Yamato: LAOPU GOLD (06181) adjusted net profit for the second half of the year exceeds expectations, target price of 880 Hong Kong dollars.

Yamato issued a research report stating that it currently rates LAOPU GOLD (06181) as a "buy" with a target price of 880 Hong Kong dollars. LAOPU GOLD forecasts that its adjusted net profit in 2025 will reach 5 billion to 5.1 billion Chinese yuan, representing a year-on-year growth of approximately 233% to 240%, exceeding the bank's and market expectations by 2% to 4%. Based on calculations, the adjusted net profit in the second half of 2025 is expected to be between 2.649 billion and 2.749 billion yuan, an increase of 194% to 205% year-on-year, surpassing the bank's forecast by 4% to 8%. The strong profit growth is mainly driven by accelerated revenue growth and the company maintaining gross profit margins by increasing product prices. Revenue in 2025 is expected to reach 27 to 28 billion yuan, representing a year-on-year growth of approximately 217% to 229%, faster than the 168% growth rate in 2024. Based on this calculation, revenue in the second half of 2025 is estimated to be around 14.6 billion to 15.6 billion yuan, a year-on-year growth of 194% to 214%, roughly in line with the bank's forecast. The growth is supported by continued brand recognition and positive consumer feedback. LAOPU GOLD opened 10 new boutique stores this year and optimized or expanded 9 existing stores. The report mentions that LAOPU GOLD announced a price increase in February, and with the recent geopolitical tensions in the Middle East leading to a temporary halt in the rise of gold prices, market research shows that consumer enthusiasm for gold products has cooled down, with significantly shorter queues than before. However, the bank believes that this situation is normal, as foot traffic typically slows down one to two weeks after a price increase, and it is expected that demand will gradually recover, driven by the increasing popularity of new products and continued support from gold prices.