Laopu Gold (06181) Report Interpretation

Overview

This Citi flash report examines Laopu Gold's July/August 2026 SKP promotion through an individual daigou channel check. Citi sees improving sales momentum, a changing customer mix, and pricing actions as early evidence that the 2Q26 earnings trough is likely behind the company.

Core views

Citi's channel check focuses on daigous, which it estimates represented around one-third of Laopu's 2025 sales. Daigous use accumulated SKP member points, high-tier membership benefits and gold-coin incentives to secure better effective discounts for customers. Citi argues that this channel had been important to Laopu's growth from 2024 through 1Q26 because the company's lagged price adjustments during rising gold prices narrowed its premium to gold, attracting price-sensitive buyers. After the price gap widened materially following March 2026, those customers left, contributing to Citi's estimate of a greater-than-30% same-store-sales decline in 2Q26. The July/August SKP promotion indicated an improvement from April. A major individual daigou's daily sales had fallen from RMB3–4mn at the February peak to below RMB1mn in April, down 50–70% year on year and back to 2023 levels. During the presale for the 6–19 August promotion, which began on 23 July, daily sales initially recovered to RMB2–3mn, matching the 2025 average, before stabilising at RMB1–2mn, roughly the February 2024 level. Citi notes that this recovery occurred despite lacklustre SKP mall traffic that remained down year on year. Citi attributes the sales rebound to Laopu's deepest discount offering on record at Beijing SKP. The daigou offered discounts of 22% on old products and 18% on new products by combining the unchanged 10% store discount, a new 5% VIP discount, a five-gram gold-coin gift on RMB250k purchases worth roughly a further 2–3%, and SKP point-redemption cash coupons worth another 2–3%. The principal change from April was the additional 5% VIP discount, while the gold-coin threshold remained RMB250k after being reduced from RMB500k. Citi says the resulting effective product prices were nearly back to levels before February's price increase of more than 25%, and believes the incremental sales can offset lower gross profit margin. The institution also sees a change in the demand base. New customers at the event showed stronger purchase intent than the daigou's prior clientele but bought smaller items, typically RMB10–20k versus more than RMB50k previously. These buyers were more interested in the brand's storytelling, design and gem-inlaid pieces and less focused on gold prices. By contrast, earlier daigou clients mainly bought heavier pure-gold products with a bargain-hunting mindset. Citi cites the daigou's view that Rednote offers substantial room for further new-customer acquisition. New product pricing is part of this repositioning. Recently launched products are priced 15–20% below existing items, near their February 2026 levels before the more-than-25% price increase. Citi highlights a Pink Sapphire Cross Pendant priced at RMB31k compared with RMB36k for an existing diamond-and-sapphire version. It says existing customers accept lower-priced new products more readily than deeper discounts on legacy SKUs, which could raise concerns about future pricing. Based on these early indicators, Citi believes 2Q26 likely marks Laopu's earnings bottom irrespective of the gold-price outlook. It revises its China jewelry preference order to Laopu Gold first, followed by Chow Tai Fook and Luk Fook. Citi retains a Buy rating on Laopu, with a HK$507 target price based on 15x 2027E normalized P/E. This is about a 30% discount to global luxury peers' 22x 2026E P/E, reflecting Laopu's shorter luxury-brand history and track record; the implied 12x 2026E P/E is described as the low end of the global luxury-peer range.

Analysis framework

Citi combines an individual-daigou channel check during an SKP promotion with observed sales run rates, discount mechanics, customer purchasing behaviour and relative pricing versus gold. It then links these indicators to same-store-sales and earnings-bottom expectations, and values Laopu using a forward P/E comparison with global luxury peers.

Methodology notes

• Industry AnalysisSupply-demand framework

  Channel checks of daigou sales, discounts and customer demand

  Citi uses observed daigou sales during SKP promotions and changes in discounting and customer mix to assess demand momentum and its earnings implications.

• Valuation methodsP/E and PEG Valuation

  Forward P/E valuation benchmarked against global luxury peers

  Citi sets Laopu's HK$507 target price using 15x 2027E normalized P/E, applying an approximately 30% discount to global luxury peers' 22x 2026E P/E because of Laopu's shorter brand history and track record.

Asset mapping & comparison

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

• Laopu Gold (06181.HK)

  Primary covered company; Citi sees improving promotion-channel sales and a likely 2Q26 earnings bottom.

  Strengths

  Recovering daigou sales, new customers with stronger brand and design interest, and potential new-customer acquisition through Rednote.

  Weaknesses

  Promotion demand has shifted toward lower-ticket purchases, and deeper discounts reduce gross profit margin.

  Comparison

  Citi's China jewelry preference order is Laopu Gold > Chow Tai Fook > Luk Fook.

  Risks

  Gold-price volatility, intense competition, changing consumer tastes, consumption trade-down in China's soft economy, and negative free cash flow during expansion.

• Chow Tai Fook Jewellery Group (1929.HK)

  Covered peer ranked below Laopu Gold in Citi's China jewelry preference order.

  Comparison

  Ranked second behind Laopu Gold and ahead of Luk Fook in Citi's revised pecking order.

• Luk Fook Holdings (International) (0590.HK)

  Covered peer ranked below Laopu Gold and Chow Tai Fook in Citi's China jewelry preference order.

  Comparison

  Ranked third in Citi's revised pecking order.

Key data

• Daigou share of 2025 salesOne-thirdCiti estimate for Laopu Gold
• Estimated 2Q26 same-store-sales change>30% declineCiti attributes the decline to the departure of price-sensitive customers after March 2026
• Major daigou daily sales at February peakRMB3–4mnDuring SKP promotions
• Major daigou daily sales in April<RMB1mnDown 50–70% YoY and back to 2023 levels
• July/August presale daily salesRMB2–3mn initially; RMB1–2mn laterInitial level matched the 2025 average; later level was roughly in line with February 2024
• Promotion discounts22% on old products; 18% on new productsStacked SKP and Laopu discounts and incentives
• 2026E revenue growth17%Citi estimate
• Laopu target valuation15x 2027E normalized P/EImplied 12x 2026E P/E; target price HK$507

Impact & implications

Citi argues that deeper promotional discounts and lower-priced new products have restarted daigou-channel sales while drawing customers who value brand and design rather than only the gold-price premium. It therefore views the weak 2Q26 earnings period as the likely trough and places Laopu at the top of its China jewelry preference ranking.

Risks

• Gold-price volatility could impede Laopu's shares from reaching Citi's target price.
• Intense competition could weaken Laopu's performance.
• Consumer tastes and preferences may evolve unfavourably.
• Consumption trade-down amid China's soft economy could pressure demand.
• Expansion could result in negative free cash flow.

What to watch

• Daigou daily sales through subsequent SKP promotions and whether the July/August recovery persists.
• The balance between promotional sales gains and lower gross profit margin.
• The pace and quality of new-customer acquisition, including via Rednote.
• The customer mix between design-led, gem-inlaid products and price-sensitive pure-gold purchases.
• Gold-price movements and the resulting premium of Laopu products versus gold.