Key Points Industry and Company * **Industry**: Jewelry, specifically high-end Chinese gold jewelry * **Company**: Lao Pu Gold, a leading brand in the high-end Chinese gold jewelry market Core Views and Arguments * **Lao Pu Gold's Growth**: The company's high growth rate is attributed to its strong brand, product, and channel capabilities, positioning it as the sole supplier meeting the needs of the high-end consumer group. * **Beta and Alpha**: The high-end gold jewelry industry has a beta component due to market trends, while Lao Pu Gold has a strong alpha due to its unique value proposition. * **Competitive Advantage**: Lao Pu Gold's competitive advantage lies in its product design, brand positioning, and exclusive channel strategy, making it difficult for competitors to imitate. * **Market Potential**: The high-end Chinese gold jewelry market has significant growth potential, driven by factors such as cultural trends, consumer preferences, and the rise of domestic brands. * **Brand Positioning**: Lao Pu Gold aims to become a globally competitive Chinese gold jewelry brand, combining traditional craftsmanship with modern aesthetics. Other Important Points * **Product Portfolio**: Lao Pu Gold offers a diverse product range, including daily accessories, jewelry, and decorative items, with a focus on Chinese cultural elements and craftsmanship. * **Channel Strategy**: The company follows a selective channel strategy, focusing on high-end shopping malls and luxury brands, ensuring a high-quality customer base. * **Brand Building**: Lao Pu Gold has successfully established a strong brand image through targeted marketing and collaborations with key opinion leaders. * **Financial Performance**: The company has achieved strong financial performance, with high gross margins and significant growth in sales. * **Future Outlook**: Lao Pu Gold is expected to continue its growth trajectory, driven by factors such as market expansion, product innovation, and brand building. References * [doc id='2'] * [doc id='3'] * [doc id='4'] * [doc id='6'] * [doc id='8'] * [doc id='9'] * [doc id='11'] * [doc id='12'] * [doc id='13'] * [doc id='14'] * [doc id='15'] * [doc id='16'] * [doc id='17'] * [doc id='18'] * [doc id='19'] * [doc id='20'] * [doc id='21'] * [doc id='22'] * [doc id='23'] * [doc id='24'] * [doc id='25'] * [doc id='26'] * [doc id='27'] * [doc id='28'] * [doc id='29'] * [doc id='30'] * [doc id='31'] * [doc id='32'] * [doc id='33'] * [doc id='34'] * [doc id='35'] * [doc id='36'] * [doc id='37'] * [doc id='38'] * [doc id='39'] * [doc id='40'] * [doc id='41'] * [doc id='42'] * [doc id='43'] * [doc id='44'] * [doc id='45'] * [doc id='46'] * [doc id='47'] * [doc id='48']

Key Points Industry and Company * **Industry**: Jewelry and luxury goods * **Company**: Old Patch Gold (Old Patch) * **Focus**: Analysis of Old Patch's business performance, valuation, and future prospects Core Views and Arguments * **Stock Valuation**: The stock price of Old Patch may be comparable to Pop Mart's growth trajectory, but the business models differ significantly. Old Patch operates in a high-price, low-repurchase rate market, unlike Pop Mart's high stickiness and high-repurchase rate. * **Industry Beta**: Old Patch benefits from the industry's beta, particularly from the growth of ancient gold compared to regular gold and hard gold, which has seen a growth rate of over 50% in the past few years and is expected to exceed 20% in the future. * **Gold Price Fluctuations**: The company's sales performance is somewhat decoupled from gold price fluctuations, as evidenced by the data in November and December. * **Valuation**: The valuation of Old Patch before and after the lock-up period is around 18-20 times earnings. The company was included in some clients' quarterly gold stocks at the end of December. * **Growth Expectations**: The market has a high expectation for Old Patch's growth in 2025 and 2026, with a potential EPS growth rate of 40-50%. * **Brand Strength**: Old Patch has a strong brand and is in a "cross-border" state, with significant growth potential. * **Store Expansion**: The company is cautious about store expansion, with a target of 60 stores in the future. * **Distribution Channels**: The company's sales are mainly through high-end shopping malls such as SKP and Wanda Plaza, with SKP and Wanda Plaza accounting for over 50% of the revenue. * **Dai gou**: The sales of Old Patch through dai gou are relatively high, with the top ten dai gou accounting for about 2 billion yuan in 2023. * **Competitive Landscape**: Old Patch faces competition from international jewelry brands and domestic high-end jewelry brands, but its competitive advantage lies in its brand strength and product innovation. Other Important Points * **Store Optimization**: The company actively optimizes and maintains its stores, improving their size and location. * **Marketing Activities**: The company actively participates in marketing activities and has increased its marketing efforts in recent years. * **Employee Stock Ownership Plan**: The company's employee stock ownership plan may be subject to delisting and reduction in the future. * **Upcoming Events**: The company will provide a pre-earnings guidance in March or April, and there will be a delisting event in June.

