By Zhang Shidong
A surge in the supply of Laopu Gold shares after the end of a lock-up period turned out to be a buying opportunity for investors who missed out on the luxury jeweller鈥檚 14-fold surge since its 2024 debut.
The Beijing-based company鈥檚 shares jumped 15 per cent to a record of HK$1,008 on Monday, bucking concerns of a pullback after 69 million shares 鈥 a 40 per cent stake 鈥 became free-floating, allowing pre-listing investors including founder Xu Gaoming to sell without restrictions a year after the stock鈥檚 debut. The stock was little changed at HK$1,006 on Wednesday as trading resumed after a public holiday.
Laopu鈥檚 resilience underscores investors鈥 persistent shift to a group of so-called new consumer names that are underpinned by the rise of Generation Z 鈥 those born between roughly 1997 and 2012. The firm鈥檚 faster pace of store openings at home and abroad this year has reinforced belief in sustainable earnings growth based on robust demand for its products.
鈥淟aopu鈥檚 branding and strong pricing power will drive fast growth in sales and help to cut costs such as rentals,鈥 said Fan Junhao, an analyst at Huatai Securities in Hong Kong. 鈥淚ts foray into the overseas market will also give more growth room for its already strong sales.鈥
Laopu has surged more than 1,300 per cent since its debut on June 28, 2024, and is capitalised at HK$173.7 billion (US$22.1 billion). That translates to 38.5 times projected earnings for this year, compared with 17.2 times for Chow Tai Fook Jewellery Group, according to Bloomberg data. Laopu is expected to report 175 per cent profit growth this year.
Same-store growth at Laopu鈥檚 four flagship shops jumped by 170 per cent year on year in the first five months, and online sales at Alibaba鈥檚 Tmall and JD.com鈥檚 platform surged 333 per cent in the period, according to the brokerage, citing industry data.
Laopu opened six new stores this year: five in first-tier Chinese cities and one in Singapore, its first overseas outlet, according to Huatai Securities. The 110-square-metre (1,184 sq ft) store in Singapore鈥檚 Marina Bay Sands drew long queues for its launch last month. The brand had 36 shops in 15 Chinese cities at the end of last year.
Founded in 2009, Laopu aspires to be China鈥檚 Hermes and fill a void in the luxury market, which is dominated by foreign brands. It blends traditional Chinese craftsmanship with modern designs, aligning with a shift towards domestic luxury goods among younger consumers.
Unlike its rivals, Laopu does not tie its prices to the cost of gold, which gives it better control over its profit margins and attracts buyers when bullion prices rise.
Analysts tracked by Bloomberg set a 12-month price target of HK$1,031.17 for Laopu, implying a gain of about 2 per cent from the current level. JPMorgan Chase is the most bullish, with a share-price estimate of HK$1,249.
Traditional Chinese consumer companies such as distiller Kweichow Moutai have lost clout recently amid a slowdown in business activity and a worsening labour market. But 鈥渆motional consumption鈥 by Gen Z would sustain the trade on new consumer stocks, analysts said.
鈥淟aopu鈥檚 fast same-store growth is expected to continue because of branding and high gold prices,鈥 said Li Xinxin, an analyst at China Post Securities. 鈥淚t鈥檚 expected to go outside China and become one of the global luxury jewellery brands.鈥