Wall Street reviews Lao Pu Gold's financial report: Performance far exceeds expectations, and the company is moving toward becoming China's first true luxury brand.

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Laopu Gold has delivered a performance report that has caught Wall Street’s attention.

According to Wind Chaser Trading Desk, both Citi and Nomura have issued new research reports giving buy ratings, noting that the company’s preliminary results for Q1 2026 far exceeded market expectations, with net profit margin hitting a record high. The reports also position Laopu Gold as a rare target on the path to becoming “China’s first true luxury brand.”

According to Citi Research, Laopu Gold’s Q1 2026 revenue reached RMB 16.5 to 17.5 billion, up over 100% year on year, representing 41% to 44% of Citi’s full-year forecast; net profit was RMB 3.6 to 3.8 billion, with a net profit margin of 21.7% to 21.8%, significantly higher than the adjusted 17.9% in H2 2025 and Citi’s full-year estimate of 19.3%. Nomura pointed out that Q1 net profit already reached nearly 60% of its previous full-year estimate of RMB 6.25 billion, calling it a “more meaningful surprise.”

Both institutions maintain buy ratings, with target prices of HKD 1,162 (Citi) and HKD 1,171 (Nomura), both implying more than 100% upside from the HKD 558.5 closing price on March 23.

Q1 performance: Growth in both volume and price, significant improvement in profit margins

According to Citi Research, Laopu Gold’s strong Q1 2026 performance was driven by multiple factors: sales contributions from new stores opened in 2025 (10 new stores for the year, including 5 large stores—4 in Shanghai, 1 in Hong Kong), demand brought forward by a rapid gold price increase in January 2026, and a buying spree triggered by the company’s retail price hike at the end of February 2026.

The significant improvement in net profit margin is also noteworthy. Citi analysts Tiffany Feng, Xiaopo Wei, and Brian Cho believe this mainly benefited from the company’s gross margin rebounding to above 40% after the price hike in October 2025, as well as the operating leverage effect of strong sales. Nomura analysts Jizhou Dong and Summer Qian added that the company’s two price increases in October 2025 and February 2026 effectively offset the negative impact of rising gold prices on gross margin, with better cost control also playing a key role.

The full-year results for 2025 were robust as well. According to Nomura, Laopu Gold’s total revenue in 2025 grew by about 2.2 times year on year to RMB 27.3 billion, with net profit up about 2.3 times to RMB 4.87 billion. Citi data shows full-year same-store sales growth (SSSG) was 161% in 2025, reaching 201% in the first half.

Outlook amid gold price volatility: Downside risks are limited even in a pessimistic scenario

The recent sharp drop in gold prices has raised market concerns about Laopu Gold’s demand outlook, which is one of the main causes of its recent stock price pressure. Citi conducted scenario analysis on this.

Citi believes that among Laopu Gold’s customer base, some are drawn in by rising gold prices—these price-sensitive customers accounted for about 40% of Q1 2026 revenue, or around RMB 7 billion. In the pessimistic scenario, assuming all this demand disappears, Citi estimates full-year 2026 revenue would still reach RMB 37 billion—RMB 17 billion in Q1 (including RMB 7 billion one-off and RMB 10 billion recurring), RMB 5 billion in Q2, and RMB 15 billion in the second half.

In this scenario, Citi expects Laopu Gold’s gross margin to remain above 40%, with net profit margin at 20% to 21%, corresponding to net profit of RMB 7.4 to 7.8 billion—roughly in line with the current forecast of RMB 7.6 billion, meaning “downside risk is limited.”

Inventory and funds: No urgent financing needs

Market rumors about Laopu Gold’s possible need for financing have also put pressure on its recent stock price. Citi gave a fairly clear verdict on this.

According to Citi, Laopu Gold’s inventory surged from RMB 4.1 billion at the end of December 2024 to RMB 16 billion at the end of December 2025, mainly for stocking up for the Spring Festival sales season. Based on roughly two inventory turns per year and gross margin over 40%, Citi calculates that the current inventory can support about RMB 53 billion in revenue in 2026, nearly double the RMB 27.3 billion for 2025. Citi thus believes that unless sales keep growing at triple-digit rates, there is no urgent need for financing.

Luxury transformation: Increasing customer overlap with high-end brands

Nomura highlighted Laopu Gold’s brand upgrading process, defining it as being in the early stages of becoming “China’s first true luxury brand.”

Citing Frost & Sullivan data, Nomura noted that Laopu Gold’s customer overlap with the world’s top five luxury brands rose from 77.3% in July 2025 to 82.4% in March 2026. Nomura believes the continuous iteration of products and store design is moving Laopu Gold closer to global luxury brands; if successful, this will give the company higher product pricing power and allow gross margins to decouple somewhat from gold price trends.

Citi confirmed this trend from a retail operations perspective. As of December 2025, Laopu Gold operated 45 boutiques in 34 shopping centers, with average annual sales per shopping center (including tax) reaching nearly RMB 1 billion. Its Plaza 66 store in Shanghai marks entry into all of China’s top ten commercial hubs.

Citi lists Laopu Gold as its top pick in the China jewelry sector. The target price of HKD 1,162 is based on 24x 2026 forecast P/E, a slight discount to the global luxury peer average of 26x, which Citi attributes to Laopu Gold’s much faster growth compensating for its relatively short brand history.

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The above highlights are from Wind Chaser Trading Desk.

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