Goldman Sachs: Reiterates "buy" rating on LAOPU GOLD (06181) with target price raised to HKD 345.

Goldman Sachs released a research report stating that it reaffirms its "buy" rating on LAOPU GOLD(06181), based on strong brand momentum. It has raised its net profit forecast for the company for the years 2024 to 2026 by 11% to 26%, reflecting better same-store sales prospects and operating leverage. The target price has been significantly raised from 205 Hong Kong dollars to 345 Hong Kong dollars, with a forecasted P/E ratio of 26 times, corresponding to a net profit compound annual growth rate of 38% from 2024 to 2026. The report mentions that the company's stock price has risen by 65% since the bank started coverage, mainly driven by the upward revision of profit forecasts for 2025 and a revaluation of its value. This is based on better than expected same-store sales and improved visibility brought by the rising gold price. The forecasted P/E ratio has increased from 15 times to 20 times. At the end of last year, the completion of a major share transaction upon the expiration of the lock-up period for cornerstone investors relieved short-term pressure and further boosted the stock price by 18%. The analysis by the bank suggests that the company's sales are expected to reach 20 billion yuan in 2028, compared to forecasted sales of 7.8 billion yuan last year, with a net profit of 3 billion to 3.5 billion yuan and a net profit margin of 15% to 17%. Based on a target P/E ratio of 20 times, this brings a long-term valuation of 60 billion to 65 billion yuan. The bank sees upside potential in the valuation, driven by a faster brand cycle resulting in higher growth and profitability forecasts for this year.