Credit Suisse lowers LAOPU GOLD's target price to 981 yuan, high gold prices suppress gross profit

Credit Suisse published a research report indicating that LAOPU GOLD (06181.HK) is expected to achieve a net profit of RMB 2.3 billion in the second half of 2025, a year-on-year increase of 155%, with sales of RMB 15.3 billion, a year-on-year increase of 207%. The bank has lowered its net profit forecasts for LAOPU for 2025 to 2027 by 14%, 6%, and 12% respectively, to reflect the impact of high gold prices leading to lower gross margins, as well as a normalization of growth in 2027.

The bank has reduced LAOPU's target price from HKD 1,103 to HKD 981, corresponding to forecast price-to-earnings ratios of 22 times and 17 times for 2026 and 2027, respectively. Despite facing margin pressure, the bank expects LAOPU to see a recovery this year and reaffirms its "Buy" rating.

Credit Suisse expects LAOPU GOLD to achieve a net profit of RMB 2.3 billion in the second half of 2025, with sales in the mainland China market projected at RMB 13 billion, a year-on-year increase of 188%; average sales per store are expected to increase by 130% year-on-year. In terms of overseas markets, overseas sales are projected to be RMB 2.2 billion, a year-on-year increase of 295%. During this period, the expected gross margin is 36.4%, down from 38.1% in the first half