JP Morgan: The market undervalues LAOPU GOLD (06181) and is working to respond to fluctuations in gold prices, reiterating a "buy" rating.

J.P. Morgan released a research report stating that the stock price of LAOPU GOLD (06181) has dropped by 45% since the end of January, currently trading at 8 times and 7 times the forecasted P/E ratio for 2026 and 2027. The bank believes that the decline in stock price is due to investors' concerns about the uncertainty of same-store sales trends under gold price fluctuations, and expects LAOPU GOLD to have sufficient upside potential in valuation. Based on the discounted cash flow (DCF) target price of HK$1,296, the bank reaffirmed a "hold" rating on LAOPU GOLD and pointed out that LAOPU GOLD is the preferred stock in the China National Gold Group Gold Jewellery and Jewellery sector. The report stated that although gold price fluctuations will trigger a wait-and-see attitude in the second quarter and put pressure on same-store sales trends, the market has underestimated LAOPU GOLD's efforts to actively respond to the volatile cycles of gold, including a more flexible new product release strategy; further enhancing consumer experience; and upgrading channel networks. LAOPU GOLD is taking measures to enhance consumer value, including accelerating the launch of new products, announcing 8 new series from January to May, incorporating more gemstones and introducing new elements in design, while implementing flexible pricing strategies. In addition, the bank's sensitivity analysis for the second quarter of this year assumes same-store sales growth ranging from -60% to +10%, meaning sales in the first half of 2026 are expected to increase by 52% to 78% year-on-year, with net profit increasing by 81% to 112%. LAOPU GOLD's controlling shareholder increased their stake by approximately HK$166 million on May 20 at around HK$495 per share, providing some downside protection.