highly correlated with the gold price cycle. In contrast, companies like LVMH SE and Richemont SA reported double-digit growth for brands such as Cartier, Van Cleef & Arpels, Bulgari, and Tiffany & Co. in their April-June results.