When investors and the market are troubled by the grand narrative of consumption downgrade, the Hong Kong stock market quietly produces a &#34;tenfold consumption bull stock&#34;—LAOPU GOLD (6181.HK), which has surpassed a market value of HKD 100 billion and is known as the &#34;Hermès of the jewelry industry.&#34;
So what magic does it possess that allows it to grow against the trend? Will it continue to ride the wave in 2025? At the earnings meeting, the management expressed their ambition to surpass Hermès in store efficiency; can they achieve it?
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<h2>Earnings Exceed Expectations, Continuous Store Expansion</h2>
LAOPU GOLD has delivered a financial report that has shocked the market.
The company's financial report shows that revenue in 2024 reached HKD 8.5 billion, a year-on-year increase of 167%; gross profit was HKD 3.5 billion, and net profit was HKD 1.47 billion, soaring by 253%.
The number of stores expanded to 36, a year-on-year increase of 121%, with an average store efficiency of HKD 230 million, ranking first in the industry. If investors pay attention to social media, they can often see long queues at LAOPU stores. The viral spread on social media has driven its brand membership to over 350,000, a year-on-year increase of 75%.
In addition to its strong growth momentum, LAOPU's 18% net profit margin and over 70% dividend payout ratio are also topics of interest for investors—this is a company that shares growth with its shareholders.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/c4c27fab-710d-499a-be0f-05bbdbc0be5e.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/c4c27fab-710d-499a-be0f-05bbdbc0be5e.png"/>
Source: Company Announcement
How did LAOPU GOLD achieve such high momentum growth against the trend?
The first differentiation: &#34;People.&#34; LAOPU GOLD's per capita consumption exceeds HKD 30,000, nearly several times that of domestic peers. The company focuses on a direct sales model, and its high-end traditional gold products have won consumer favor, while traditional domestic peers mostly adopt a franchise model with a wide range of products.
The second differentiation: &#34;Goods.&#34; The barrier to entry for traditional gold craftsmanship is not high; LAOPU ranks 7th in the traditional gold market and has a research and development expense ratio of only 0.3%. However, the company has pioneered the concept of traditional gold in the market and relies on craftsmanship, artistry, and aesthetic standards to create well-reviewed products, thus achieving higher premiums. The gross profit margins for pure gold and inlaid products reach 37% and 46%, respectively.
The third differentiation: &#34;Place.&#34; The brand positioning is clear, with high-end + direct sales occupying the channels. LAOPU has already covered 80% of the top ten high-end shopping centers in China. Through cooperative accumulation, it has expanded into the SKP and MixC series, opening 5 and 9 stores, respectively.
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Source: Company Announcement
The sluggish consumption and luxury goods market has instead provided LAOPU GOLD with a solid opportunity for a curve overtaking. At the performance meeting, Chairman Xu Gaoming announced that LAOPU GOLD aims to become the most competitive brand of traditional Chinese gold and the number one gold brand in the world, stating that &#34;the average store efficiency in the future must exceed 1 billion yuan,&#34; far surpassing the current average store efficiency of about 300 million yuan, with a goal to exceed Hermès' single-store level of 500 million.
<h2>Channel Transformation Products, Thinking Determines Victory</h2>
LAOPU GOLD's winning strategy is based on the underlying thinking of &#34;transforming channels into products.&#34;
According to Morgan Stanley's estimates, to achieve the goal of 1 billion yuan in annual sales per store, LAOPU GOLD needs to sell an average of 65 to 90 pieces of jewelry per store each day (assuming an average price of 25,000 to 35,000 yuan per piece), with the sales ratio of antique/jewelry products being 2/8. Such sales figures are unimaginable for traditional gold stores. It is somewhat similar to an automobile manufacturer using one model to surpass the sales of seven or eight other models.
Essentially, after the support of internet traffic, the thinking of &#34;product supremacy&#34; has replaced the industry's &#34;channel supremacy,&#34; and the viral potential of single products has greatly surpassed traditional perceptions.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/3908ed93-f0e0-4b86-8649-032424e0e6d3.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/3908ed93-f0e0-4b86-8649-032424e0e6d3.png"/>
Source: Company Announcement
The company expects to add only 6 new stores by 2025, which means that sales growth will mainly come from the improvement of same-store revenue. According to our grassroots communications, LAOPU GOLD's same-store revenue has seen a growth of 70-80% in the past two months, with SKP series nearly doubling and the Vientiane series growing at around 40%. Such outstanding results stem from the main logic of &#34;popularizing niche elements&#34;—the mandala pendant, which balances products by symbolizing religious artifacts.
Another foreign investment bank, Nomura, emphasized:
<blockquote>
“LAOPU has the potential to become the first truly Chinese luxury goods company.”
</blockquote>
This is attributed to its combination of Chinese consumers' strong preference for gold with innovative consumption experiences unique to modern luxury goods: longer delivery wait times, continuous price increase expectations, and special treatment for VIP customers. Emotional value is also a form of consumption innovation.
Even for the ancient gold craftsmanship that is most discussed in the market, we believe this technology cannot simply be replicated.
Why has the ancient gold market rapidly risen?
In the past five years, the growth rate of ancient gold products (CAGR 65%) has significantly outpaced the overall performance of the gold jewelry industry (CAGR 7%).
By 2023, the overall scale of the ancient gold market has grown to 157 billion, accounting for 30% of the gold category. With the influx of competitors, the ancient gold market is expected to maintain an annual growth rate of over 20% in the coming years, keeping at a level more than twice the industry growth rate.