Investment Rating - The investment rating for the company is "Buy" (maintained) [2][9]. Core Views - The report highlights that the company, Laopu Gold, is positioned in the high-end gold luxury market, with optimistic growth expectations driven by product differentiation and strong brand positioning [5][9]. - The ancient gold market is projected to grow significantly, with a compound annual growth rate (CAGR) of 21.8% from 2023 to 2028, indicating a robust demand for gold products [7]. - The company's unique product offerings and strong design capabilities are seen as key competitive advantages in a market characterized by product homogeneity [7][9]. Summary by Sections Market Performance - The report notes significant absolute and relative price increases for Laopu Gold, with absolute increases of 47.29%, 43.61%, and 75.68% over the past 1, 2, and 3 months respectively [4]. Company Overview - Laopu Gold has expanded its offline presence to 38 stores by the end of 2024, with a focus on high-end shopping districts, enhancing brand visibility and consumer attraction [7]. - The company has successfully implemented promotional activities during key shopping periods, resulting in over 30% year-on-year sales growth in first-tier cities [7]. Financial Projections - Revenue is projected to grow from 3.18 billion in 2023 to 8.04 billion in 2025, with net profit expected to increase from 416 million to 1.95 billion in the same period [8][10]. - The report anticipates a significant increase in same-store sales, driven by brand loyalty and a growing consumer base [7][9]. Strategic Outlook - The company plans to double its store count in the domestic market and expand internationally, targeting Southeast Asia, including Hong Kong, Macau, Tokyo, and Singapore [7][9]. - The report emphasizes the potential for further growth in the high-end jewelry segment, supported by a strong marketing strategy and product innovation [9].

Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [5]. Core Insights - Laopuhuang is positioned as a leading high-end Chinese gold brand, benefiting from the trend of domestic high-end jewelry consumption and the cultural revival in China. The company is expected to achieve significant growth in store numbers and operational performance [5][21]. - The company anticipates net profits of 1.281 billion, 1.799 billion, and 2.305 billion CNY for 2024, 2025, and 2026 respectively, with corresponding EPS of 7.61, 10.69, and 13.69 CNY, indicating a strong growth trajectory [5][9]. Summary by Sections Company Overview - Laopuhuang is recognized as the first brand in ancient gold craftsmanship in China, focusing on high-end positioning and cultural value. The brand has gained significant recognition, being listed among the top ten jewelry brands favored by high-net-worth individuals [21][22]. Financial Performance - In 2023, the company achieved revenue of 3.18 billion CNY, a year-on-year increase of 146%, and a net profit of 416 million CNY, up 340% year-on-year. The first half of 2024 saw revenue of 3.52 billion CNY, reflecting a 148% increase, and a net profit of 590 million CNY, a 199% increase [32][33]. Competitive Advantages - Laopuhuang maintains a high-end brand positioning and differentiates itself through unique product offerings, self-operated channels, and a strong brand narrative. The company emphasizes quality craftsmanship and cultural significance in its products, appealing to high-end consumers [36][41]. Growth Strategy - The company adopts a strategy of "building high walls, accumulating grain, and waiting to claim the throne," focusing on deepening customer relationships and maintaining a self-operated model without franchising. This approach is designed to enhance customer loyalty and brand recognition [5][36]. Market Potential - The high-end jewelry market in China exceeds 60 billion CNY, with Laopuhuang positioned to capture a significant share as consumer preferences shift towards high-quality gold products. The company is expected to benefit from increased penetration and repeat purchases among high-end clientele [6][36].

