The "Great and Beautiful Act" has officially come into effect! The industry landscape is significantly different; who are the winners and losers?
Laopu Gold Lockup Expiry Countdown! Is it time to buy in or seek safety?
This year, the Hong Kong stock market's newly listed stocks have created a "myth of wealth creation": $LAOPU GOLD (06181.HK)$ At one point, the stock price strongly broke through the 1,000 yuan barrier, soaring nearly 22 times since its listing; $MIXUE GROUP (02097.HK)$ 、 $MAO GEPING (01318.HK)$ Other newly listed stocks have also opened up the surge "script", igniting the market's enthusiasm for Hong Kong stocks.
Among them, Lao Pu Gold has become the most sought-after company in the market, having risen over 270% this year, and over 20 times since its listing in June last year.
However, it is worth noting that Lao Pu Gold's lock-up period is about to expire. On June 28, the largest scale of restricted shares will be unlocked since its listing, with about 40% of the shares to be released, and it is possible that the unlocked shares will take profits at a high point.
The lock-up period generally consists of two stages—6 months or 12 months. Generally, cornerstone investors of new stocks have a 6-month lock-up period, while other major shareholders typically have a 12-month lock-up period. When the lock-up period expires, it means that the relevant shareholders can sell their held stocks, which usually brings significant selling pressure to the stock price; the higher the proportion of the relevant shares to the total capital, the larger the expected volatility.
This event has also become the focus of market attention, with many investors pondering whether the lifting of the ban will create a highly valuable 'Gold pit'.
Looking back to December 2024, before the expiration of the 6-month lock-up period, the share price of the old shop Gold experienced the largest weekly decline since its listing, but subsequently regained upward momentum.
Moreover, from market Historical Data and Statistical laws, it has been found that many Stocks typically show a trend of initially retreating followed by a strong rebound after the lifting of restrictions on shares.
Taking as an example. $FOURTH PARADIGM (06682.HK)$ For example, on the day of the lifting of the ban on September 30, 2024, the share price hit a bottom and quickly rebounded, doubling within the following month.
$UBTECH ROBOTICS (09880.HK)$ Although on December 29, 2024, prior to the lifting of the ban, the share price was impacted by Shareholder reductions and agreement changes, it began to rebound half a month later, and now the share price is approaching the level before the lifting.
However, $BLACK SESAME (02533.HK)$ on the day of the lifting of the ban on February 10, 2025, the share price dropped sharply and subsequently continued to decline, and is currently in the process of forming a bottom.
Overall, although the lifting of some restricted shares will impact stock prices in the short term, as the market self-adjusts and investors engage in rational games, the newly circulating shares will gradually be absorbed by the market, which often leads to a re-evaluation of the company's intrinsic value.
What do the institutions think?
Goldman Sachs views the potential pullback from the unlocking of Lao Pu Gold shares as a good opportunity to build positions, significantly raising the 12-month Target Price from HKD 976 to HKD 1,090. Goldman Sachs believes that Lao Pu Gold has three core drivers:
First, the performance growth momentum is astonishing, with same-store sales growth rates maintaining triple-digit growth from April to May this year, and the total transaction amount of Commodities from January to May also increased by 511% year-on-year to RMB 1.6 billion;
Second, the brand premium is significant, with the second-hand value of products maintained at over 90% of the original price, far exceeding the industry average of 85%;
Third, multiple catalysts are poised to emerge, and Goldman Sachs has outlined a series of positive catalysts coming soon for investors. In addition to the opening of the Singapore store at the end of June, the company expects to issue a profit warning for the first half of the year by the end of July, with a projected net profit growth rate of around 260%. Furthermore, new stores in top shopping centers such as Shanghai IFC will also be opening sequentially.
Therefore, Goldman Sachs believes that the short-term price fluctuations caused by the unlocking of shares create strategic opportunities for investors who are bullish on the company's long-term value to buy at a low.
Bank of America pointed out that on Saturday (28th), the company will face a share unlocking event, where about 23% of shares will be available for sale (12% from pre-IPO investors, 11% from employee equity incentive platforms). However, due to the major shareholder family's lock-up period being delayed by 90 days following the company's rights issue on May 15, the pressure from this share sale is lower than originally expected. The bank expects improved liquidity after the unlocking, reducing volatility and enhancing price discovery. Bank of America raised the target price for the company from the original 932 yuan to 999 yuan and upgraded the rating from 'neutral' to 'buy.'
In contrast to Goldman Sachs' focus on the strong growth of existing business, Morgan Stanley is looking towards overseas expansion. The bank gives a neutral rating, with the core logic being that whether the overseas story of the company's Gold can be well told hinges on the performance of its first Singapore store.
Morgan Stanley advises investors to closely monitor three aspects after the store opens. First, whether the product mix is consistent with that of the Greater China region; second, whether the pricing strategy differs from those in the mainland China and Hong Kong markets; third, the demand proportion among local residents and non-Chinese tourists in the customer composition, which will reflect the brand's appeal in non-Chinese cultural circles.
Overall, the future of the company's Gold is full of uncertainty. The wave of unlocking shares serves as a litmus test, and whether the leading players can maintain the currently high stock price hinges on 'short-term volatility' and 'long-term resilience.'
