Guotai Junan Securities expects that the net income attributable to the parent company of Laopu Gold will be 1.079/1.412/1.754 billion yuan respectively in 2024-2026.
According to the Zhitong Finance APP, Guotai Junan Securities has released a research report stating that it maintains a "buy" rating for Laopu Gold (06181) and expects revenues of 6.994/8.644/10.606 billion yuan in 2024-2026, with a year-on-year increase of 120%/24%/23% respectively. The net income attributable to the parent company is expected to be 1.079/1.412/1.754 billion yuan, with a year-on-year increase of 159%/31%/24%. The company is a scarce high-end ancient gold brand and is expected to achieve significant faster-than-industry performance growth in the next three years, enjoying a certain valuation premium. The company has released its 24H1 performance, achieving revenue of 3.52 billion yuan, a year-on-year increase of 148%, and a net income of 0.588 billion yuan, a year-on-year increase of 199%. The net income meets the previous performance forecast guidance.
Cinda Securities' main points are as follows:
Under the fully direct sales model, the same-store sales growth drives significant optimization of expense ratio and improvement of net margin.
The company's gross margin for 24H1 sales is 41.33%, a slight decrease of 0.33pct compared to the same period last year. The bank predicts that this is mainly because the company's products are all priced on a per piece basis, and the price of gold rose rapidly in the first half of the year, resulting in an increase in raw material costs. Overall, the company's gross margin remains stable. The expense ratio for 24H1 is 19.15%, a year-on-year decrease of 4.20pct. Among them, the sales/management/research/finance expense ratios are 15.12%/3.54%/0.19%/0.30%, a year-on-year change of -2.51/-1.25/-0.14/-0.29pct. The net margin for 24H1 is 16.70%, a year-on-year increase of +2.82pct. The improvement in net margin mainly comes from the optimization of the expense ratio.
The brand's influence continues to expand, with gold-set diamonds leading the growth.
As the first brand to launch gold-set diamond products in the industry, Laopu Gold continues to lead the industry trend, and the sales proportion of the company's gold-set diamond products further increased in 24H1. In terms of revenue by product, 24H1 revenue for gold products/gold-set diamond products reached 1.372/2.147 billion yuan, with a year-on-year increase of 110%/182%. Gold-set diamond products accounted for 61% of the total revenue, an increase of 7pct compared to the same period last year.
The increase in revenue is contributed by the same-store sales and store expansion and enlargement.
According to Frost Sullivan, as of June 30, 2024, Laopu Gold ranked first in the coverage rate of the top ten high-end department stores nationwide among all gold jewelry brands. The expansion of brand influence drives the growth of same-store sales, with a growth of 104.2% in 1H24 same-store revenue. According to Frost Sullivan, in 1H24, Laopu Gold ranked first in single-store revenue in the industry in mainland China. In terms of region, mainland China/hong Kong and Macao achieved revenues of 3.233/0.288 billion yuan in 1H24, with an increase of 138%/376%. In addition to the same-store growth, the company is also actively promoting store expansion to bring incremental sales. As of June 30, 2024, the company has opened 33 self-operated stores in 14 cities, including 4 stores in SKP and 10 stores in the Wanda Plaza series. Compared with June 30, 2023, 6 new stores and 1 expanded store were added. As a strong complement to offline channels, online channels achieved a revenue of 0.391 billion yuan in 1H24, up 139%, accounting for 11.1% of total revenue.
Risk Warning: Gold price fluctuation; Store expansion below expectations; Uncertainty in overseas market environment; Weak consumer demand.
