No longer just “selling gold”! HSBC: Lao Feng Xiang Gold is expected to break free from the gold price cycle and transition into a Tiffany-style luxury brand.
When gold price fluctuations become a sword hanging overhead, Lao Pu Gold’s growth story is being rewritten. HSBC’s latest report points out that the driver of Lao Pu Gold’s growth is no longer the gold price-driven "golden flywheel," but a "luxury goods flywheel" fueled by brand power.
On November 12, according to Windchaser Trading Desk, HSBC stated in its report that Lao Pu Gold’s growth logic is shifting from relying on rising gold prices—the “golden flywheel”—to one driven by branding, craftsmanship, and cultural narrative—the “brand flywheel.”
This means the company is expected to break free from the cyclical constraints of gold prices and transform into a true luxury brand. Its valuation metrics should be aligned with Western luxury giants like Tiffany and Richemont, rather than traditional Chinese jewelers, signaling massive potential for value re-rating.
The report also highlights that the recently introduced, seemingly negative gold tax reform could become a new catalyst for Lao Pu Gold to further erode market share in the per-gram pricing segment.
HSBC says this is the bank’s first coverage of Lao Pu Gold and the first time assigning a "Buy" rating, giving a target price of HKD 973.70 based on a DCF model, representing a 55% upside compared with the current share price (HKD 628.00 as of November 5, 2025).
Growth Myth: The Powerful Start of the “Golden Flywheel”
The report points out that since its IPO in June 2024, Lao Pu Gold’s stock price has surged nearly 800%, first benefitting from a powerful “golden flywheel” effect. The core logic of this flywheel is:
Unique fixed pricing model: Unlike traditional jewelers that price per gram, Lao Pu Gold sells at a “one-price” per item.
Rising gold prices fuel demand: As gold prices soar, the premium of their products calculated per gram actually narrows relative to the spot price, sharply stimulating market demand.
IPO capital boost: Funds raised from the IPO enabled rapid inventory expansion to meet surging demand, resulting in higher sales and faster inventory turnover.
Data shows that under this flywheel, Lao Pu Gold’s sales are expected to grow eightfold from 2023 to 2025. HSBC states that this growth miracle essentially stems from the perfect combination of a rising gold cycle, a unique business model, and capital injection.
Future Engine: The “Brand” Flywheel Poised to Take Over
HSBC believes that while the “golden flywheel” is powerful, true long-term value lies in the impending “brand flywheel.” As gold prices reached an all-time high of $4,350/oz in October 2025, markets worry about the risk of a price pullback. However, Lao Pu Gold has already leveraged the golden flywheel to accumulate the original momentum for its brand.
The core components of the “brand flywheel” include:
Exquisite craftsmanship and cultural narrative: Products integrate elements of traditional Chinese culture with modern aesthetics, highlighting intangible cultural heritage techniques like “hammering,” “engraving,” and “filigree,” making them not just gold, but heirloom-quality art pieces.High-end clientele and VIP services: According to Frost & Sullivan, Lao Pu Gold’s customer base overlaps with the top five international luxury brands by as much as 77.3%. The company established a VIP team in 2025 to focus on high-net-worth clients.
Targeted channel expansion: The company insists on opening boutiques in top-tier malls. It currently owns 48 stores, covering high-end commercial landmarks such as Beijing SKP and MixC. Although the store count is small, its sales-per-store rank first among all jewelry brands in mainland China.Overseas market expansion: Its first overseas boutique opened in Singapore in 2025, with plans for 3-4 more boutiques abroad between 2026 and 2027, launching a “brand internationalization, market globalization” strategy.
HSBC believes this flywheel will grant Lao Pu Gold powerful pricing rights, enabling it to gradually shrug off the negative effects of gold price volatility and grow into the first Chinese high-end jewelry brand able to compete with Tiffany, Richemont, and other global giants.
Valuation Logic: Benchmarking International Luxury Giants
The report presents highly optimistic financial forecasts:
- Short-term explosive growth: Net profit is expected to grow 218% year-on-year in 2025, with revenue rising 199%.
- Long-term steady growth: As growth normalizes, between 2025 and 2027, net profit CAGR is expected to reach 29.5%, and revenue CAGR 23.1%.
On valuation, HSBC’s key argument is that Lao Pu Gold’s valuation metrics should be reshaped. The market may still partly see it as a gold-related company, but its brand attributes position it with global luxury peers.
- Target valuation: Target price of HKD 973.70, equivalent to 26.2x projected 2026 P/E.
- Peer comparison: The average forward P/E for global luxury brands is 27x, while Chinese jewelry brands are only 13x. Lao Pu Gold’s current valuation clearly does not fully reflect its luxury brand potential.
The Dual Faces of Gold Tax Reform
The report provides a special analysis of the recent high-profile tax reform risk.
On November 1, two government departments issued a statement: taxpayers who do not sell standard gold through exchanges should pay VAT according to current regulations. Starting November 1, 2025, the VAT deduction for gold purchases will fall from 13% to 6%.
HSBC believes this new regulation could trigger another round of the “golden flywheel.” Because Lao Pu Gold’s “one-price” products have higher margins and can better absorb tax costs, while jewelers who price by gram will have to increase prices to pass on costs.
According to HSBC, this will further shrink the price gap between Lao Pu Gold’s traditional technique gold products and normal gold jewelry, attracting more consumers to opt for Lao Pu Gold’s pieces with both artistic and store-of-value attributes, accelerating its market share gain.
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