JPM-Laopu Gold-H Price rise on 25 Aug., earlier than expected...-20250818

Laopu announced on 15 August that it will raise product prices on 25August. This is earlier than our expectation of mid-September (see report)and shall further ease the GPM pressure in 2H (the gold price is up 15%since the last price rise on 25 February; see our channel checks note afterthe price increase). Meanwhile, we also note the progress in storeexpansion/refreshment: (1) construction of the Shanghai Plaza 66Boutique has started, next to the famous international diamond brand DeBeers and the luxury fashion brand Valentino; see Figure 1-2; and (2)construction of a new boutique on 2F of Hangzhou MixC has also started(see Figure 3); it will replace the current one (a counter; see Figure 4), inour view. The progress demonstrates on-track store expansion andrefreshment. Potential near-term share-price catalysts include: new storeopenings, such as the Hong Kong IFC store; likely FTSE index inclusion;the upcoming product price increase; and the upcoming 1H25 resultsbriefing. Currently, Laopu trades at a 25x/18x 2025/26E PE, vs a71%/80% sales/earnings CAGR in 2025-27E. The risk-reward looksattractive to us. We expect Laopu’s momentum to continue, driven bybrand equity, product innovation and strong value proposition in a marketthat values national pride. We maintain our 2025-27 earnings estimates.Our Dec-25 PT of HK$1,294 implies a 39x/29x 2025/26E P/E. ReiterateOW on Laopu and its status as one of our top picks within the ChinaConsumer sector.

Price hike on 25 Aug.; earlier than expected. We believe this pricehike, together with new product launches with higher margins, shallfurther ease the GPM pressure in 2H –the gold price is up 15% since thelast price hike on 25 Feb. and we expect >1ppt GPM contraction in 1H.Meanwhile, we believe the price hike announcement will drive robustdemand in the next 10 days before it is implemented. For reference, in2024, Laopu raised its prices by ~10% (JPMe) in early April and lateSeptember, and in 2025 Laopu it raised prices by ~9% (JPMe) on 25Feb; see Figure 6.