Wall Street reviews Old Shop Gold's earnings report: performance far exceeds expectations, and the company is moving toward China's first truly luxury brand

Citi and Nomura believe that Laopu Gold’s growth is driven by store expansion, rising gold prices, and synchronized price hikes, significantly strengthening its profitability. Even if gold prices pull back, in a pessimistic scenario profits would still remain steady and downside risks would be limited; with ample inventory, there is also no financing pressure. At the same time, the acceleration of premium branding continues to increase overlap between its customer base and top luxury brands, as the company moves toward a scarce asset that is becoming a “China luxury brand.”

Laopu Gold has delivered a scorecard that makes Wall Street sit up and take notice.

According to the Pursuing the Trend Trading Desk, both Citi and Nomura have assigned buy ratings in their latest published research reports, noting that the company’s preliminary results in the first quarter of 2026 significantly outperformed market expectations. Net profit margin hit a record high, and it was positioned as a scarce asset that is moving toward “China’s first truly luxury brand.”

According to Citi Research, Laopu Gold’s revenue in the first quarter of 2026 was between RMB 16.5 billion and RMB 17.5 billion, up more than 100% year over year. This corresponds to 41% to 44% of Citi’s full-year forecast. Net profit was RMB 3.6 billion to RMB 3.8 billion, with a net profit margin of 21.7% to 21.8%, significantly higher than the 17.9% adjusted for the second half of 2025 and Citi’s 19.3% full-year forecast. Nomura, meanwhile, pointed out that the quarter’s net profit was already close to 60% of its prior full-year forecast of RMB 6.25 billion, calling it a “more meaningful surprise.”

Both institutions maintained buy ratings. Their target prices were HKD 1,162 (Citi) and HKD 1,171 (Nomura), respectively, implying more than 100% upside versus the HKD 558.5 close on March 23.

First-quarter performance: Both volume and price rise, and profit margins improve significantly

According to Citi Research, Laopu Gold’s strong performance in the first quarter of 2026 was driven by multiple factors: sales contribution from newly opened stores in 2025 (10 new stores in total for the full year, including 5 large stores—four in Shanghai and one in Hong Kong), demand released earlier prompted by the rapid rise in the gold price in January 2026, and the “rush-buying” effect triggered by the company’s retail price increase at the end of February 2026.

The sharp improvement in net profit margin is also notable. Citi analysts Tiffany Feng, Xiaopo Wei, and Brian Cho believe this mainly stems from the company’s gross margin rebounding to over 40% after its October 2025 price increase, along with the operating leverage effect supported by strong sales. Nomura analysts Jizhou Dong and Summer Qian further added that the company’s two price hikes in October 2025 and February 2026 effectively offset the erosion to gross margin caused by rising gold prices, and that better cost control also played a positive role.

Full-year 2025 performance was likewise steady. According to Nomura, Laopu Gold’s full-year 2025 revenue rose by approximately 2.2 times year over year to RMB 27.3 billion, while net profit increased by approximately 2.3 times year over year to RMB 4.87 billion. Citi data shows that full-year same-store sales growth (SSSG) reached 161%, including 201% in the first half.

Outlook under gold price volatility: Limited downside risk in a pessimistic scenario

The recent sharp decline in gold prices has raised market concerns about Laopu Gold’s demand outlook, which is also one of the main reasons behind recent share-price pressure. Citi conducted scenario analysis.

Citi believes that among Laopu Gold’s customer base, some consumers buy due to the gold price uptrend. These price-sensitive customers account for about 40% of first-quarter 2026 revenue, totaling about RMB 7 billion. In a pessimistic scenario, assuming this demand completely disappears, Citi estimates that Laopu Gold’s full-year 2026 revenue could still reach RMB 37 billion—of which about RMB 17 billion in the first quarter (including one-off demand of RMB 7 billion and recurring revenue of RMB 10 billion), about RMB 5 billion in the second quarter, and about RMB 15 billion in the second half.

In this scenario, Citi expects Laopu Gold’s gross margin to remain at over 40%, and net profit margin to stay at 20% to 21%, corresponding to net profit of approximately RMB 7.4 billion to RMB 7.8 billion, basically in line with its current forecast of RMB 7.6 billion. “Downside risk is limited.”

Inventory and capital: No urgent financing needs

Market rumors about whether Laopu Gold needs financing have also weighed on the share price recently. Citi provided a relatively clear assessment.

According to Citi, Laopu Gold’s inventory rose sharply from RMB 4.1 billion at the end of December 2024 to RMB 16.0 billion at the end of December 2025, mainly prepared stock for the Spring Festival sales season. Citi calculates that, based on roughly two inventory turnovers per year and gross margin of over 40%, the current inventory can support revenue of about RMB 53 billion for 2026, nearly twice the RMB 27.3 billion of 2025. Citi therefore believes that unless future sales continue to maintain triple-digit growth, the company does not have an urgent need for financing.

Luxury branding pathway: Customer overlap continues to rise

In its report, Nomura places emphasis on Laopu Gold’s brand upgrade process and characterizes it as an early stage of “moving toward China’s first truly luxury brand.”

Citing data from Frost & Sullivan, Nomura noted that Laopu Gold’s customer overlap with the world’s top five luxury brands increased from 77.3% in July 2025 to 82.4% in March 2026. Nomura believes that continuous iterations in products and store design are gradually pushing Laopu Gold closer to global luxury brands. If successful, this would give the company stronger product premium pricing capability and allow its gross margin and gold price trajectory to decouple to some extent.

Citi, from the perspective of store operations, also confirms this trend. As of December 2025, Laopu Gold operated 45 boutique stores across 34 shopping malls. Its average annual, tax-included sales per shopping mall were close to RMB 1 billion. Opening a store at Shanghai Plaza 66 indicates that the company has entered all venues of the top ten commercial centers in China.

Citi lists Laopu Gold as the preferred target in China’s jewelry sector. The target price of HKD 1,162 is based on a 24x forecast P/E for 2026, which is a slight discount versus the 26x for global luxury peers. Citi believes that Laopu Gold’s faster growth momentum can offset its relatively short brand history.

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    There are risks in the market, and investment should be done cautiously. This article does not constitute personal investment advice, and it does not take into account any specific users’ special investment objectives, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article align with their own specific circumstances. In investing, you bear responsibility yourself.  

	
	

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