Laopu Gold plunges 24% as Q2 revenue collapses to 40% of March level

Laopu Gold (06181.HK) reported H1 revenue of RMB 19.8 billion to RMB 20.45 billion, missing consensus by about 10%, sending shares down 24%.

"Laopu Gold's profit alert disappointed versus expectations, with second-quarter sales reaching only 40% of the March level," Morgan Stanley analysts wrote in a report, reiterating an Overweight rating but flagging near-term sentiment risk.

Second-quarter revenue totaled about RMB 3.5 billion, a sharp drop from first-quarter revenue of RMB 16.5 billion to RMB 17.5 billion. Net profit for Q2 fell to between RMB 510 million and RMB 760 million, compared with RMB 3.6 billion to RMB 3.8 billion in Q1. Non-IFRS adjusted net profit for the half grew 83% to 85% year on year, while reported net profit surged 93% to about RMB 4.4 billion.

The results show the vulnerability of China's high-end gold jewelry demand to elevated and volatile gold prices. Macquarie cut its target price 39% to HKD 275 with an Underperform rating, while CICC lowered its target 44% to HKD 604.48, citing risks from a high comparison base, intensifying competition and inventory reduction by speculators.

Macquarie said second-quarter revenue was 17% to 19% below its forecast, while non-IFRS adjusted net profit missed by 27%. The broker maintained an Underperform rating and lowered same-store sales growth and margin forecasts, warning that second-half SSSG may still face downside risks.

Morgan Stanley kept its Overweight rating and HKD 590 target price but said it would monitor shareholder return policies and updated management guidance in the interim results. CICC cut its 2026 and 2027 earnings per share estimates by 14% and 26% to RMB 39 and RMB 42, respectively, noting that at the current share price, Laopu Gold trades at about 9 times 2026 estimated earnings with an implied dividend yield of roughly 9%.

The Q2 slowdown reflects multiple headwinds: elevated international gold prices dampening consumer purchasing, a high base from the Lunar New Year peak season in Q1, and a weaker-than-expected recovery in China's domestic consumption of high-end discretionary goods. Laopu Gold, known for its ancient-method gold craftsmanship, had cultivated a luxury brand image through high-end mall expansion, becoming one of the few local Chinese brands with premium cachet in the gold jewelry market.

The 24% single-day decline puts Laopu Gold at its lowest since listing, testing investor confidence in its luxury brand narrative. The market will watch the interim results for updated management guidance and any changes to shareholder return policy.

This article is for informational purposes only and does not constitute investment advice.