Gold Price Volatility Impact Absorbed, Lao Pu Gold Brand Upgrade Proceeding Steadily

Overview

Nomura Securities issued a research report, reiterating a 'Buy' rating on Lao Pu Gold (6181.HK) and maintaining a target price of HKD 1,114. The report states that although YTD stock performance has been weak due to gold price volatility and market style switches, current valuations fully reflect downside risk. As the company continues to advance high-end store upgrades and VIP client expansion, long-term brand awareness is expected to improve, making the current risk-reward ratio attractive.

Core views

Stock Performance and Valuation Logic: Lao Pu Gold YTD stock price down 24%, underperforming Hang Seng Index by 17.4 percentage points, also weaker than some peers (such as Chow Tai Fook). Nomura believes this is mainly attributable to intensified gold price volatility since March 2026, and capital markets preferring technology/AI themes over consumer stocks more strongly. Currently the company trades at only 9.9 times FY2026 expected P/E, institutions believe the risk of sales slowdown caused by gold price volatility has been largely priced in by the market. Brand Building and Store Upgrades: Despite facing gold price volatility, Lao Pu Gold persisted with its growth strategy in the second quarter of 2026, including new product launches, boutique store upgrades, and VIC (High Net Worth Individuals) group expansion. The report is particularly positive about its recent store upgrade initiatives, such as store relocations and expansions at Shenzhen MixC World, Shanghai IFC Mall, Shanghai Grand Gateway (the only full luxury mall in Shanghai), and Marina Bay Sands Singapore. These upgrades not only expanded service areas to accommodate more consumers but also provided differentiated shopping experiences through newly established in-store after-sales service managers, which is expected to enhance brand awareness in the long run. Profit Forecast and Target Price: Nomura maintains Lao Pu Gold's FY2026-2028 revenue and profit forecasts unchanged. Based on 22.5x FY2026 expected P/E (unchanged), maintains HKD 1,114 target price, implying approximately 143% upside from current closing price.

Analysis framework

Nomura adopts relative valuation method (P/E multiple) combined with fundamental qualitative analysis. First, by comparing stock performance with macro factors (gold price volatility, market style), explain the causes of short-term stock weakness and judge that bad news is exhausted. Second, track store expansion quality and service upgrades at the micro-operational level to verify the process of building its brand moat. Finally, derive target price based on stable profit forecasts and given valuation multiples, emphasizing that current low valuation provides a margin of safety.

Methodology notes

• Valuation MethodPE/PEG valuation

  Relative valuation based on expected P/E

  The research report uses FY2026 expected EPS multiplied by 22.5x P/E to determine the target price, a common valuation method for growth consumer stocks, reflecting market recognition of its high growth trajectory.

• Industry/Industrial Analysis Framework

  Transmission of gold price volatility impact on jewelry retail

  Analyzing how gold price volatility affects consumer purchase willingness and inventory value, thereby transmitting to jewelry retailer sales and stock performance, is a key logic for evaluating such cyclical strong consumer goods.

Asset mapping & comparison

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

• Lao Pu Gold (6181.HK)

  Beneficiary subject, enhancing long-term competitiveness through high-end store upgrades and brand differentiation

  Strengths

  High growth trajectory, unique ancient gold craftsmanship, core location layout in high-end malls

  Weaknesses

  Significantly impacted by gold price volatility in short term, valuation under pressure

  Comparison

  Compared to peers like Chow Tai Fook, possesses stronger brand uniqueness and higher gross margin potential

  Risks

  Sharp decline in gold price, fashion trend changes, weakening macro economy

Key data

• Target Price1114 HKDBased on 22.5x FY26F P/E
• Current Stock Price458.40 HKDAs of June 18, 2026
• FY26F Expected P/E9.9xAt historic lows, reflects pessimistic expectations
• FY26F Expected Revenue395.01 Hundred Million CNYYoY Growth +44.7%
• FY26F Expected Net Profit76.63 Hundred Million CNYYoY Growth +57.4%

Impact & implications

The report believes that if gold prices stabilize in the coming months due to improved geopolitical environment (e.g., Middle East peace agreement), capital markets' pessimism regarding Lao Pu Gold's H2 sales may ease, creating valuation repair opportunities. The company's store upgrade strategy is viewed as a key driver for long-term brand premium and competitiveness enhancement.

Risks

• Significant weakening of gold price
• Fashion trend risks higher than expected
• Macro environment weaker than expected

What to watch

• Stability of gold price in coming months
• Progress of Middle East geopolitical situation
• Whether H2 sales data will improve following gold price stabilization