JP Morgan: Expects LAOPU GOLD (06181) performance to gradually recover, maintains "Overweight" rating.
J.P. Morgan still expects the performance of the old gold industry to gradually recover, estimating profits of approximately 800 million and 1.2 billion yuan for the third and fourth quarters, respectively.
JPMorgan released a research report stating that the sales slowdown of LAOPU GOLD (06181) in the second quarter is more cyclical rather than structural. The company's gross margin exceeded expectations, and its strategy for handling gold price fluctuations has become clearer. Expansion in VIC and overseas markets can also enhance mid-term growth visibility, while liquidity and dividends provide downward protection for the company. The bank maintains an "Overweight" rating on the company with a target price of HKD 891.
JPMorgan still expects LAOPU GOLD's performance to gradually recover, forecasting profits of approximately RMB 800 million and RMB 1.2 billion for the third and fourth quarters, respectively. Although short-term sales performance still depends on the trend of gold prices, and the Mid-Autumn Festival and National Day holidays will be the next key observation points, the bank believes that the company's brand competitiveness and mid- to long-term profitability remain solid.
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