GF Securities: Initiates coverage on LAOPU GOLD (06181) with a "buy" rating. Fair value is 775.64 Hong Kong dollars.

GF SEC released a research report, predicting that LAOPU GOLD (06181) will achieve a net profit attributable to shareholders of 48.0/68.9/87.1 billion yuan in the years 2025-2027. Taking into account the company's differentiated layout in the high-end gold market and the potential of domestic and overseas store expansion combined with channel optimization, and referencing comparable companies, the company is given a 18 times P/E multiple for 2026, corresponding to a fair value of 775.64 Hong Kong dollars per share. The company is given a "buy" rating for the first time. (Based on an exchange rate of 1 Hong Kong dollar = 0.91 RMB) GF SEC's main points are as follows: The gold and jewelry industry is undergoing an industrial transformation, with traditional craftsmanship becoming an important carrier of high-end products. Due to iterative craftsmanship and rising gold prices, the consumption of gold jewelry is trending towards high-end and lightweight. Traditional craftsmanship is superior to traditional gold jewelry in terms of complexity and design, driving the consumption of gold jewelry towards high-end customization. As a leading brand of traditional handmade gold jewelry, the company is expected to continue to benefit. Differentiation in entering the high-end gold market, constructing core competitiveness with brand/product/channel elements. Product end: The company adopts unified pricing with significantly higher unit prices and gross profit margins than its peers, and continuously launches differentiated designs that lead the market aesthetically; Channel end: Under a fully direct-operated model, the company creates an immersive shopping experience, with store locations concentrated in core business districts of first-tier and new second-tier cities, leading in-store performance growth rate, average store performance, and area efficiency compared to domestic and foreign jewelry brands; Brand end: Focusing on cultural narrative and membership service, the company continues to win the favor of high-net-worth individuals. Expansion of stores and store renovations drive company growth elasticity. Continuous store renovations: As of H1 2025, the company has completed upgrades at many core stores in China, with better business district locations and larger operating space driving continuous improvement in store performance; Potential for domestic and overseas store expansion: Benchmarking Bulgari/Cartier/Tiffany/Van Cleef & Arpels in the Greater China region and Singapore's channel layout, the bank believes that the company still has expansion potential for at least 40 stores in Asia in the medium to long term. Risk factors: industry competition risk, channel expansion and optimization risk, gold price volatility risk.