CICC has issued a research report maintaining its earnings per share (EPS) forecasts for LAOPU GOLD (06181) at 26.57/35.80 yuan for 2025/26. The current stock price corresponds to 27x/20x P/E ratios for 2025/26. The firm maintains its "Outperform" rating and target price of HK$1,079.06, representing 37x/27x P/E ratios for 2025/26 with 38% upside potential.
The company announced its 1H25 results, with revenue surging 251% year-over-year to 12.4 billion yuan and net profit attributable to shareholders jumping 286% year-over-year to 2.3 billion yuan, meeting market expectations. The company proposed an interim dividend of 9.59 yuan per share, representing a payout ratio of approximately 73%, marking its first interim dividend distribution.
**Outstanding Retail Performance with Continued High Same-Store Sales Growth**
LAOPU GOLD is committed to building a world-leading gold brand with significant intangible cultural heritage value and international competitiveness. 1H25 revenue increased 251% year-over-year to 12.4 billion yuan. By channel, offline revenue grew 243% year-over-year to 10.7 billion yuan. The company actively expanded in prime commercial districts, achieving a net addition of 5 stores to reach 41 stores in the first half. Enhanced brand strength drove same-store revenue growth of 201% in 1H25, with average sales per mall reaching 460 million yuan, ranking first among domestic and international jewelry brands in both single-mall revenue and sales efficiency in mainland China.
Online revenue surged 313% year-over-year to 1.6 billion yuan, contributing 13% of total revenue. By region, mainland China revenue increased 233% year-over-year to 10.8 billion yuan, while overseas revenue jumped 455% year-over-year to 1.6 billion yuan, representing 13% of total revenue.
**Rising Gold Prices Impact Margins While Operating Leverage Emerges, Healthy Inventory Growth**
1H25 gross margin declined 3.2 percentage points year-over-year to 38%, primarily due to rapid gold price increases that remained at high levels, while the company made only one price adjustment during the period. Strong revenue growth highlighted operating leverage benefits, with selling and administrative expense ratios declining 5.1 percentage points year-over-year. Net profit attributable to shareholders surged 286% year-over-year to 2.3 billion yuan in 1H25.
Due to rapid sales growth and channel expansion optimization, inventory increased from 4.1 billion yuan at the beginning of the year to 8.7 billion yuan at the end of June. Inventory turnover days improved from 195 days in 2024 to 150 days in 1H25, maintaining healthy levels.
**LAOPU GOLD Brand Continues to Demonstrate Rare Premium Positioning**
The company continues to focus deeply on the ancient-craft gold industry, with both brand and products reflecting rare premium characteristics. According to Frost & Sullivan data, LAOPU GOLD consumers have an average overlap rate of 77.3% with consumers of five major international luxury brands including Louis Vuitton, Hermès, Cartier, and Bulgari, further validating the brand's high-end positioning.
LAOPU GOLD has currently entered 9 of China's top 10 major commercial centers, with full coverage expected to be completed within the year. As of the end of June, LAOPU GOLD had approximately 480,000 loyal members, an increase of about 130,000 from the beginning of the year, with brand expansion continuing to advance.
**Development Outlook**
With the opening and expansion optimization of stores including Shanghai Grand Gateway 66, Shanghai IFC, and Marina Bay Sands Shopping Centre in Singapore during 1H25, management expects new and optimized channels to contribute more significant revenue and profit in the second half. Additionally, the company's WeChat official account indicates that LAOPU GOLD products will undergo price increases on August 25, which should provide good support for the company's gross margin performance.
**Risk Factors**: Significant gold price volatility, intensified industry competition, and weaker-than-expected terminal retail environment.