Investment Rating - The report assigns an "Accumulate" rating for the company, with a target price of 217.14 HKD for 2025, based on a 22x PE ratio [4][5][115]. Core Insights - The company is a leading high-end gold jewelry brand in China, focusing on the promotion of "Ancient Method Gold" and has established a differentiated high-end positioning that serves as a foundation for its success. The company has experienced rapid growth, with a CAGR of 58.6% in revenue and 91.2% in net profit from 2021 to 2023 [1][29]. - The market for Ancient Method Gold jewelry is expected to grow significantly, with a projected CAGR of 21.8% from 2023 to 2028, outpacing traditional gold jewelry segments. The company is well-positioned to capitalize on this growth through its comprehensive competitive advantages across branding, product innovation, channel marketing, and strategic development [1][53]. Company Overview - Founded in 2009, the company is recognized as the first brand in China to promote the concept of "Ancient Method Gold" and is the leading brand in the field of traditional handcrafted gold jewelry [1][23]. - The founder has extensive experience in commercializing cultural products, and the management team is stable and experienced [1][41]. Market Potential - The gold jewelry market in China is projected to reach 811 billion RMB by 2028, with a CAGR of 9.4% from 2023 to 2028. The pure gold segment is expected to dominate, with a projected CAGR of 9.7% during the same period [46][47]. - The Ancient Method Gold jewelry market is anticipated to grow from 157.3 billion RMB in 2023 to 421.4 billion RMB by 2028, capturing an increasing market share [53][54]. Brand Positioning - The company fills a gap in the high-end gold jewelry market in China, recognized by high-net-worth individuals. It differentiates itself through a pricing model based on piece pricing rather than weight, which is common among traditional brands [2][62]. - The company has been recognized as one of the top ten jewelry brands favored by high-net-worth individuals in China, indicating strong brand recognition and market acceptance [62][68]. Distribution Channels - The company focuses on high-end shopping centers, achieving significant results with a coverage rate of 80% in major high-end shopping centers in China. The revenue share from five major shopping centers increased from 35.7% in 2021 to 39.1% in 2023 [2][80]. - The company plans to open 15 new stores over the next three years, indicating substantial growth potential in its distribution network [2][90]. Product Competitiveness - The company maintains a strong product development capability, with a focus on strict quality control to ensure high-end positioning. It has a unique advantage in the Ancient Method Gold market, being the only brand dedicated to this segment [3][95]. - The company has a robust pipeline of innovative products, having launched numerous new and updated products in recent years, which enhances its competitive edge [99][100]. Financial Projections - The company forecasts significant growth in earnings per share, projecting 6.93, 9.19, and 11.71 RMB for 2024, 2025, and 2026, respectively. Revenue is expected to grow substantially, driven by both offline and online sales channels [4][110][112].

Investment Rating - The report assigns an "Accumulate" rating for the company, marking its first coverage in the market [4][62]. Core Insights - The company is recognized as the leading brand in traditional handcrafted gold jewelry in China, focusing on high-quality products that blend cultural and fashionable attributes [22][10]. - The company has demonstrated rapid growth, with a CAGR of 39.5% in revenue and 53.0% in net profit from 2017 to 2023, driven by increasing consumer preference for high-quality traditional gold products [25][27]. - The company has a strong competitive advantage in product, research and development, and distribution channels, with a significant increase in the revenue share of higher-margin gold-inlaid products [37][41]. Summary by Sections 1. Company Overview - The company is the only major brand in the Chinese gold jewelry market that specializes in the design, production, and sale of traditional gold products, holding a market share of 2.0% in the traditional gold jewelry segment and 0.6% in the overall gold jewelry market as of 2023 [22][10]. 2. Competitive Advantages - **Product**: The revenue from gold-inlaid products has increased significantly, with a CAGR of 71.8% from 2021 to 2023, and these products accounted for 61.0% of total revenue in the first half of 2024 [37][41]. - **Distribution**: The company operates all its stores in a self-operated model, primarily located in high-end shopping districts of first-tier and new first-tier cities, contributing 88.6% of total revenue in 2023 [41][42]. - **Research and Development**: The company has a robust R&D framework, with 243 domestic patents and 164 international patents, ensuring continuous product innovation and quality control [51][53]. 3. Financial Forecast and Valuation - The company is projected to achieve revenues of 67.0 billion, 91.3 billion, and 108.8 billion yuan from 2024 to 2026, with year-on-year growth rates of 110.8%, 36.1%, and 19.3% respectively [58][62]. - The expected net profit for the same period is 9.7 billion, 13.4 billion, and 16.3 billion yuan, with growth rates of 132.3%, 38.3%, and 21.5% respectively [58][62]. - The current price-to-earnings (P/E) ratios are projected to be 30, 22, and 18 for the years 2024, 2025, and 2026 [58][62].

