Financial News, December 13th (Editor Hu Jiarong). $LAOPU GOLD (06181.HK)$ Recently, the stock price has performed strongly, continually setting new highs since its listing, increasing by as much as 274.26% compared to the opening price on the first day and 496.05% compared to the issue price of 40.5 Hong Kong dollars. In particular, over the last week, the stock price has increased by nearly 25%.

Old shop Gold rose over 4% during trading today, with the stock price continuing to set a historical high; as of the time of this report, it has risen 2.12%, reported at 241.4 Hong Kong dollars.

For Lao Pu Gold, perhaps many investors are not familiar. The company was founded in 2009 and mainly engages in the creative processing of Gold, Jewelry, etc., with most processing techniques being handcrafted using ancient methods. The products include jewelry, daily gold utensils, ornaments, and more. Brand revenue mainly comes from offline stores, with most located in first-tier and new first-tier cities, focusing on core business district luxury department sales areas.

The company positions itself in high luxury gold jewelry. Although the number of Lao Pu Gold stores is limited, its annual revenue and Net income growth levels are not low. According to the prospectus, in 2023, the average income per store for Lao Pu Gold reached 93.9 million yuan. The two stores located in Peking SKP have a total revenue of 0.336 billion yuan in 2023. According to Frost & Sullivan's data, Lao Pu Gold has ranked first in single-store income among all Gold and jewelry brands in China for two consecutive years (2022 and 2023).

Most gold jewelry retail stocks performed poorly in the first half of the year.

In fact, this year the international gold price has been remarkable. Taking spot gold as an example, it has increased by over 30% year-to-date.

However, several well-known enterprises in the gold jewelry industry, including $CHOW TAI FOOK (01929.HK)$ 、 $CHOW SANG SANG (00116.HK)$ and $LUK FOOK HOLD (00590.HK)$ Recently, the performance did not meet expectations and instead showed a declining trend.

Specifically, CHOW TAI FOOK's performance report for the first half of the fiscal year 2025 (ending September 30, 2024) shows that the revenue was 39.408 billion HKD, a decrease of 20.4% compared to the same period last year; Net income attributable to Shareholders was 2.53 billion HKD, markedly down by 44.4% year-on-year.

LUK FOOK HOLD's financial performance in the first half of this year was also disappointing, achieving revenue of 5.449 billion HKD, a year-on-year decrease of 27.2%; operating profit was 0.536 billion HKD, a year-on-year decrease of 53%; profit for the period was 0.417 billion HKD, a decrease of 55.7% year-on-year. In addition, CHOW SANG SANG also faced double-digit declines in revenue and Net income in the first half of this year.

Even these companies have experienced a wave of store closures. For instance, CHOW TAI FOOK closed 239 stores in the first half of the year. Among them, 36 were closed in first-tier cities, 73 in second-tier cities, 52 in third-tier cities, and 78 in fourth-tier cities and others. As of the end of September 2024, CHOW TAI FOOK had a total of 6968 retail outlets in mainland China, of which about 77% were franchise stores.

Why does Old Shop Gold stand out among gold jewelry retail stocks?

It is noteworthy that Lau Po Gold's performance has not declined. According to the performance in the first half of the year, revenue was 3.766 billion HKD, a year-on-year increase of 148.34%; net profit attributable to the parent was 6.29%, a year-on-year increase of 198.75%.

In this regard, Guo Zheng International believes that Lau Po Gold has the potential to be developed into a Luxury Goods brand. If it can become a Luxury Goods brand, there would be considerable room for market expansion and price increases. Moreover, the firm's high-end positioning means its performance is less affected by short-term fluctuations in gold prices.

UBS Group previously indicated that LAO PU GOLD's sales momentum has remained strong in the second half of the year to date, opening two new specialty stores in the second half and renovating three branches by expanding their area.

They anticipate that the catalysts for LAO PU GOLD may include a rebound in gold prices after a short-term adjustment; strong sales momentum during the year-end shopping festival; a potential opening of a store in Singapore in early 2025; and with the improvement in inventory turnover, a positive operating cash flow may be achieved in 2025.

编辑/jayden