Report summary:

Old-fashioned Gold: A pioneer in ancient gold, the high-end brand position is stable. Old-fashioned Gold originated in 2009. The brand focuses on R&D, design, manufacture and sales of ancient gold. The sales channel is mainly offline direct management, mainly in high-end shopping malls and focuses on high-net-worth customers. The products and brands are widely recognized by customers. Benefiting from a significant increase in same-store sales, the company's performance grew rapidly. In 2023, revenue reached 3.18 billion yuan/ +145.67%, and net profit to mother reached 0.42 billion yuan/ +340.4%.

Gold jewelry: Gold continues to be popular, and ancient gold stands out. The size of China's gold and jewelry market continues to grow steadily. The CAGR is expected to be 9.38% in 2023-2028. Among them, ancient gold is favored by young customers and high-net-worth people due to its beautiful appearance and rich cultural content. The market size is rapidly increasing. The CAGR is expected to reach 21.78% in 2023-2028. Many domestic brands have entered the Gufajin Circuit one after another. Among them, the old Gold Shop had an earlier layout and always focused on the Gufajin Circuit, and the brand is more recognizable. High-end jewelry: Foreign investment accounts for the main share, and domestic brands are promising. China's high-end jewelry market is mainly dominated by foreign investors. Among them, leading foreign brands have differentiated high-quality products and a deep brand culture. Their position is relatively stable. The recognition of some foreign brands at the waist has declined, and domestic brands are expected to break through by relying on localization advantages and national trend.

Company advantages: Exquisite craftsmanship achieves noble quality, and continues to show high luxury attributes. 1) Product: The company has a complete R&D and production process, combined with deep process precipitation and rich patented design, which fully guarantees excellent product quality and differentiated exquisite appearance. 2) Brand: By focusing on the sense of luxury and scarcity created by high-end shopping centers, and the clear positioning brought by specialized ancient French gold products, it continues to highlight luxury attributes, and has a high level of popularity and recognition among young people and high-net-worth people. 3) Channel: The company already set up 33 stores nationwide in June 2024, and plans to add at least 15 new stores in the next 3 years. In addition to the mainland, Hong Kong and Macau markets, it will also actively expand overseas markets. Compared with foreign luxury jewelry brands, old gold stores still have plenty of room to expand their stores.

Investment advice: Laopu Gold is the pioneer and leader of the ancient French gold circuit in China. It is not only the first brand in the country to promote the ancient gold concept, but also the only brand currently focusing on ancient French gold products among major Chinese jewelry brands. The company maintains a stable position as a high-end jewelry brand with excellent product quality, differentiated design, meticulous store service, and continuous luxury attributes, thereby promoting steady growth in store sales and maintaining high profitability. The company's 2024-2026 revenue is expected to be 5.21 billion/6.535 billion/7.902 billion, and net profit to mother is 0.739 billion/0.96 billion/1.173 billion, corresponding PE is 16 times/12 times/10 times. First coverage, giving a “buy” rating.

Risk warning: Store expansion falls short of expectations; industry competition intensifies; gold prices fluctuate sharply; consumption power declines; performance forecasts and valuation judgments fall short of expectations.