Pacific Securities: Maintains a "buy" rating on LAOPU GOLD (06181) as scale effect drives high performance.

Pacific Securities released a research report stating that LAOPU GOLD (06181), as the absolute leader in traditional Chinese gold, has built a strong brand barrier based on intangible cultural heritage, Oriental cultural heritage, and top luxury service experience, continuously strengthening the social identity and emotional value binding of high net worth individuals, coupled with the natural value preservation attributes of gold. With the three driving forces of store expansion, deep penetration of high net worth customer base, and high growth in online channels, the company has sufficient momentum for revenue growth and is expected to continue its high growth trend. It is expected that the company will achieve revenues of RMB 41.44 billion / 52.30 billion / 63.28 billion in 2026-2028, with year-on-year growth rates of +52% / +26% / +21%, and achieve net profits attributable to shareholders of RMB 8.04 billion / 10.30 billion / 12.63 billion, with year-on-year growth rates of +65% / +28% / +23%, corresponding to PE ratios of 10x / 7x / 6x, maintaining a "buy" rating. Key points of Pacific Securities: Event The company released its 2025 annual report, with a taxable sales of RMB 31.37 billion in 2025, a year-on-year increase of +220.3%, total revenue of RMB 27.30 billion, a year-on-year increase of +221.0%, and net profit attributable to shareholders of RMB 4.87 billion, a year-on-year increase of +230.5%, with adjusted net profit of RMB 5.03 billion, a year-on-year increase of +234.9%. The company also announced a final dividend of RMB 11.95 per share, totaling approximately RMB 2.1 billion, with a total dividend of approximately RMB 3.8 billion for the year, with a dividend payout ratio of approximately 78%. Continued expansion of brand momentum, with Wuxi Online Offline Communication Information Technology Co., Ltd. making progress In 2025, the company's brand influence continued to expand, and performance achieved explosive growth. By channels, the company's offline/online channels achieved operating income of RMB 22.65 billion / 4.66 billion in 2025, with year-on-year growth rates of +204.0% / +341.3%. Offline same-store sales maintained high growth, with the average annual sales performance per store approaching RMB 1 billion, ranking first in store efficiency among luxury brands in Mainland China. The online channel performance was impressive, with the company's flagship store ranking first in gold category sales in both Tmall 618 and Double Eleven events, with turnover exceeding RMB 10 billion and RMB 20 billion respectively. In terms of regions, in 2025, China Mainland / Overseas achieved revenues of RMB 23.36 billion / 3.94 billion, with year-on-year growth rates of +205.4% / +361.0%, accelerating expansion in overseas markets. Steady expansion of store network, continued penetration of high net worth customer base Channel expansion continued steadily, with a total of 45 self-operated stores in 16 cities by the end of 2025, all located in 34 well-known commercial centers such as SKP and Wanda Plaza. In 2025, 10 new stores were added for the year, with 9 optimization and expansion of existing stores. With the opening of the Shanghai Hang Lung Plaza store in October 2025, the company has completed full entry into the top ten domestic commercial centers. In terms of overseas markets, the opening of the Sands Shopping Centre store in Singapore in the first half of 2025 marked an important step towards internationalizing the brand. Customer base deepening and core customer base rapidly expanding. By the end of 2025, the company's loyal membership reached approximately 610,000, a year-on-year growth of 74.3%. According to Frost & Sullivan's research, the average overlap rate between the company's consumers and those of the top five international luxury brands increased from 77.3% in July 2025 to 82.4% in March 2026, consolidating the mindset of high-end customer base. The company accurately positioned itself in first-tier and new first-tier core business districts, continued to seize scarce store locations in top commercial centers such as SKP and Wanda Plaza, further solidifying its top luxury brand positioning, and continued to lead the industry in brand momentum. Short-term gold price disturbances, gradual manifestation of economies of scale, stable profitability In 2025, the company's gross profit margin was 37.6%, a year-on-year decrease of -3.5 percentage points, mainly due to the rapid rise in gold prices. After the price adjustment in October 2025, the gross margin has returned to over 40%. In terms of expenses, benefiting from the explosive growth in revenue, the company maintained good expense control, with sales and distribution expense ratio of 11.6% in 2025, a decrease of -3.0 percentage points year-on-year, and administrative expense ratio of 2.0%, a decrease of -1.2 percentage points year-on-year. Profitability steadily improved, with adjusted net profit margin of 18.4%, a year-on-year increase of +0.8%, effectively offsetting the short-term impact of gold price fluctuations on gross profit margins with economies of scale. Risk warning: Weak consumer demand; Gold price volatility; Increased market competition; Store openings falling short of expectations.