Understanding the Market | LAOPU GOLD fell nearly 4% in the late session, Citigroup stated that the company's placement of shares is within expectations, and product prices increased by 25%, exceeding expectations

LAOPU GOLD fell nearly 4% in the afternoon trading session, down 3.74% to HKD 669, with a transaction volume of HKD 822 million. On the news front, on October 22, LAOPU GOLD announced plans to place 3.71 million new H shares at HKD 732.49 per share, raising approximately HKD 2.707 billion, of which 70% will be used for inventory reserves. The company explained that due to the long cycle of procurement, production, and sales collection lasting several months, it needs to stock up in advance to cope with the peak sales season. It is reported that in May this year, LAOPU GOLD placed 4.31 million H shares, raising approximately HKD 2.698 billion. Citigroup published a research report stating that this placement is within market expectations, and investors' core focus is whether the capital will be sufficient after this fundraising. With same-store sales growth slowing and new store expansion slowing down, it is expected that free cash flow will turn positive by 2026. In addition, LAOPU GOLD's new round of products has an average price increase of 25%, exceeding expectations. The bank believes that the significant price increase before the November sales peak reflects that the company has achieved ideal sales, and it also expects the company's gross profit margin to stabilize in the second half of the year after the product price increase, based on current gold prices, and anticipates a recovery in gross profit margin next year