Goldman Sachs: Laopu Gold (6181.HK) Raises Prices 20-30% Post-Peak Season; Buy
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Goldman Sachs maintains its Buy rating on Laopu Gold (6181.HK) with a 12-month target price of HK$1,128, offering 55.9% upside from the current price of HK$723.50. On February 28, Laopu implemented a 20-30% price increase—primarily concentrated in the 25-30% range—slightly exceeding market expectations, with pure gold products seeing higher hikes. This move protects gross margins, which management targets at 40% for 2026, maintaining 2025 levels. While the sustainability of post-hike demand remains debated, robust peak season performance in January and February supports first-half growth prospects, underscoring a solid brand upward cycle. Goldman Sachs notes the increase aligns with gold price appreciation since the previous hike in October 2025—up roughly 22% from October peaks and 30% from averages—providing a buffer for future gold price inflation. Management indicated that even at approximately $4,500 per ounce gold, a 40% gross margin remains achievable. Peer jewelers have also raised prices recently: Chow Tai Fook by 15-30% in March, Lukfook by about 25-30% in early February, and Borland by roughly 15%. Online channels surged 263% year-over-year in January, with Tmall recording 1 billion yuan in promotional sales on February 26. The brand's relative pricing advantage persists amid an industry-wide pricing adjustment.