LAOPU GOLD (HKEX: 06181), once hailed as one of Hong Kong's "New Consumption Three Sisters" alongside Pop Mart and Mixue Bingcheng, is enduring its most brutal day since listing. On July 28, the company released a positive profit alert forecasting over 80% growth in first-half net profit, yet its share price fell instead of rising. By the close of trading, LAOPU GOLD shares were at HK$302.2, a single-day drop of 23.76%, marking the largest single-day decline since its listing. What hidden information within this seemingly impressive "profit alert" triggered such market panic?

From a year-on-year perspective, the company's first-half performance was indeed strong, with revenue up 60% to 66% and adjusted net profit rising 83% to 85%. However, a quarterly breakdown quickly reveals signs of a downturn. The second quarter saw a staggering 76% to 87% sequential decline in revenue and an over 80% sequential drop in net profit. This structural collapse has led the market to reassess the true value of this "fixed-price" high-premium gold brand during a downward gold price cycle.

Notably, major investment banks have collectively slashed their target prices. Macquarie was the most pessimistic, downgrading the stock to "underperform" and drastically cutting its target price to HK$275. Gold prices have plunged from a historical peak of $5,598 per ounce to $4,023, a 100-billion-dollar "zero-hedge" inventory is exposed to asset impairment risks, and under the high base effect, H2 sales expectations have turned negative. These multiple concerns suggest that LAOPU GOLD's "gold narrative" is facing unprecedented challenges.

A market value of approximately 100 billion has evaporated over the past year. While the first-half performance showed high year-on-year growth, the second quarter experienced a sequential cliff-like decline.

LAOPU GOLD, founded in 2009, was the first brand in China to promote the concept of "ancient method" gold. It is a professional operator integrating R&D and design, production, and multi-channel retail of ancient Chinese handmade goldware. Its main products are pure gold items made using traditional Chinese craftsmanship. On June 28, 2024, the company listed on the Hong Kong Stock Exchange at an IPO price of HK$40.5 per share. After listing, it embarked on an epic surge, with a nearly 500% increase in 2024, and the momentum continued into 2025. On March 12, 2025, the stock price hit an intraday high of HK$798, surpassing Tencent to become the "stock king" by unit price in Hong Kong. By July 8, the stock price had reached a historical peak of HK$1,108 per share, a more than 26-fold increase from the IPO price, pushing the total market capitalization to approximately HK$187 billion.

However, the peak marked the turning point. As gold prices reversed, the stock price plummeted. By July 28, 2026, the stock hit an intraday low of HK$298.4, a 17-month low, representing a decline of over 73% from the peak and a loss of about HK$100 billion in market value. On July 28, following the positive profit alert, the stock price fell instead of rising, with an intraday drop of over 25% to HK$297, a near 17-month low.

Following the profit alert, several major investment banks simultaneously lowered their earnings forecasts and target prices for LAOPU GOLD, with most turning pessimistic. CICC cut its target price by 8.3% from HK$659 to HK$604.48 and reduced its EPS forecasts for this year and the next by 14% and 26%, respectively. Citigroup lowered its target price by 23% from HK$659 to HK$507 and cut its 2026-2028 earnings forecasts by 17% to 22%. Goldman Sachs reduced its target price by 14% from HK$650 to HK$560 and lowered its net profit forecasts for the same period by 14% to 15%. Macquarie was the most bearish, slashing its target price by 39% from HK$450 to HK$275 and downgrading the stock to "underperform," primarily due to weak Q2 performance and downward revisions to same-store sales and margin forecasts.

So, what other information hidden in the first-half profit alert led investors to vote with their feet?

From the overall first-half data, LAOPU GOLD's performance was indeed strong: expected revenue of 19.8 billion to 20.45 billion yuan, a year-on-year increase of 60% to 66%; adjusted net profit of 4.31 billion to 4.36 billion yuan, up 83% to 85% year-on-year. However, this performance was significantly below market expectations. More critically, the second quarter saw a cliff-like decline. Based on Q1 data, LAOPU GOLD's Q2 revenue was only 2.3 billion to 3.95 billion yuan, a sequential collapse of 76% to 87% from Q1's 16.5 billion to 17.5 billion yuan. Q2 net profit was only 510 million to 760 million yuan, a sequential drop of over 80% from Q1. This performance structure of "strong first-half growth, Q2 collapse" turned the profit alert into a de facto "profit warning," which was likely the core factor driving the stock's sharp decline on July 28.

The "Fixed-Price" sales model faces challenges as gold prices fall. With a high base from last year's same period and lackluster gold prices, the H2 performance outlook is concerning.

In 2026, international gold prices followed an inverted V-shaped trajectory of "first hitting a peak, then collapsing." Starting the year at around $4,900 per ounce, gold prices surged rapidly, hitting a historical peak of $5,598.75 per ounce on January 26, with a year-to-date maximum gain of about 14%. After peaking, gold prices entered a wide range of volatility with a declining center of gravity. After breaking below the mid-term support level of around $4,750 in early April, the trend confirmed a weakening. Since then, gold prices have accelerated their decline, losing support levels such as $4,330 and $4,030 in about two months, hitting a low of $4,023.10 per ounce, a pullback of over $1,500 from the peak, a cumulative decline of about 28%.

The link between falling gold prices and LAOPU GOLD's performance decline is first evident in the direct reversal of consumer psychology and end demand. During the gold price up-cycle, the "buying on the rise" mentality fueled a rush to purchase LAOPU GOLD's high-premium "fixed-price" products. However, with the sharp drop in gold prices, consumer psychology quickly shifted from "panic buying" to "wait-and-see." This reflects LAOPU GOLD's high sensitivity to gold price fluctuations. In a gold price down-cycle, consumers are more inclined to buy traditional gold jewelry priced by weight, rather than "fixed-price" products.

A deeper structural risk lies in LAOPU GOLD's long-standing "zero-hedge" inventory strategy. The company's inventory surged from about 4 billion yuan at the end of 2024 to 16 billion yuan by the end of 2025. Founder Xu Gaoming has repeatedly stated publicly that he will not hedge, believing that "choosing to hedge means giving up the original intention of building a world-class ancient-method gold brand." During the gold price one-way up-cycle, this aggressive strategy amplified profit elasticity. However, when gold prices plummeted from nearly $5,600 per ounce to around $4,100, the tens of billions in inventory became fully exposed to price fluctuation risk without any buffer. If gold prices continue to fall, high-cost inventory will face immense asset impairment pressure. This aggressive mismatch of "high inventory, high leverage, zero hedging" has become the biggest concern for the capital market.

Furthermore, the high base effect and worsening H2 growth prospects have amplified the impact of falling gold prices. In the second half of 2025, LAOPU GOLD's revenue base was extremely high, with full-year 2025 revenue growing 221% year-on-year. Combined with persistently low gold prices, CSCI expects the company's H2 sales to decline 29% year-on-year. Macquarie also warned that due to multiple factors like high base, unstable gold prices, intensifying competition, and speculator destocking, H2 same-store sales growth still faces significant downside risk.

More problematic is the company's dilemma of "maintaining gross margin or sacrificing store traffic." If it maintains high prices to protect profit margins, it will likely lose more customer traffic in the current market conditions. If it cuts prices to promote sales, it could erode the hard-won "luxury" brand premium. The falling gold price acts like a magnifying glass, exposing the cyclical fragility hidden in LAOPU GOLD's business model.