Laopu Gold’s May Day performance was in line with expectations, and margin expansion supports the buy rating

Overview

This report is Goldman Sachs’ update on Laopu Gold following its post-holiday consumption review on May 8. The update covered recent sales trends, consumer behavior after gold prices softened, margin changes after pricing actions, store upgrades and overseas expansion, product strategy, and VIC client management. The conclusion is constructive: although gold price softening has made some consumers cautious, and although the market worries that channel growth may be weak and that demand after price hikes may not be durable, management still sees brand-demand resilience, with May Day performance in line with expectations and margin improvement providing upside for 2Q26 net margin.

Core views

The key view is that Laopu Gold’s brand momentum and continuous customer acquisition can cushion short-term sentiment shocks from gold-price swings. Gold price declines affect some discretionary, non-gifting, and non-wedding demand, but core markets such as Shanghai still show queues in non-promotional periods, and new-product feedback is positive, indicating core consumers place greater importance on brand value. Current gross margin at Laopu Gold is above 45%, and if gold prices stay at current levels, there may be further upside for profitability. Goldman notes that after a roughly 18% stock decline since March, concerns about growth and gold prices are already largely reflected, and therefore maintains a Buy rating.

Analysis framework

The report uses a post-holiday field visit and management-interview framework to validate demand, margins, channels, products, inventory, VIC clients, and overseas expansion; for valuation, it uses a 20x 2026E target P/E to derive a 12-month target price of HK$1,108, then combines this with current price, 2026E P/E, and potential upside to assess risk-reward.

Methodology notes

• Valuation MethodTarget P/E Approach

  20x 2026E target P/E

  Goldman Sachs derives Laopu Gold’s 12-month target price of HK$1,108 using a 20x 2026E target P/E to assess total return potential versus the current share price.

• Fundamental FactorGS Factor Profile

  Growth, financial returns, valuation multiples, and relative percentile

  Goldman’s factor framework compares the stock to the market and peers using forward-looking sales, EBITDA, and EPS growth, as well as financial return metrics such as ROE, ROCE, and CROCI, along with valuation multiples such as P/E, P/B, and EV/EBITDA.

• M&A ScenarioM&A Rank

  Acquisition probability grading

  Goldman applies an M&A framework in global coverage to assess takeover likelihood; grades 1 to 3 represent high, medium, and low probability. If graded 1 or 2, an M&A component may be incorporated into the target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Laopu Gold(6181.HK)

  Coverage target of the report; the company is a premium gold jewelry retailer.

  Strengths

  Brand momentum is relatively strong with sustained customer traffic at core stores; gross margin after price hikes can exceed 45%; new-product feedback is positive; store upgrades and improved VIC service can strengthen loyalty among high-end customers.

  Weaknesses

  A gold price decline may make consumers wait, especially affecting discretionary spending such as gifting and weddings; in some channels, past reliance on travel retail arbitrage was high, so performance in one channel may not fully represent company-wide outcomes.

  Comparison

  The report notes that overseas markets and East China are relatively less sensitive to gold-price fluctuations, while North China is more sensitive; channels with higher exposure to arbitrage, such as SKP, do not represent the company as a whole.

  Risks

  A sharp gold price decline, stricter luxury-consumption regulation, regional concentration, and potential stock supply pressure after lock-up expiration.

Key data

• Investment ratingBuyThe report explicitly reiterates a Buy rating.
• 12-month target priceHK$1,108Based on a 20x 2026E target P/E.
• Current priceHK$592.50The disclosure page shows the price as HK$592.50, and chart notes state the price is as of the close on 2026-05-08.
• Implied upsideabout 87%Calculated from the target price of HK$1,108 versus the current price of HK$592.50.
• Current valuation10x 2026E P/EThe report says the shares trade at around 10x 2026E P/E after the pullback.
• Stock pullbackdown 18% since MarchReflects market concerns over channel growth, lower gold prices, and demand sustainability after price hikes.
• Current gross margin>45%After late-February price increases, management said current gross margin could exceed 45%.
• Management full-year net margin guidance20% NPMFurther gross margin improvement could provide upside versus the company’s 20% full-year NPM guidance.
• Mainland China store upgrades8 to 12The focus this year is upgrading store location and size in Mainland China.
• Overseas new-store plan5 to 6Mainly in Hong Kong, Macau, and ASEAN, with most openings expected in 2H26.
• New product sales mixGem-studded jewelry accounted for about 60% of sales in non-promotional periodsPure gold product sales contributed more during promotional periods.
• Pricing strategyRaise prices 2 to 3 times per yearManagement reiterated no plans to cut prices or expand discount levels.

Impact & implications

The investment implications are constructive: if gold prices remain stable, consumers may gradually adapt to the new price anchor and demand confidence may recover. If gold prices hold at current levels, post-hike gross margin improvement is likely to continue supporting net margin. The company is not stimulating sales by expanding discounts; instead it is relying on broader price ladders, new-product cadence, store upgrades, and stronger VIC service to preserve brand positioning. For the stock, Goldman believes current valuation already embeds short-term concerns, while brand resilience and upside in profitability make the risk-reward more attractive.

Risks

• A sharp decline in gold prices could suppress consumer willingness to buy and weigh on stock sentiment.
• Tightening regulation on luxury consumption could hurt premium gold jewelry demand.
• Higher regional concentration may amplify localized market volatility.
• Potential supply pressure may emerge after the IPO lock-up period expires.
• If gold prices continue to fall or consumers digest the price increases more slowly than expected, the recovery pace of sales may be weaker than management expects.
• Increases in investment in brand, customer service, talent, and store renovation could offset some of the margin upside if operating leverage is insufficient.

What to watch

• Whether gold prices remain stable and whether consumers gradually accept the new price anchors.
• Whether the 618 festival discount remains stable, and how sales contributions from new products and pure gold products change.
• Traffic differences across Shanghai, East China, North China, and overseas markets, especially demand sensitivity under high-price and lower-price scenarios.
• Execution progress of the 8 to 12 store upgrades in Mainland China and sales conversion from those upgrades.
• Progress on opening 5 to 6 new overseas stores in Hong Kong, Macau, and ASEAN, especially the concentration of openings in 2H26.
• The impact of VIC client manager hiring, VIC room redesign, and gold ornament sales on high-end client service capability.
• Whether inventory procurement continues to match sales expectations for the next quarter, avoiding overbuying if the company is betting on a gold price bottom.