Bank of America Securities: Downgrade LAOPU GOLD (06181) and CHOW TAI FOOK (01929) to "Neutral" and lower target price.

Bank of America Securities released a research report stating that the ratings of LAOPU GOLD (06181) and CHOW TAI FOOK (01929) have been downgraded from "buy" to "neutral", with LAOPU GOLD's target price lowered from 860 Hong Kong dollars to 774 Hong Kong dollars, and CHOW TAI FOOK from 17.5 Hong Kong dollars to 13.1 Hong Kong dollars. The bank stated that fluctuations in gold prices and slowing macroeconomic growth increase the risks to growth prospects. The conflict in Iran adds uncertainty to the upward cycle of gold prices. Over the past two years, the rise in gold prices has been one of the main drivers of gold jewellery stocks, as gold is seen as a good hedge against value. Even if gold prices can maintain an upward trend, the bank believes that there are limits to the potential for continued synchronous growth of gold jewellery consumption with gold prices, and consumer fatigue and product cycle declines may periodically affect sales. The bank pointed out that national gold and retail sales growth slowed to 13% in the first two months of this year, and it is expected that CHOW TAI FOOK's same-store sales growth in the first quarter of this year will slow down from the 21% growth in the fourth quarter of last year. Although a drop in gold prices may drive growth in same-store sales of weight-based products, this might be offset by weaker gross profit margins and inventory write-downs. As for LAOPU GOLD, the bank has raised its profit forecast for this year by 20% to reflect better-than-expected performance in the last year and the first quarter of this year.