LAOPU GOLD shares jumped 8.92 percent to HKD383.4 despite Morgan Stanley cutting its target price to HKD505 from HKD590. The broker lowered revenue and EPS forecasts for this year by 14 percent while maintaining an Overweight rating, citing stabilizing gold prices and improving store traffic.
LAOPU GOLD shares jumped 8.92 percent to HKD383.4 as Morgan Stanley cut its target to HKD505 from HKD590 on weak second-quarter results.
"Gold prices stabilized in the third quarter and initial signs of improvement have emerged," Morgan Stanley said in a research report, noting some LAOPU GOLD stores saw queues reappear in early August.
The broker lowered its revenue and EPS forecasts for this year by 14 percent and cut 2027-28 estimates by 11-12 percent. The target reduction follows second-quarter results that missed expectations, pressured by a sharp decline in gold prices that dampened demand for the jeweler's premium-priced products.
The stock's resilience despite the target cut reflects improving sentiment as international gold prices stabilized after falling nearly 30 percent from their April peak of nearly $5,600 per ounce. LAOPU GOLD had lost more than 60 percent of its value from the July 2025 peak of HKD1,083.8 before Monday's rebound.
The company issued a positive profit alert last week, forecasting first-half revenue of 22.7 billion to 23.35 billion yuan, up 60-65 percent year-on-year, with net profit of 4.31 billion to 4.36 billion yuan, up 83-85 percent. However, second-quarter revenue is estimated at 2.3 billion to 3.95 billion yuan with net profit of 510 million to 760 million yuan, a sharp sequential decline from the first quarter.
Morgan Stanley maintained its Overweight rating, focusing on shareholder returns and management guidance in the interim results. The new target price implies roughly 32 percent upside from current levels.
CICC also cut its target price by 44 percent to HKD604.48, lowering 2026/27 EPS forecasts by 14 percent and 26 percent to 39 and 42 yuan respectively. The firm maintained an Outperform rating, noting the current price implies 9/8 times 2026/27 P/E with an expected 2026 dividend yield around 9 percent.
LAOPU GOLD, once hailed as one of the "three new consumer sisters" in Hong Kong stocks alongside Pop Mart and Mixue Group, debuted on the Hong Kong Stock Exchange in June 2024 at an IPO price of HKD40.5. The company's "zero-hedging" inventory strategy left it exposed as gold prices fell, with inventory surging from approximately 4 billion yuan at the start of 2025 to 16 billion yuan by year-end.
The stock's rebound suggests investors are pricing in a stabilization in gold prices and a potential recovery in consumer demand. The interim results, expected in the coming weeks, will test whether the brand's premium pricing can hold in a lower gold price environment.
This article is for informational purposes only and does not constitute investment advice.
