Laopu Gold plunges 24% as first-half guidance misses estimates

Laopu Gold shares plunged 24% after the Chinese jeweler's first-half guidance signaled a sharp second-quarter slowdown.

"The second-quarter results were way below both our and market expectations," Jefferies analysts said in a note, maintaining a buy rating with a HK$580 price target.

The company expects first-half sales of RMB19.8 billion to RMB20.45 billion, representing growth of 60% to 66% from a year earlier — a steep deceleration from the more than 240% growth recorded in the same period last year. Adjusted net profit is projected at RMB4.31 billion to RMB4.36 billion, up 83% to 85%. Jefferies estimated second-quarter sales of roughly RMB3.1 billion and net profit of about RMB635 million, far below its forecasts of RMB4.4 billion and RMB990 million respectively. Citi analysts said the results came in roughly 30% below market expectations and cut their 2026-2028 earnings forecasts by 17% to 22%.

The selloff pushed the stock to HK$306, its lowest since January 2025 and more than 70% below the record high reached in July last year. Short selling accounted for 17.5% of turnover, signaling bearish positioning. Analysts said sustained weakness in gold prices and product price increases introduced in February weighed on second-quarter momentum.

Laopu's management expects new product launches in the second half and more attractively priced offerings through discounts to help stimulate sales, Citi analysts said. Nomura analysts said the company's efforts to strengthen brand recognition, expand its boutique network in premium malls and cultivate high-value customers should pay off if spot gold prices stabilize in the coming months. "Laopu, in our view, remains on track to become one of China's legitimate, high-end consumer brands, despite the weakened sales" in the second quarter, Nomura said.

The decline puts the stock at its lowest since January 2025, testing support levels not seen in 18 months. Investors will watch second-half sales data and gold price trends for signs of a recovery in consumer demand.

This article is for informational purposes only and does not constitute investment advice.