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Compared to ordinary gold, which is prone to deformation and has relatively simple styles, traditional gold achieves dense gold and exquisite, rich styles through traditional craftsmanship. At the same time, cultural confidence has enhanced the return of domestic aesthetics, and the craftsmanship of traditional gold is rich in cultural connotation, thicker, and has a higher purity than K gold products, which means a higher average transaction price and value retention rate. Accompanied by more than two years of a bull market in gold, both young people and wealthy individuals have been attracted to these innovative products.
The company's management insists on product innovation, emphasizing &#34;only high-end, only innovation, only traditional craftsmanship,&#34; thus gaining extremely high market recognition and brand premium.
LAOPU aims to capture the mindset of high-net-worth individuals; becoming the &#34;Hermès of the jewelry world&#34; is not something that can be achieved overnight. At the annual performance communication meeting, the management's &#34;restraint&#34; and &#34;professionalism&#34; were also felt, with dividends providing assurance to investors rather than simply pursuing rapid store expansion. The chairman also serves as the chief designer, personally taking on the role of product manager, eliminating communication barriers and increasing the scale of intellectual capital investment.
<h2>The Next &#34;Hermès&#34;</h2>
If LAOPU truly wants to achieve &#34;learning from Ma, becoming Ma, and surpassing Ma,&#34; the following three points have already emerged as a successful path from another new consumer disruptor, Pop Mart, and are worth deeper consideration by more consumer goods companies in terms of underlying logic and combining their own business characteristics to reorganize company genes and strategies.
1) Global Expansion
Overseas expansion is underway, with the first overseas store entering a luxury mall in Singapore. The LAOPU Singapore store has begun renovations and is located in the Marina Bay Sands Hotel, a landmark building in the area, where high-end luxury brands such as Hermès, Chanel, and LV are gathered. The significance of overseas expansion lies in enhancing brand tone and international influence, further improving competitiveness in domestic core business districts. Only brands moving towards internationalization can solidify China's own high-end luxury goods.
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Data source: Xiaohongshu
2) Stable Pricing Strategy
On February 25, LAOPU officially announced a price increase, ranging from 3% to 11%.
Only six months have passed since the company's last price increase. According to research reports from Soochow Securities, LAOPU adjusts prices fixedly twice a year, with specific timing being relatively flexible. Through price adjustments, the company can basically maintain a gross profit margin of around 40%. This level is 10% higher than the highest standard in the industry.
A stable and predictable pricing strategy is also one of the characteristics of luxury brand tone.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/00a16137-0947-48c7-ac2c-8f1330a78c8e.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/00a16137-0947-48c7-ac2c-8f1330a78c8e.png"/>
3) Strong Profitability Effect
The profitability effect is a unique attribute of luxury brand assets
From Moutai to Hermès, enduring the test of time and consistently outperforming M2 in returns is a true refinement of the status of luxury brands.
LAOPU GOLD's preservation rate not only exceeds that of international luxury brands but also surpasses its peers. Comparing the pricing after the price increase, the current discount rates in the second-hand market for small diamond gourd, small diamond Vajra, and small ruby rose window are just over 10%. Compared to the price increase in 2023, it is between 1-5%.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/eaf8eb9b-c6b0-49b6-901d-bd305b9b0b91.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/eaf8eb9b-c6b0-49b6-901d-bd305b9b0b91.png"/>
Source: Growth Black Box
“The entire gold jewelry industry is studying ancient gold and fixed-price models.”
Top luxury brands possess the power to transcend cycles; how far is LAOPU GOLD from becoming a luxury brand?
In the process of upward progression, the long-term challenges LAOPU may face are:
<ol>
<li>
Creating a unique brand identity and symbol, as the cultural connotation of gold belongs to the industry rather than a single brand;
</li>
<li>
Guiding lifestyle through a multi-line approach of products and services, such as certain major brands that also have hotels;
</li>
<li>
After enduring economic cycles, only the continuous recognition and consumption of loyal paying users can give the brand the power to transcend cycles;
</li>
</ol>
The path of domestic luxury brands has quietly begun. Firstly, cultural confidence is increasingly firm; secondly, the accumulation of Chinese culture over thousands of years; thirdly, high-net-worth individuals need new consumption stories and preferences.
In the stage of high-quality development, creating products that fulfill spiritual demands + social expression + emotional value + pragmatism may bring breakthroughs for Chinese brands, becoming a benchmark asset in a new era.
We shall wait and see.
Risk Warning and Disclaimer
The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investment based on this is at one's own risk

HESAY

06181

LAOPU GOLD has performed outstandingly in the Hong Kong stock market, with a market capitalization exceeding HKD 100 billion, becoming the "Hermès of the gold jewelry industry." In 2024, the company's revenue reached HKD 8.5 billion, a year-on-year increase of 167%, with a net profit of HKD 1.47 billion, up 253%. The number of stores expanded to 36, with an average store efficiency of HKD 230 million, ranking first in the industry. LAOPU GOLD has differentiated itself through a direct sales model and high-end traditional gold products, attracting a large number of consumers, with brand membership exceeding 350,000. Its 18% net profit margin and 70% dividend payout ratio have also garnered significant attention from investors

Wallstreetcn

Hermès

LAOPU GOLD

Morgan Stanley

POP MART

SINOFERT

Moutai

小红书

Consumer Insights | The Billion-Dollar LAOPU GOLD: Learn from Hermès, Become Hermès, Surpass Hermès