Wall Street Reviews LAOPU GOLD's Earnings: Performance Far Exceeds Expectations, Company Moving Towards China's First Truly Luxury Brand

LAOPU GOLD has delivered a report card that has caught Wall Street's attention.

According to the "Chasing Wind" trading desk, both Citi and Nomura have issued "Buy" ratings in their latest research reports, highlighting that the company's preliminary performance for the first quarter of 2026 significantly exceeded market expectations, with net profit margins reaching a historical high. They also position it as a rare stock "marching towards China's first truly luxury brand."

According to Citi Research, LAOPU GOLD's revenue for the first quarter of 2026 reached RMB 16.5 billion to RMB 17.5 billion, a year-on-year increase of over 100%, equivalent to 41% to 44% of Citi's full-year forecast. Net profit was RMB 3.6 billion to RMB 3.8 billion, with a net profit margin of 21.7% to 21.8%, significantly higher than the adjusted 17.9% in the second half of 2025 and Citi's full-year forecast of 19.3%. Nomura noted that the net profit for the quarter was close to 60% of its previous full-year forecast of RMB 6.25 billion, calling it a "more meaningful surprise."

Both institutions maintained their "Buy" ratings, with target prices of HKD 1,162 (Citi) and HKD 1,171 (Nomura), both implying an upside of over 100% from the closing price of HKD 558.5 on March 23.

Q1 Performance: Volume and Price Surge, Profit Margin Significantly Improves

According to Citi Research, LAOPU GOLD's strong performance in the first quarter of 2026 was driven by multiple factors: sales contributions from new stores opened in 2025 (10 new stores opened throughout the year, including 5 large-format stores, with 4 in Shanghai and 1 in Hong Kong), a release of pent-up demand due to the rapid rise in gold prices in January 2026, and a buying spree triggered by the company's retail price increase at the end of February 2026.

The significant improvement in net profit margins is also noteworthy. Citi analysts Tiffany Feng, Xiaopo Wei, and Brian Cho believe this is mainly due to the recovery of gross profit margin to above 40% after the company's price hike in October 2025, coupled with operating leverage effects from strong sales. Nomura analysts Jizhou Dong and Summer Qian added that the company's two price increases in October 2025 and February 2026 effectively offset the erosion of gross profit margins by rising gold prices, while better cost control also played a positive role.

Full-year 2025 performance was also robust. According to Nomura, LAOPU GOLD's full-year revenue for 2025 increased by approximately 2.2 times year-on-year to RMB 27.3 billion, and net profit increased by approximately 2.3 times year-on-year to RMB 4.87 billion. Citi data shows that same-store sales growth (SSSG) for the full year 2025 reached 161%, with the first half at 201%.

Outlook Amidst Gold Price Volatility: Limited Downside Risk Under Pessimistic Scenario

The recent significant drop in gold prices has sparked market concerns about LAOPU GOLD's demand outlook, which is one of the main reasons for the recent stock price pressure. Citi has conducted a scenario analysis on this.

Citi believes that among LAOPU GOLD's customer base, some consumers are attracted to purchase by the trend of rising gold prices. These price-sensitive customers account for about 40% of the first-quarter 2026 revenue, totaling approximately RMB 7 billion. Under a pessimistic scenario, assuming this portion of demand completely disappears, Citi estimates that full-year 2026 revenue could still reach RMB 37 billion – with Q1 at approximately RMB 17 billion (including RMB 7 billion in one-time demand and RMB 10 billion in recurring revenue), Q2 at approximately RMB 5 billion, and the second half at approximately RMB 15 billion.

In this scenario, Citi expects LAOPU GOLD's gross profit margin to remain above 40% and its net profit margin to stay between 20% and 21%, corresponding to a net profit of approximately RMB 7.4 billion to RMB 7.8 billion, which is broadly in line with its current forecast of RMB 7.6 billion, indicating "limited downside risk."

Inventory and Funding: No Urgent Need for Financing

Market rumors surrounding LAOPU GOLD's potential need for financing have also suppressed its recent stock price. Citi has provided a relatively clear assessment on this.

According to Citi, LAOPU GOLD's inventory has significantly increased from RMB 4.1 billion at the end of December 2024 to RMB 16 billion at the end of December 2025, mainly for stocking up for the Chinese New Year sales season. Citi estimates that with an annual inventory turnover of about 2 times and a gross profit margin above 40%, the current inventory can support revenue of approximately RMB 53 billion in 2026, almost double the RMB 27.3 billion in 2025. Based on this, Citi believes that unless future sales continue to maintain triple-digit growth, the company has no urgent need for financing.

Path to Luxury: Continuously Increasing Customer Overlap

Nomura's report emphasizes LAOPU GOLD's brand upgrade process, classifying it as an "early stage of marching towards China's first truly luxury brand."

Citing Frost & Sullivan data, Nomura points out that the overlap ratio between LAOPU GOLD's customer base and the world's top five luxury brands has increased from 77.3% in July 2025 to 82.4% in March 2026. Nomura believes that the continuous iteration of product and store design is driving LAOPU GOLD closer to global luxury brands. Once successful, this will grant the company higher product pricing power and allow its gross profit margin to achieve a certain degree of decoupling from gold price movements.

Citi corroborates this trend from a store operations perspective. As of December 2025, LAOPU GOLD operated 45 boutique stores in 34 shopping malls. The average sales per shopping mall (including tax) in 2025 was close to RMB 1 billion. Its store opening at Plaza 66 in Shanghai signifies that the company has entered all locations within China's top ten commercial centers.

Citi lists LAOPU GOLD as its top pick in the Chinese jewelry sector. The target price of HKD 1,162 is based on a 2026 estimated P/E ratio of 24 times, a slight discount compared to the global luxury peer group's 26 times. Citi believes LAOPU GOLD's faster growth momentum can compensate for its relatively short brand history.