- Laopu Gold forecasted its net profit for the first half of 2025 would increase between 279% and 288% year over year.
- However, shares of Laopu Gold fell to their lowest levels since May 20 and is on course for their ninth straight session of decline.
- Luxury spending slowdown looms as affluent Chinese shift spending to travel, Oliver Wyman says.
Following the Chinese jewelry startup’s prediction that its net profit for the first half of 2025 would rise between 279% and 288% year over year, or between RMB 2.23 billion and RMB 2.28 billion ($311.11 million to $318.08 million), shares of Laopu Gold plummeted to their lowest levels since May 20.
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The stock, up 203.07% so far this year, increased by almost 4% in early trading before reversing gains as investors locked in their gains.
Laopu Gold shares have soared by more than 2,000% since their debut last year, but they are headed for their ninth consecutive session of fall.
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In a filing to the Hong Kong stock exchange on Sunday, the Hong Kong-listed business also stated that it expects its first-half revenue to rise by 241% to 255% over the same period the previous year.
A reset in market expectations and “unwinding fund flow” were cited by Citi analysts as the reasons for Laopu’s share price decline, noting that the company seems rather inexpensive.
According to a research note released Monday by Morgan Stanley analysts, the company has also declined from its peak in early July due to market downgrades in earnings forecasts and worries about rising gold prices.
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But according to consulting firm Oliver Wyman, Laopu’s profits are less dependent on changes in gold prices than those of conventional jewelers because of the way its goods are designed, which combines traditional workmanship with modern appeal.
Established in 2009, the Chinese jewelry brand is well-liked by younger customers due to its unique designs, which include lotus themes and pendants made of old coins.
Nomura analysts stated in a study that “despite the company’s intact growth story, we believe Laopu’s current valuation has become more attractive in the past three weeks.”
The Beijing-based business credited the brand’s growth through online and physical boutiques for the rise in both top and bottom lines.
Laopu inaugurated its first international location at Marina Bay Sands in Singapore in June and has boutiques in Shanghai, Shenzhen, and Hong Kong.
The success of Laopu stands in contrast to China’s more muted consumer spending.
Oliver Wyman issued a survey last week that found wealthy Chinese are more critical of the economy than they were during the pandemic. According to the report, a large number of respondents are spending more on experiences like travel rather than luxuries.
Similarly, earlier this month, Labubu manufacturer Pop Marthad released a positive profit outlook for the first half of 2025, but the news caused company shares listed in Hong Kong to initially decline. So far this year, Pop Mart’s stock has increased by 175.74%.
Conversely, Anta, a Chinese sportswear business, has had a 17.15% growth in its shares so far this year. In a July 21 filing, the business said that, for the first half of this year, it had “mid-single digit positive growth” for house brand products and “high-single digit positive growth” for Fila-branded products.
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