[HK IPO] Lao Feng Gold: Handcrafted with ancient techniques, what makes it different?
1. Basic Information
1.1 Company Profile
$LAOPU GOLD(06181.HK), is the first brand in China to promote the concept of "ancient gold craftsmanship" certified by the China Gold Association, and is the leading professional brand of ancient handmade gold artifacts in China. Inheriting Chinese classical culture and intangible cultural heritage craftsmanship, Laopu Gold combines cultural value with distinctive product differentiation.
According to the company's prospectus, based on 2023 revenue, Laopu Gold accounted for 2.0% and 0.6% of China's ancient gold jewelry market and the overall gold jewelry market, respectively. As of now, the company has established 33 self-operated stores in prominent commercial centers across 14 cities in China.
1.2 IPO Information
2. Fundamental Analysis
2.1 Financial Data
Revenue: The company achieved revenues of RMB 1.265 billion, RMB 1.294 billion, and RMB 3.180 billion in 2021, 2022, and 2023, respectively, with a compound annual growth rate (CAGR) of 58.5%. While the year-on-year growth in 2022 was only 2.3%, revenue surged by 145.7% in 2023.
Profit: Gross profits for 2021, 2022, and 2023 were RMB 521 million, RMB 442 million, and RMB 1.332 billion, with corresponding gross margins of 41.2%, 34.2%, and 41.9%. Net profits for the same periods were RMB 114 million, RMB 95 million, and RMB 416 million. The company's overall profitability remains robust.
2.2 Industry Development
The market size of ancient gold jewelry, measured by sales revenue, skyrocketed from RMB 13 billion in 2018 to RMB 157.3 billion in 2023, with a CAGR of 64.6%.
The ancient gold jewelry market is expected to reach RMB 421.4 billion by 2028, with a CAGR of 21.8% from 2023 to 2028. Although growth is slowing, the absolute market size is projected to remain strong.
2.3 Company Position
In 2023, China's ancient gold jewelry market was valued at RMB 157.3 billion, with the top five gold jewelry brands generating total revenue of approximately RMB 72.4 billion, accounting for a 46.1% market share.
Laopu Gold, with revenue of RMB 3.2 billion, held a 2.0% market share, ranking seventh. Notably, Laopu Gold is the only company among the top 10 gold jewelry brands solely focused on ancient gold craftsmanship.
3. Cornerstone Investors and Sponsors Analysis
The company has introduced three cornerstone investors for this IPO, with a total subscription amount of $55.5 million, accounting for 55.5% of the total shares issued. The cornerstone investors' lock-up period is six months...
4. Lottery Rate Analysis
The Hong Kong public offering comprises 1.94 million shares, with each lot consisting of 100 shares, totaling 19,400 lots. Currently, the margin financing has exceeded 75 times and is likely to surpass 100 times, triggering a 50% clawback. This would allocate 48,500 lots each to Group A and Group B. Assuming 10,000 applicants, the estimated one-lot winning rate is 100%...
5. Comprehensive Analysis and Rating of the New Stock
1. From a fundamental perspective, the company's financial performance is commendable, with revenue showing explosive growth. The fundamentals are solid...
2. In terms of brand recognition, the company operates in the highly traditional gold jewelry sector, already crowded with established brands. However, its focus on ancient gold craftsmanship sets it apart uniquely among jewelry brands.
3. Regarding cornerstone investors, three investors subscribed to $55.5 million, accounting for over 55% of the total offering—the highest proportion among recent IPOs.
4. Market sentiment for Hong Kong IPOs has been revitalized recently, with several new listings performing well. Laopu Gold is riding the wave, especially with gold prices hitting record highs.
5. Valuation-wise, the company is priced at HKD 6.5 billion, with a P/E ratio of 15x. Comparatively, Chow Tai Seng trades at 13x, Chow Sang Sang at 5x, and Luk Fook Holdings at 6x. While Laopu Gold's valuation isn't cheap, its standout feature is its gross margin of 40%, significantly higher than the industry average of 20%-30%.
6. Operationally, the company is issuing 19 million shares, aiming to raise HKD 780 million. Cornerstone investors have subscribed to HKD 400 million, leaving less than HKD 400 million in the float. Selling pressure may be notable, but the current IPO frenzy in Hong Kong often sees oversubscription exceeding 100 times?
7. In summary, Laopu Gold's fundamentals are sound, particularly its industry-leading gross margin. Brother Er Gou must grab a lot to show respect!
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