Wall Street Reviews Lao Pu Gold Financial Results: Performance Far Exceeds Expectations, Company Moving Toward China's First True Luxury Brand

Old Shop Gold delivers a performance that catches Wall Street’s attention.

According to Wind Trading Desk, both Citibank and Nomura have issued buy ratings in their latest research reports, noting that the company’s preliminary Q1 2026 results significantly exceeded market expectations, with record-high net profit margins. They also position it as a scarce asset on its way to becoming “China’s first truly luxury brand.”

According to Citibank research, Old Shop Gold’s revenue in Q1 2026 reached RMB 16.5 billion to RMB 17.5 billion, more than doubling year-over-year, accounting for 41% to 44% of Citibank’s full-year forecast; net profit was RMB 3.6 billion to RMB 3.8 billion, with net profit margins of 21.7% to 21.8%, significantly higher than the 17.9% adjusted in the second half of 2025 and Citibank’s full-year forecast of 19.3%. Nomura pointed out that the quarterly net profit is close to 60% of its previous full-year forecast of RMB 6.25 billion, calling it a “more meaningful surprise.”

Both institutions maintain buy ratings, with target prices of HKD 1,162 (Citibank) and HKD 1,171 (Nomura), implying over 100% upside from the March 23 closing price of HKD 558.5.

Q1 Performance: Volume and Price Rise, Significant Margin Improvement

According to Citibank, Old Shop Gold’s strong Q1 2026 performance was driven by multiple factors: sales contributions from new stores opened in 2025 (a total of 10 new stores, including five large stores—four in Shanghai and one in Hong Kong), the demand pull from the rapid rise in gold prices in January 2026, and the rush to buy following the company’s price increase at the end of February 2026.

The notable improvement in profit margins is also noteworthy. Citibank analysts Tiffany Feng, Xiaopo Wei, and Brian Cho believe this mainly results from the gross margin recovering to over 40% after the October 2025 price hike, coupled with strong sales driving operating leverage. Nomura analysts Jizhou Dong and Summer Qian added that the two price increases in October 2025 and February 2026 effectively hedged against the erosion of gross margins caused by rising gold prices, while better cost control also played a positive role.

The full-year 2025 results were also solid. Nomura estimates that Old Shop Gold’s revenue in 2025 grew approximately 2.2 times year-over-year to RMB 27.3 billion, with net profit increasing about 2.3 times to RMB 4.87 billion. Citibank data shows that same-store sales growth (SSSG) reached 161% in 2025, with 201% in the first half.

Outlook Amid Gold Price Fluctuations: Limited Downside Risks in Pessimistic Scenario

Recent sharp declines in gold prices have raised concerns about demand for Old Shop Gold, which has also been a major factor pressuring its stock price recently. Citibank conducted scenario analysis on this.

Citibank believes that among Old Shop Gold’s customer base, some consumers are attracted by rising gold prices and purchase accordingly, accounting for about 40% of Q1 2026 revenue, roughly RMB 7 billion. In a pessimistic scenario where this demand disappears entirely, Citibank estimates that full-year 2026 revenue could still reach RMB 37 billion—about RMB 17 billion in Q1 (including RMB 7 billion one-time demand and RMB 10 billion recurring revenue), RMB 5 billion in Q2, and RMB 15 billion in the second half.

In this scenario, Citibank expects gross margin to remain above 40%, with net profit margins of 20% to 21%, corresponding to net profits of RMB 7.4 billion to RMB 7.8 billion, close to its current forecast of RMB 7.6 billion, indicating “limited downside risk.”

Inventory and Capital: No Urgent Need for Financing

Market rumors about whether Old Shop Gold needs financing have also suppressed its recent stock price. Citibank provides a clear view on this.

According to Citibank, inventory has surged from RMB 4.1 billion at the end of December 2024 to RMB 16 billion at the end of December 2025, mainly for the Spring Festival sales season. Based on approximately two inventory turns per year and over 40% gross margin, current inventory could support about RMB 53 billion in revenue in 2026, nearly double the RMB 27.3 billion in 2025. Citibank believes that unless sales continue to grow at triple-digit rates, the company does not have an urgent need for financing.

Luxury Path: Increasing Customer Overlap

Nomura emphasizes the brand upgrade process of Old Shop Gold, describing it as “early stages of moving toward China’s first true luxury brand.”

Referring to Frost & Sullivan data, Nomura notes that the overlap of Old Shop Gold’s customer base with the top five global luxury brands increased from 77.3% in July 2025 to 82.4% in March 2026. Nomura believes that ongoing product and store design iterations are gradually aligning Old Shop Gold with global luxury brands. If successful, this will enable higher product pricing power and decouple gross margin trends from gold prices to some extent.

Citibank confirms this trend from a store operation perspective. As of December 2025, Old Shop Gold operated 45 boutiques across 34 shopping centers, with an average sales per shopping center approaching RMB 1 billion for the full year. Its store in Shanghai Plaza 66 marks the company’s entry into all of China’s top ten commercial centers.

Citibank considers Old Shop Gold the top pick in China’s jewelry sector, with a target price of HKD 1,162 based on a 2026 forecast P/E of 24x, slightly discounted compared to the global luxury industry’s 26x. Citibank believes Old Shop Gold’s faster growth can offset its relatively short brand history.

The above highlights are from Wind Trading Desk.

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