Investment Rating - The report assigns a "Buy" rating to Laopu Gold with a target price of HKD 235 [1][1]. Core Insights - Laopu Gold is a pioneer in the ancient gold concept, focusing on high-end gold jewelry with significant growth potential in the domestic market. The company reported revenues of RMB 3.28 billion and RMB 3.52 billion for the full year of 2023 and the first half of 2024, respectively, reflecting year-on-year growth of 145% and 148%. Net profits were RMB 416 million and RMB 587 million, showing year-on-year increases of 342% and 198% [1][1][14]. Company Overview - Laopu Gold, established in 2009, is a chain enterprise specializing in the processing and sale of gold jewelry, promoting the ancient gold concept. The company operates 33 stores across 14 cities in China, focusing on high-end markets [1][14]. - The company has a concentrated shareholding structure, with the largest shareholders being the Xu family, holding 67.6% of the shares [16]. Financial Performance - The company has shown rapid revenue growth, with a compound annual growth rate of 58.6% from 2021 to 2023. The gross profit margin has remained stable at around 41.9% [25][25]. - For the years 2024 to 2026, net profit forecasts are RMB 1.12 billion, RMB 1.45 billion, and RMB 1.78 billion, respectively, with corresponding EPS of HKD 7.1, HKD 9.3, and HKD 11.3 [1][1]. Market Position and Strategy - Laopu Gold has positioned itself in the high-end jewelry market, with 90% of its sales coming from products priced above RMB 10,000. This is significantly higher than competitors, where such products typically account for less than 20% of sales [1][1][36]. - The company has a unique product offering, utilizing complex craftsmanship to create intricate gold jewelry, and has been recognized as one of the top ten jewelry brands favored by high-net-worth individuals in China [1][1][36]. Industry Insights - The gold jewelry market in China is projected to grow, with the ancient gold segment experiencing a compound annual growth rate of 64.6% from 2018 to 2023, reaching RMB 157.3 billion [1][1]. - The report highlights that the gold price has been on an upward trend, currently at RMB 623 per gram, which has increased by 28.9% since the beginning of the year. This trend supports the demand for gold jewelry [1][55].

Investment Rating - The report assigns an "Overweight" rating to Laopu Gold (06181 HK) for the first time [1] Core Views - Laopu Gold is positioned as a high-end jewelry brand specializing in ancient gold craftsmanship, with rapid revenue and profit growth [6] - The ancient gold jewelry market is growing significantly faster than the ordinary gold jewelry market, with penetration still having room for improvement [7] - Laopu Gold's brand premium, product differentiation, and channel expansion are key drivers of growth [7] Company Overview - Laopu Gold focuses on ancient gold craftsmanship, offering products such as jewelry, daily gold utensils, and ornaments [6] - The company operates 33 self-owned stores as of H1 2024, primarily located in high-end shopping malls in first-tier and new first-tier cities [6] - Revenue from offline stores accounted for 88 6% of total revenue in 2023 [6] - Laopu Gold plans to open approximately 10 new stores in mainland China and 5 stores in regions including Hong Kong, Macau, Tokyo, and Singapore over the next three years [6] Financial Performance - Revenue grew from RMB 1 265 billion in 2021 to RMB 3 18 billion in 2023, with a CAGR of 58 6% [6] - Net profit attributable to shareholders increased from RMB 114 million in 2021 to RMB 416 million in 2023, with a CAGR of 91% [6] - Gross margin remained stable at around 41 9% from 2021 to 2023 [6] - Net margin improved from 9% in 2021 to 13 1% in 2023 [6] Market and Industry Analysis - The ancient gold jewelry market grew from RMB 13 billion in 2018 to RMB 157 3 billion in 2023, with a CAGR of 64 6% [7] - The penetration rate of ancient gold jewelry increased from 4 6% in 2018 to 31 2% in 2023 [7] - The top five gold jewelry brands accounted for 46 1% of the ancient gold jewelry market in 2023, with Laopu Gold holding a 2% market share [7] - The price of 9999 gold in China rose from RMB 271 1 per gram in 2018 to RMB 449 9 per gram in 2023 [18] Competitive Advantages - Laopu Gold's products are priced higher than traditional gold jewelry, with 65% of products priced between RMB 10,000 and RMB 50,000 [7] - The company's stores are located in high-end shopping malls, with the top five stores achieving a sales growth of 157 9% in 2023 [7] - Laopu Gold's single-store revenue increased from RMB 52 58 million in 2018 to RMB 98 89 million in 2023, with a CAGR of 13 47% [7] - The company's coverage rate in the top 40 high-end shopping malls in China was 30% in 2023, with plans to expand to 15 new stores by 2026 [7] Valuation and Forecast - Revenue is expected to grow to RMB 6 432 billion in 2024, RMB 8 753 billion in 2025, and RMB 10 614 billion in 2026 [4] - Net profit attributable to shareholders is forecasted to reach RMB 1 032 billion in 2024, RMB 1 423 billion in 2025, and RMB 1 742 billion in 2026 [4] - The P/E ratio is projected to be 24 9x in 2024, 18x in 2025, and 14 7x in 2026 [4] Product and Customer Analysis - Laopu Gold's products are primarily priced between RMB 10,000 and RMB 50,000, with gold-inlaid products contributing 56% of revenue in 2023 [7] - Customers spending over RMB 1 million accounted for 15 9% of sales in 2023, up from 8 5% in 2021 [48] - The company's customer base is relatively young, with 45% of followers on Xiaohongshu aged 45 and above [52]

