Laopu Gold plunges 16% as profit alert misses analyst expectations

Laopu Gold tumbled 16% to a 1.5-year low after its interim profit alert missed analyst estimates by about 30%.

"Second-quarter net profit was about 30% below our and the market's expectations, because of pressure on revenue and margins," Citi said in a report. The broker cut its 2026-2028 earnings forecasts by 17-22%.

The heritage gold jewelry retailer expects 1H26 revenue of RMB19.8 billion to RMB20.45 billion, up 60-66% from a year earlier. Adjusted net profit is seen at RMB4.31 billion to RMB4.36 billion, an 83-85% increase. The company did not disclose earnings per share or an interim dividend in the profit alert. The stock fell as much as 19.2% to HKD325.8, the lowest since January 2025, before settling at HKD332 with turnover of HKD615 million. Short selling accounted for 21.9% of volume.

Gold price volatility during the second quarter dampened demand for gold jewelry, CICC said, noting that while Laopu's growth slowed, its sales capability remained industry-leading. The broker cut its target price by 44% to HKD604.48. Goldman Sachs lowered its target to HKD560 from HKD650, citing greater-than-expected pressure from sales and operating deleveraging. Citi reduced its target to HKD507 from HKD659. All three maintained buy-equivalent ratings.

Laopu, which pioneered heritage gold products combining traditional Chinese cultural elements with intricate manufacturing techniques, had positioned itself as a luxury alternative to brands like Cartier and Van Cleef & Arpels. The sharp gold price fluctuations in the second quarter disrupted consumer demand across the jewelry sector, with peer Chow Tai Fook also facing headwinds. Morningstar analyst Jeff Zhang said in a July 27 note that while uncertainties remain, gold price recovery should support Laopu's revenue growth over time.

The coordinated downgrades from three top-tier brokers point to a fundamental reassessment of Laopu's near-term outlook as gold price swings hurt consumer demand. Investors will watch for the full interim report and any updated guidance on second-half margins.

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