Laopu Gold's sales momentum is cooling, but margins and valuation appeal still support a Buy rating

Overview

This report is UBS's updated company research on Laopu Gold (6181.HK). The report believes that after a strong first quarter, the market began to question the sustainability of growth, and the share price subsequently pulled back by about 9%. UBS expects same-store sales growth to slow from the second quarter onward, but a higher contribution from online sales, strong productivity from stores opened or expanded in 2025-2026, and post-price-hike earnings leverage may still drive relatively high year-over-year growth in 2026 revenue and net profit.

Core views

The core view is that 'sales growth is slowing, but profitability is strengthening year over year.' UBS channel checks show that from March to April to date, same-store sales at Beijing stores with a high base fell 20%-30% year over year, with both average ticket size and transaction volume declining; the drop among daigou resellers was greater than that among ordinary consumers, while demand from VIC customers was more resilient than that from middle-class and entry-level customer groups. Short-term demand is being affected by falling gold prices, fewer shopping festival days, and undigested daigou inventory. However, online channels are expected to have net margins in the low- to mid-single-digit percentage points above offline channels, and savings in rent and depreciation can offset platform commissions and potentially lower gross margins. UBS believes that at the current 11x 2026E P/E and 6.6% dividend yield, the risk-reward remains attractive.

Analysis framework

The report combines channel checks, same-store sales observations, judgments on gold price trends, margin assumptions for online/offline channels, a breakdown of new-store and mature-store productivity, scenario analysis, and DCF valuation. The three core drivers in the scenario analysis are online sales mix, same-store sales volume growth, and new-store productivity, and base, bull, and bear cases are constructed to estimate 2026 revenue and net profit.

Methodology notes

• Valuation methodsDCF valuation

  Deriving a 12-month target price using discounted cash flow

  UBS assigns a target price of HK$930 based on the DCF method, corresponding to about 18x 2026E P/E under the base case.

• scenario_analysisThree-variable earnings scenario analysis

  Online mix, same-store sales volume, new-store productivity

  The base, bull, and bear cases assume different online sales mix, same-store sales changes, and new-store productivity to assess the elasticity of 2026 revenue and net profit.

• channel_checkChannel checks

  Store same-store sales, average ticket size, transaction volume, and customer segment performance

  Based on observations from Beijing stores with a high base, the report concludes that same-store sales fell 20%-30% year over year from March to April to date, and further breaks down differences in demand among daigou resellers, ordinary consumers, and VIC customers.

• market_contextGold price cycle and jewelry demand analysis

  Demand differences between fixed-price gold jewelry and gold jewelry sold by weight

  After gold prices fell from about US$5,300 to about US$4,700, short-term demand for fixed-price gold jewelry was pressured, but demand for gold jewelry sold by weight was supported by a low base; if gold prices resume an uptrend, demand for fixed-price gold may improve.

Asset mapping & comparison

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

• Laopu Gold (6181.HK)

  Research target

  Strengths

  High-end brand positioning, leadership in the heritage gold concept, and complex, differentiated product craftsmanship; online channels have higher margins, and new-store productivity is strong.

  Weaknesses

  Short-term same-store sales have weakened, daigou demand has declined, and demand for fixed-price gold jewelry is affected by gold price volatility.

  Comparison

  Compared with ordinary gold jewelry retailers, Laopu Gold relies more on high-end fixed-price gold jewelry and a boutique store model; the report also mentions the Shuibei model, which sells retail gold jewelry at wholesale prices and may create price competition.

  Risks

  A macro consumption slowdown, high gold price volatility, substitution by lab-grown diamonds, consumer skepticism toward the pricing structure of fixed-price gold, counterfeit products, and shareholder sell-downs after lock-up expiries.

• Gold price

  Key external driver

  Strengths

  If gold prices resume rising, demand for fixed-price gold jewelry may recover; UBS's view that gold prices will hit new highs is unchanged.

  Weaknesses

  A pullback in gold prices from high levels suppresses short-term demand for fixed-price gold jewelry.

  Comparison

  Fixed-price gold jewelry comes under pressure when gold prices weaken, while demand for gold jewelry sold by weight is supported by a low base.

  Risks

  Uncertainties such as the Middle East situation may cause gold price volatility and affect consumer purchasing decisions.

Key data

• 12-month ratingBuyThe report lists a 12-month Buy rating.
• Target priceHK$930.00DCF-derived target price.
• Current priceHK$588.00As of April 23, 2026.
• Forecast share price upside58.2%Forecast price appreciation.
• Forecast dividend yield3.3%Forecast dividend yield.
• Forecast shareholder return61.4%Forecast stock return.
• Forecast excess return50.5%Relative to an assumed market return of 10.9%.
• 2026E base-case revenueRmb42,212mThe table uses Revenues.
• 2026E base-case net profitRmb8,136mCorresponding net margin of about 19%.
• 2026E base-case revenue/net profit YoY growth55%/67%Disclosed in the main report text.
• 2026E bull-case revenue/net profit YoY growth113%/131%Stronger online mix and new-store productivity, with a smaller decline in same-store sales volume.
• 2026E bear-case revenue/net profit YoY growth16%/29%Larger decline in same-store sales volume and lower online mix.
• Same-store sales from March to April to datedown 20%-30% YoYChannel check results from Beijing stores with a high base.
• Market capitalizationHK$104b / US$13.2bReport trading data table.
• 2026E P/E11xThe report believes the current valuation offers attractive risk-reward.
• 2026E dividend yield6.6%Disclosed in the valuation section of the main text.

Impact & implications

The report's investment implication is positive overall: short-term sales deceleration may continue to affect market sentiment, but if the online channel mix rises, new-store productivity remains strong, and demand for fixed-price gold improves as gold prices resume an uptrend, there is still room for earnings growth and valuation recovery. The substantial upside to the target price relative to the current price supports UBS maintaining its Buy rating.

Risks

• A slowdown in China's economy may suppress jewelry consumption.
• Lab-grown diamonds may gain market share and increase consumer price sensitivity.
• Sharp gold price volatility may disrupt consumer purchasing decisions.
• The Shuibei model sells retail gold jewelry at wholesale prices, potentially intensifying price competition.
• Competition from other jewelry brands may weaken product differentiation.
• The pricing structure of fixed-price gold may face consumer skepticism.
• Consumers may shift to lower-priced imitation products.
• Cornerstone investors and IPO/Pre-IPO investors may reduce holdings after lock-up periods end.

What to watch

• Whether same-store sales growth continues to slow from the second quarter through the fourth quarter.
• Whether the online sales mix can continue rising from about 20% in the first quarter.
• Whether productivity at newly opened and expanded stores in 2025 remains higher than that of mature stores.
• Whether gold prices resume an uptrend and drive a recovery in demand for fixed-price gold jewelry.
• The pace of daigou inventory digestion and the recovery of daigou demand.
• Whether the resilience of VIC customer demand can offset weakness among middle-class and entry-level customer groups.
• Changes in the share price relative to the HK$930 target price and the 2026E P/E range.