Laopu Gold shares drop over 3% on Fed rate hike and margin concerns
Shares of Laopu Gold (HK6181) fell over 3% in Hong Kong trading, dropping as low as HK$352.2, amid pressure from a U.S. Federal Reserve rate hike and analyst warnings. Citi reported the company offered 15-20% price discounts in Q3 mall promotions, up from 10%, and forecast gross margin to decline from 47% in Q2 to 41.8% in Q3. JPMorgan viewed the sales slowdown as cyclical, with upcoming holidays as key observation points.
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Laopu Gold Drops Over 3% as Citi Warns Discounts May Squeeze Gross Margin
Shares of Laopu Gold (HK6181) fell over 3% in Hong Kong trading, dropping 2.92% to HK$352.2 with a turnover of HK$299 million. The decline comes amid pressure on precious metals following the Federal Reserve's September meeting, where it unanimously voted 12-0 to raise interest rates by 25 basis points, restarting the rate hike cycle. Several Fed officials, including Musalem and Goolsbee, made hawkish statements that further weighed on precious metal valuations. Additionally, a Citi research report noted that Laopu Gold offered 15% to 20% price discounts during third-quarter mall promotions, higher than the previous 10%. Since old-model products account for the majority of sales, Citi expects an additional 9% discount in the third quarter. Assuming cost of goods sold remains unchanged, Citi forecasts the company's gross margin will decline from 47% in the second quarter to 41.8% in the third quarter.
Read sourceLaopu Gold Drops Over 3% on Fed Rate Hike and Citi Forecast of Margin Pressure
Shares of Laopu Gold (06181) fell over 3% in Hong Kong trading, dropping 2.92% to HK$352.2 with a turnover of HK$299 million. The decline comes amid pressure on precious metals following the U.S. Federal Reserve's September meeting, where it voted 12-0 to raise interest rates by 25 basis points, restarting the rate hike cycle. Several Fed officials, including Musalem and Goolsbee, made hawkish statements that further weighed on precious metal valuations. Additionally, a Citi research report noted that Laopu Gold offered 15% to 20% price discounts during third-quarter mall promotions, higher than the previous 10%. With old-model products accounting for most sales, Citi expects an additional 9% discount in the third quarter. Assuming stable cost of goods sold, Citi forecasts the company's gross margin will decline from 47% in the second quarter to 41.8% in the third quarter.
Laopu Gold Falls 2.59% as Citi Expects Q3 Gross Margin to Decline Sequentially
Shares of Laopu Gold (06181) continued to fall, dropping 2.59% to HK$353.20, marking a third consecutive daily decline, with turnover of HK$170 million. According to a research note from Citi, the company increased promotional discounts at shopping malls in the third quarter, which helped boost sales sequentially but will also cause gross margin to decline quarter-over-quarter. Citi maintains a 'Buy' rating with a target price of HK$507. The bank estimates that third-quarter revenue needs to grow 18% quarter-over-quarter to 3.9 billion yuan to maintain the same net profit level as the second quarter. For the second half of the year, Citi forecasts Laopu Gold's revenue will range between 7.5 billion and 10.5 billion yuan, representing a year-over-year decline of 15% to 39%, with net profit between 1.26 billion and 2.01 billion yuan, implying a net profit margin of 16.8% to 19.2%.
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Lao Pu Gold drops 3% as Q2 profit seen falling; holidays key for sales
Shares of Lao Pu Gold (HK6181) fell over 3% to HK$362.8, with turnover of HK$401 million. The decline follows the company's first-quarter earnings guidance, which implies second-quarter revenue of approximately RMB 2.3–3.3 billion and net profit of about RMB 467–667 million, a significant sequential drop from Q1. The company attributed the slowdown to a rapid decline in gold prices during the quarter. Founder Xu Gaoming has publicly stated that the company does not use hedging instruments to manage gold price volatility, arguing that 'hedging means abandoning brand strategy' and that the company instead relies on brand premium to offset price fluctuations. A JPMorgan Chase research report noted that the sales slowdown appears more cyclical than structural. While short-term sales performance remains dependent on gold price trends, the bank views the upcoming Mid-Autumn Festival and National Day holidays as key observation points. JPMorgan believes the company's brand competitiveness and medium- to long-term profitability remain solid.
Laopu Gold drops over 3% as Q2 sales seen cyclical; holidays key test
Laopu Gold (HK6181) fell more than 3% on September 17, trading at HK$362.8. Based on the company's first-quarter earnings guidance, second-quarter revenue is projected at RMB 2.3–3.3 billion and net profit at RMB 467–667 million, a significant sequential decline due to a rapid drop in gold prices. Founder Xu Gaoming has stated the company does not use hedging instruments, preferring to offset price volatility through brand premium. A JPMorgan research report views the sales slowdown as cyclical rather than structural, noting that short-term performance remains dependent on gold price trends. The bank identifies the upcoming Mid-Autumn Festival and National Day holidays as key observation points for sales recovery, while maintaining that the company's brand competitiveness and medium- to long-term profitability are robust.