Goldman Sachs reiterates its Buy rating on Laopu Gold, 12-month target price HK$1,108

Overview

This report summarizes Goldman Sachs' NDR takeaways after an in-person discussion with Laopu Gold management on March 30, 2026. The key conclusion is that despite recent gold price volatility and market concerns over the sustainability of growth, Laopu Gold's first-quarter performance was better than expected, March retail sales remained resilient, and the brand upcycle, customer base expansion, VIC development, and store upgrades continue to support growth visibility.

Core views

Goldman Sachs remains constructive on Laopu Gold for the following reasons: first, 1Q26 momentum was strong, with March retail sales of about RMB 3.0 billion; second, growth is not solely reliant on new stores, as online channels and existing-store traffic also contributed meaningfully; third, the company insists on prioritizing brand equity and avoids chasing volume through steep discounts; fourth, it had prepared RMB 16.0 billion of inventory by the end of 2025, which should help stabilize 2026 gross margins; and fifth, valuation is in the low-double-digit 2026E P/E range, coupled with a 6%-7% implied dividend yield, making the risk-reward attractive.

Analysis framework

The report evaluates Laopu Gold's growth resilience and target price by combining management NDR discussions, channel sales breakdowns, inventory and gold cost analysis, pricing and promotion strategy, store network planning, margin targets, financing and dividend policy, as well as Goldman Sachs' earnings forecast and valuation framework.

Methodology notes

• 估值目标市盈率法

  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 and calculates 79.4% upside versus the current price.

• 因子分析GS Factor Profile

  Growth, financial return, valuation multiples, and composite percentile

  Goldman Sachs' factor framework compares the stock with the market and industry peers across dimensions such as forward sales, EBITDA, EPS, ROE, ROCE, CROCI, P/E, P/B, and dividend-related indicators.

• 并购框架M&A Rank

  M&A probability rating

  The report discloses Laopu Gold's M&A Rank is 3 under the Greater China Retail framework, indicating a low probability of acquisition and generally not included in target price adjustments.

Asset mapping & comparison

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

• Laopu Gold (6181.HK)

  Core covered name

  Strengths

  Brand upcycle, expanding customer base, strong March sales, ample inventory preparation, and store upgrades plus overseas expansion create room for capacity and customer growth.

  Weaknesses

  The business remains sensitive to gold prices, luxury consumption sentiment, and the high-end retail environment; regional concentration is also a constraint.

  Comparison

  Relative to market concerns about gold price volatility, the report believes the company's sales resilience and brand demand are stronger; current valuation is in the low-double-digit 2026E P/E range, and the dividend yield is attractive.

  Risks

  A sharp decline in gold prices, tighter luxury consumption regulation, regional concentration, and supply pressure after the IPO lock-up period ends.

• Gold / gold prices

  Key external variable

  Strengths

  If gold prices remain resilient or volatility stays contained, the company's inventory and pricing strategy should help maintain gross margins.

  Weaknesses

  If the market enters a clear downcycle, investors may reassess demand for gold jewelry and inventory profitability.

  Comparison

  Management said it will not widen direct discounts even if gold prices fall, but will instead reward consumers through gifts, services, and new products.

  Risks

  A sharp decline in gold prices may affect consumer expectations, inventory value, and gross margins.

Key data

• RatingBuyGoldman Sachs reiterates its Buy rating in the report.
• 12-month target priceHK$1,108Based on a 20x 2026E target P/E.
• Current priceHK$617.50Price as of the March 30, 2026 close.
• Implied upside79.4%Calculated from the target price and current price.
• March retail salesAbout RMB 3.0 billionManagement expects March sales including tax to remain resilient.
• Inventory at end-2025RMB 16.0 billionAverage inventory cost of about US$3,800-4,300/oz helps support 2026 gross margins.
• 1Q26 new-store sales mixAbout 15%New stores are one of the growth drivers.
• 1Q26 online sales mixAbout 20%The online mix rose from the high-teens, and online gross margin is about 5 percentage points higher thanks to promotion discipline.
• Normalized net profit margin targetAbout 18%-20%Management guides to around 20% net profit margin in 2026.
• Dividend guidance50% of retained earningsEquivalent to about 70%-80% of annual net profit.
• Overseas store opening paceAbout 4-5 per yearKey markets include Japan, South Korea, Malaysia, Thailand, etc.
• 2026E net profitRMB 8.78 billionUsed in the report's 6%-7% implied dividend yield statement.

Impact & implications

For investors, the main implication of the report is that Laopu Gold's demand resilience and brand premium may be underestimated by the market, and gold price volatility does not necessarily weaken its growth trend. If the company continues to lift per-store productivity through new products, store upgrades, VIC customer development, and overseas expansion, the current low-double-digit 2026E P/E and relatively high dividend yield could provide valuation support. That said, investors still need to watch gold prices, luxury consumption regulation, regional concentration, and the supply pressure after IPO lock-up expiry.

Risks

• Gold prices could fall sharply, undermining market confidence in the company's growth and inventory profits.
• The luxury consumption regulatory environment could tighten, affecting high-end gold jewelry demand.
• The business carries regional concentration risk.
• The end of the IPO lock-up period could create share supply pressure.
• If demand exceeds expectations by a wide margin and inventory needs to be expanded, the company may need to evaluate financing tools, with a preference for debt financing.

What to watch

• Whether March retail sales of about RMB 3.0 billion can be sustained in subsequent months.
• Whether the pace of customer base expansion in 1Q26 continues the trend of 260,000 new customers added in 2025.
• Per-store productivity improvement after the 8-12 domestic store upgrades.
• The pace of 4-5 new overseas store openings per year and progress in markets such as South Korea, Japan, Malaysia, and Thailand.
• Whether the company can still maintain price increases and discount discipline amid gold price volatility.
• Whether 2026 net profit margins can approach management's guidance of about 20%.
• Dividend delivery and the sustainability of the 6%-7% implied dividend yield.