7 October 2024 | 8:13PM HKT | --- | --- | --- | --- | --- | --- | --- | --- | --- | |--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------|-------|----------- ...

Investment Rating and Core Views - **Investment Rating**: Overweight (Initiation) [1] - **Core Views**: The company is a pioneer in the ancient gold jewelry market, leveraging its high-end product positioning and differentiated competition to drive growth through brand momentum, single-store efficiency, and store expansion [2] Company Overview - **Company Profile**: Founded in 2009, the company is a leading brand in ancient gold jewelry, focusing on the research, design, and sale of ancient gold products [11] - **Organizational Structure**: The company has a concentrated ownership structure, with the founder and his son holding a combined 62.03% of the shares. Employee incentives are robust, with multiple employee持股 platforms established [11][12] - **Financial Performance**: The company has shown strong revenue and profit growth, with 2023 revenue reaching RMB 3.18 billion, a 145.6% YoY increase, and net profit reaching RMB 416 million, a 340.4% YoY increase [14] Market and Industry Analysis - **Ancient Gold Market Growth**: The ancient gold market is expected to grow rapidly, with a projected CAGR of 21.8% from 2023 to 2028, reaching a market size of RMB 421.4 billion by 2028 [2] - **High-Net-Worth Individuals (HNWIs)**: The company targets HNWIs, with a penetration rate of 5.7% among China's 3.16 million HNWIs in 2022. The company's products cater to the rational, self-indulgent, and social needs of HNWIs [39][40] Growth Drivers - **Brand Momentum and User Expansion**: The company's brand momentum is increasing, with a growing penetration rate among HNWIs and younger, middle-to-high-income consumers [4] - **Single-Store Efficiency**: The company's single-store efficiency is expected to continue improving, driven by product diversity, optimized channel conditions, and price adjustments [2] - **Store Expansion**: The company plans to open 13 new stores in the next two years, maintaining high standards and controlled expansion [2] Product and Channel Strategy - **Product Innovation**: The company focuses on R&D, with the founder leading the product development team. It has launched 324 new products and 419 iterations from 2021 to 2023, with new and iterated products accounting for over 12% of total revenue [33][34] - **Channel Expansion**: The company primarily operates through offline channels, with 88.6% of revenue coming from offline sales in 2023. It focuses on high-end commercial centers in first-tier and new first-tier cities [21] Financial Projections - **Revenue and Profit Forecast**: The company is expected to achieve net profits of RMB 1.006 billion, RMB 1.435 billion, and RMB 1.818 billion in 2024, 2025, and 2026, respectively, with corresponding P/E ratios of 19.6x, 13.8x, and 10.9x [2] - **Gross Margin and Expense Ratio**: The company's gross margin has remained stable at around 42%, with a declining expense ratio due to economies of scale. The net profit margin improved to 16.7% in H1 2024 [16] Competitive Positioning - **Market Share**: The company holds a 2.0% market share in the ancient gold jewelry market, ranking seventh. It is the only brand among the top ten players that focuses exclusively on ancient gold jewelry and operates all offline stores through a direct model [31][32] - **Comparison with Competitors**: The company's revenue and profit levels are lower than its peers due to its selective store locations and smaller store count. However, its gross and net profit margins are industry-leading, driven by its high-end product positioning and direct operation model [23][24]