HK Stock Market Move | LAOPU GOLD (06181) rebounds nearly 4% with product price increases and recent decline in gold prices expected to partially offset the impact of the new gold taxation policy.

LAOPU GOLD (06181) rose nearly 4%, as of press time, up 3.61% to HK$631, with a turnover of HK$4.46 billion. On the news front, the value-added tax rate for Chinese non-investment gold producers has been reduced from 13% to 6%. Daiwa believes that LAOPU GOLD's direct profit margin risk should decrease. The bank stated that LAOPU GOLD's significant price increase at the end of October and the approximately 3% drop in gold prices since then should provide some cushion for the company. The bank also pointed out that the potential general increase in gold jewelry prices may make LAOPU GOLD's products more attractive, potentially prompting consumers to purchase gold jewelry ahead of time. UBS, on the other hand, stated that the short-term demand for LAOPU GOLD and CHOW TAI FOOK may face pressure, but in the long term, both are expected to further integrate the market. Assuming the value-added tax refund rate is reduced from 13% to 6%, it is estimated that LAOPU GOLD's gross profit margin will face a pressure of 3 to 4 percentage points, but the company increased prices by about 20% at the end of last month, which may offset some of the impact; while CHOW TAI FOOK has recently raised prices for calculating gold products by 5%, passing the gross margin pressure on to consumers.