CICC: Maintains LAOPU GOLD's outperform rating in the industry, target price HKD 1,079.06

According to the Zhitong Finance APP, CICC released a research report stating that it basically maintains the EPS forecast for LAOPU GOLD (06181) at 26.57/35.80 yuan for 2025/26, with the current stock price corresponding to 27/20 times the 2025/26 price-to-earnings ratio. It maintains an outperform rating for the industry and a target price of HKD 1,079.06, corresponding to 37/27 times the 2025/26 price-to-earnings ratio, with a 38% upside potential. The company announced its 1H25 performance, with revenue increasing by 251% year-on-year to 12.4 billion yuan, and net profit attributable to the parent company increasing by 286% year-on-year to 2.3 billion yuan, in line with market expectations. The company plans to distribute an interim dividend of 9.59 yuan per share, with a payout ratio of about 73%, marking its first interim dividend. CICC's main points are as follows: Retail performance shows significant advantages, same-store sales continue to grow rapidly LAOPU GOLD is committed to creating the world's leading gold brand with non-heritage cultural value and international competitiveness, with 1H25 revenue increasing by 251% year-on-year to 12.4 billion yuan. By channel, offline revenue increased by 243% year-on-year to 10.7 billion yuan, as the company actively lays out advantageous business districts, net opening 5 new stores to a total of 41 stores in the first half of the year. The continuous enhancement of brand power also drove same-store revenue growth of 201% in 1H25, with average sales per single mall reaching 460 million yuan, ranking first among domestic and international jewelry brands in terms of revenue and sales efficiency in a single mall in mainland China. Online revenue increased by 313% year-on-year to 1.6 billion yuan, contributing 13% to the company's revenue. By region, revenue from mainland China increased by 233% year-on-year to 10.8 billion yuan, while overseas revenue increased by 455% year-on-year to 1.6 billion yuan, contributing 13% to the company's revenue. Significant rise in gold prices affects gross profit, operational leverage becomes apparent, and inventory grows healthily The gross profit margin in 1H25 decreased by 3.2 percentage points year-on-year to 38%, mainly due to the rapid rise in gold prices during the period and maintaining high levels, while the company only made one price adjustment. The impressive revenue growth also brought about apparent operational leverage, with the sales and management expense ratio decreasing by 5.1 percentage points year-on-year, and net profit attributable to the parent company increasing by 286% year-on-year to 2.3 billion yuan. Due to rapid sales growth and optimized channel expansion, the company's inventory increased from 4.1 billion yuan at the beginning of the year to 8.7 billion yuan by the end of June, with inventory turnover days decreasing from 195 days in 2024 to 150 days in 1H25, maintaining a healthy level. LAOPU GOLD brand continues to showcase a rare sense of luxury The company continues to delve into the ancient gold industry, with both brand and products reflecting a rare sense of luxury. According to data from Frost & Sullivan, the average overlap rate of LAOPU GOLD consumers with consumers of five major international luxury brands, including Louis Vuitton, Hermès, Cartier, and Bulgari, reaches 77.3%, further confirming the brand's high-end positioning. Currently, LAOPU GOLD has entered 9 of the top ten commercial centers in China, and the bank expects to achieve full coverage within the year. As of the end of June, LAOPU GOLD had approximately 480,000 loyal members, an increase of about 130,000 since the beginning of the year, with the brand's outreach continuing to advance. Development Trends With the opening and expansion optimization of stores such as Shanghai Port Huai Henglong, Shanghai IFC, and Marina Bay Sands Shopping Center in Singapore in 1H25, management expects that the newly added and optimized channels will contribute more significant revenue and profits in the second half of the year. In addition, the company's WeChat public account shows that LAOPU GOLD products will undergo a price increase on August 25, which the bank believes will provide good support for the company's gross profit margin performance Risk Warning: Gold prices are highly volatile, industry competition is intensifying, and the terminal retail environment is below expectations